Churn Management in Sri Lankan Mobile Market

Churn is a measure of the number of subscribers who leave or switch to another carrier's service. The frequent migration of customers is in a way a threat to mobile operators as the expense on customer acquisition is greater than retention. On the other hand, for any operator it is difficult to maintain a steady growth in the market without maintaining the existing customers. Due to profound competition, controlling churn rate is becoming a challenge to Mobile Operators and identifying reasons for Churn is an even greater challenge as it is highly dependent on the values, culture, attitudes and perception of the different segments. The main causes for retention or churn from one network in Sri Lankan context (for different segments) are identified by a questionnaire evaluated across various demographic factors (Age, Education level, Monthly Income, Gender). The questionnaire was distributed among 400 mobile subscribers and received 305 responses which were used in the analysis set out in the paper to follow. Strategies that can be used to minimize churn rate is identified based on the feed back received in the questionnaire and by looking at best practices available in the region. Finally, Researchers developed a model to prioritize the influencing factors (Tariff, Coverage, Brand, VAS, and QOS) for overall customer satisfaction of Sri Lankan Mobile customers and checked whether there is any relationship with demographic factors and influencing factors for churn. In addition to that, researchers have suggested strategies that should be adopted by Sri Lankan mobile operators to minimize churn.


Sri Lankan Mobile Industries
During the last few years, Sri Lankan Telecommunication industry (especially mobile Industry) has shown a significant growth compared to other Industries. According to statistics in the 1st Quarter 2007, Sri Lanka has a Tele density of 40%, distributed as follows [1]. After 2002, the growth rate of Sri Lankan Mobile market changed exponentially and that variation can be clearly observed through the following graph. [1] In relation to the concept of product life cycle, it is evident that the mobile industry is reaching its maturity stage. In this regard it is of paramount importance that the operators manage churn (i.e. subscribers leaving the network) as churn management helps retain market share. The expansion in the mobile market has given greater choice to mobile subscribers creating opportunity to switch from one operator to another if not satisfied with the current service provider. The frequent migration of customers is in a way a threat to mobile operators as the expense on customer acquisition is greater than retention.
On the other hand, for any operator it is difficult to maintain a steady growth in the market without maintaining the existing customer. The present Sri Lankan mobile industry is extremely dynamic, with new services, technologies, and carriers constantly altering the landscape. High churn rates impact as bad debts which cost over US$6 billion each year to Asian mobile operators. Particularly, the two biggest markets in Asia -China and India -have churn rates that are significantly higher than the regional average. [2] 2. Literature Review

Definition of Churn
Churn is a measure of the number of subscribers who leave or switch to another carrier's service.
In other words churn is the gross rate of customer loss during a given period. Churn Rate can be described as follows. [5] Monthly  In ,u hirve a 90% confidence rating, + or -5%, a minimum of 273 responses is required for rtiiiilysis. The Stratified sampling technique is i i-ii'i I .is the sampling technique in such a way i l l i i stratum (sample) represents each tli-mographic factor in the population

Hypothesis
• T.iriff Kates and coverage cause churn from a network than QOS & Technology of the operator in Sri Lankan Context.
• Influencing factors for churn are same for various subscriber segments

Conceptual Model
When Churn Management is concerned, it is necessary to identify what main factors affect the churn management process and those factors may vary based on whether it happens voluntary or involuntary.

Survey Results
A Survey was conducted through a questionnaire that was printed both in Sinhala and English Medium. The Questionnaire was distributed both in soft and hard copies in such a way that it cover all demographic areas based on stratified sampling technique. SPSS, Minitab and Microsoft excel were used as software for data analysis.   More than 57% of customers say that mobile is important for their day to day activities. So we can say mobile has become an indispensable feature among the Sri Lankan mobile subscribers. On the other hand, more than 52% of customers consider their mobile number as a unique identification for them. So if the mobile number portability is allowed in Sri Lankan context, there will be an impact on churn rate.

