Essay on CUSTOMER RETENTION STRATEGY AND CONTACT PLAN FOR ORANGE part 2
Essay on CUSTOMER RETENTION STRATEGY AND CONTACT PLAN FOR ORANGE part 1
Question 2. Explain how to develop a customer contact plan in order to avoid losing customers considering the different market conditions in European markets.
Orange is a large telecommunications provider offering internet services, fixed and mobile telephony and IPTV. The company’s customer base is very diverse, as Orange operates in 30 countries and has more than 230 million customers (Baines & Fill 2014). The company is headquartered in Paris, France but its services are offered at the international level. Major regions of operation are Europe and Africa (Baines & Fill 2014). Strategic objectives of Orange are to strengthen its core network offer and to add innovative services to achieve growth in order to expand the company’s market share.
It is currently important for Orange to increase customer retention. Currently the company’s approach to managing customer lifecycle includes three stages – welcome, grow and keep (Baines & Fill 2014). Yet the impact of financial crisis in European countries led to the increase of involuntary churn for customers who are unable to pay their bills. In this context, it is difficult to simply “keep” a customer because customers experience financial hardships (Baines & Fill 2014). The lack of a consistent customer contact strategy in Orange leads to the outflow of customers to other competitors and increases customer churn. Therefore, Orange should develop a consistent contact plan for its customers aimed at increasing customer retention.
In terms of developing a customer contact plan, Orange should first of all determine its approach to marketing its services at international level. There are four key approaches to international market development – ethnocentric approach, polycentric, regional and geocentric approach (Payne & Frow 2013). Ethnocentric approach focuses on the national market, polycentric approach views every market as a separate environment, regional approach is based on grouping countries into specific groups and targeting the regions, while geocentric approach views all target markets as a unified global market (Payne & Frow 2013).
Currently Orange has elements of ethnocentric approach (some key assumptions such as customer service use patterns are taken from national experience) combined with polycentric approach (customer retention strategy is standardized across Europe). It is recommended for Orange to switch to regional approach and to group European countries according to their financial health, borrowing culture and to the degree of reaction to financial crisis. For example, one group of countries might include stable and healthy economies which did not suffer significantly from financial crisis (e.g. France or Germany) and another group might include countries in which the purchasing ability of customers was notably affected by the financial crisis, e.g. Spain and Romania.
Research pertaining to customer retention in telecommunications shows that companies are switching from customer acquisition to customer retention due to competition and market saturation. Furthermore, according to Baines and Fill (2014), it is essential for telecommunications companies to focus on customer value and customer preferences. Kestnbaum, Kestnbaum & Ames (1998) identified the following motivators of customer retention in telecommunications: customer service quality, phone/internet service quality and phone/internet plan quality. More recent findings also indicate that it is essential to optimize customer plans. Wong (2010) found that telecommunications customers often have difficulties predicting their usage needs and requirements, and tend to choose plans that are not optimal for them. Furthermore, Wong (2010) found that helping customers optimize their plans notably decreases churn rate and improves customer retention.
Therefore, to build a successful customer contact plan, Orange should analyze the needs of its customers as well as customer contact preferences, and to help customers optimize their plans according to their needs and financial position. The first step in creating such contact plan will be collecting customer information and dividing customers into categories using typical customer profiles (Pourasghar 2009). Key customer profiles might be: brand advocates (trusted customers actively supporting the brand), loyal customers (those who purchase regularly but do not take active part in brand promotion), average customers (make purchases from time to time), switchers (non-loyal customers who prefer discounted purchases), difficult customers (customers who have low satisfaction and have a lot of complaints), adversaries (those who are dissatisfied and spread negative information about the brand) and new customers (Kumar & Reinartz 2012). Customer profiles should be matched against country groups with different financial position. The combinations of customer and country profiles should be used for identifying the steps for customer contact plan.
For each of the above-mentioned categories, it is necessary to develop a specific communication strategy to increase customer retention. For brand advocates, it is recommended to offer loyalty bonuses, access to new technologies and offers for free, advanced plans, etc. For loyal customers, such contacts as service news, account upgrade options and account optimization services can be offered. For “average” customers it is best to contact them with new offers, bundles, announces of new technologies and to provide them with exceptional customer support ready to explain and compare existing offers.
For switchers, it might be efficient to suggest loyalty bonuses and to focus their attention on economic offers and bundles. Family options and group purchase options might also increase retention for such customers. Providing discounts for reviewing the company’s products and services might also encourage these customers to establish a better relationship with the company. For difficult customers, it is recommended to assign personal customer support workers who would help them and resolve their issues. Similar approach might be used for adversaries; furthermore, it might be beneficial to offer them a discount or free service for switching from competitors (assuming that the negative issues they disliked could be eliminated). For new customers, it would be best to offer a short survey of their preferences and interests, and then to suggest personalized services and plans according to survey results.
Furthermore, it is essential to optimize the ways of contacting customers (Gillgan & Wilson 2012). There are customers who prefer being contacted by email and those who prefer calling (Wong 2010). Additional methods of contacting customers are text messages, regular mail, messages in social networks, etc. (Gillgan & Wilson 2012). For each customer, it is necessary to keep the preferred contact channels in customer profile and to use these channels. For the group of countries which were more significantly affected by financial crisis, more economic offers, discounted offers and options for paying by installments should be offered. For Orange, it might also be efficient to analyze the patterns of service use for all customers, to identify customers with low plan use rates and to suggest optimized plans to such customers. Using these recommendations, Orange would be able to create an efficient customer contact plan and increase customer retention.
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