Methods to Minimize Churn based on Customer Feed Back
I. The into providing more benefits to long staying customers, it is necessary to enhance benefits to customers considering their network stay. But according to the survey results, only 57% of customers who have been with the same network for more than 3 years have incoming free connections.  III. Customer feed backs should be considered when coverage is expanded. More priorities should be given to the areas with higher complaint rates and it is very vital to maintain proper systems to gather customer responses precisely.
IV. Customer Service officers should be more aware about the service and technology -Customer Service officers and call center staff should be properly trained about the existing services. They should identify customer requirements properly and should be able to provide correct answers based on their requirements. Apart from that whenever a customer is contacted, it is better to select the most convenient language to contact the customer as otherwise inconvenience may be caused. Based on survey results of those who have made complaints, it appears that only 31%   Ai i ording to the survey results, this is basically happening due to lack of awareness on the loyalty points offerd operators. 36% of i ir.lomers do not care about the loyalty points. Kill il mobile operators can offer free minutes, Inn 1 SMSs or credit upgrades instead of loyalty pi iinls these schemes may be more effective as Ihi 1 Sri Lankan market is highly price sensitive.

Methods to overcome Involuntary Churn
In the Sri Lankan context, disconnections mainly happen due to involuntary churn. Most of them a iv post paid customers, basically due to non payments. Based on the input received from the post paid customers in the sample, 35% of them have been disconnected at least once although still they remain in the network. To overcome involuntary churn rate, post paid customers should be aware about the offered credit limit, and need to be aligned loyalty point schemes to paymasters. In both graphs ( figure 20 and figure 21)

Conclusion
Due to profound competition, controlling churn rate has become a challenge to Sri Lankan Mobile Operators. In this regard it is of paramount importance that the operators manage churn, as without proper churn management strategies, they will not be able to retain the market share. The main reasons for churn were identified after analyzing customer expectations and behavior patterns through this research.
Based on the research outcome, it can be stated that Sri Lankan subscribers are highly price sensitive and that the majority of customers who have churned from one network to another is due to lower tariff rates offered by the latter.

ENGINEER
Further, it was identified that features for different packages are not being properly directed to the target audience or a segment. Therefore it is necessary to build new products or Packages after cautious analysis of interests of different segments. e.g.: As most of the younger people prefer to use SMS, special packages can be introduced with low tariff for SMS.
It is also vital to give more benefits to existing customers considering their network stay.
e.g.: Number of incoming free minutes can be increased considering the number of years in the network.
On the other hand, the majority of mobile subscribers use value added services very rarely. It is a big challenge to Sri Lankan mobile operators to align their value added services with culture, attitudes and values of Sri Lankan people. But, however, they should educate customers about the available value added services and they must use different strategies to promote existing value added services.
Meanwhile, it is necessary to align all discounts, loyalty programs, promotions with financial benefits to customers. Otherwise it is difficult to attract attention of customers due to the nature of the Sri Lankan market. E.g: if customer recharges the card with a Rs.1000 card, if operator can assign bonus Rs. 200, customer tends to go for a Rs.1000 card as there is an explicit benefit.
From the operators' point of view, they need to provide special attention to most profitable customers; since if they can retain them the impact of churn can be minimized. As most disconnections are caused by non payment, it is necessary to give special discounts to paymasters to encourage timely payments.
Finally if proper churn management policies are available in the Sri Lankan mobile market it will help increase the customer satisfaction while minimizing losses incurred by mobile operators due to bad debts, and acquisition costs.

Limitations of the Study
There were some limitations experienced in achieving the objective of this research project.
I. Difficulty in collecting accurate information (e.g.: Churn Rate, Bad debts per month, current strategies to minimize the churn) as competitive information is not exposed to a third party.
II. Non availability of comprehensive literature on this topic both in Sri Lankan and Asian region contexts III. Some customers are not familiar with words/concepts in the questionnaire (E .g : Credit limit, Loyalty points ) to give more detailed answers IV. Although relevant research papers are available on the Internet, it is necessary to pay for reading their full content.
V. Lack of empirical evidence to support some gathered information.
VI. Non availability of statistics to do a proper stratified sampling in such a way that stratum represents the population