Published on International Journal of Economics & Business
Publication Date: May, 2019
Ruth Erang Mbu Epse Enoanyor & Nwahanye Emmanuel
University of Buea
South-West Region, Republic of Cameroon
This paper intended to analyze the effect of customer service on customer retention in CAMTEL, South-West Region of the Republic of Cameroon. Data used in the study were collected through questionnaires administered to 90 customers of CAMTEL South-West Region. Data were analyzed using both descriptive and inferential statistics. With respect to customer service in CAMTEL, the study established that CAMTEL customer service is not significant enough to bring about substantial and credible customer retention. Most respondents were not satisfied with the customer service in CAMTEL which reduced their loyalty, their level of contentment in staying with CAMTEL rather leaking on to competitors, their trust of the services and their desire to stay with CAMTEL. Despite the fact that the company can still boost of a certain number of customers, it is strongly recommended that CAMTEL management should improve its customer service, emphasizing on building a good customer relationship management, developing information systems, training its staff to be responsive, providing bonuses, and reviewing the pricing, to increase loyalty and retention.
Keywords: Customer Service; Retention; CAMTEL, South-West Region.
Customer retention has long been considered an important element in achieving competitive advantage for businesses. The increasingly turbulent economic environment has brought this again to the forefront of many organizations (McCrory, 2013). In fact, the contemporary advancement of commerce and emerging of markets has led to radical economical fluctuations and inflamed fierce competition (Narteh, 2013). As a result, the consumer today has a multitude of alternatives to exceed his expectations when making a purchasing decision, whereas, rivalry has reached its climax (Leal & Pereira, 2003). Consequently, given the assumption that loyal customers are a vital ingredient of a sustainable business operation, therefore, retaining these customers is no doubt an interactive catalyst that will systematically influence the long-term success of any enterprise in today’s service-driven economy. In this regard, customer retention strategy signifies the vaccine that must be utilized by enterprises to diminish the risk of substitutes (Komunda & Osarenkhoe, 2012).
Customer retention is the approach in which organisations emphasize their exertions on current customers with the aim to carry on business with them (Mostert et al, 2009). Ramakrishnan (2006) defines customer retention as the objective of marketing that bars customers from joining the competition. Nevertheless, customer retention can also imply the number of clients who stay with the supplier over an established period, like a year (Dawes, 2009). Customer retention is considered an important aspect in shaping the accomplishment of businesses.
Customer retention is seen as an obligation by a customer to carry out business transactions with a particular firm on a regular basis. Molapo and Mukwada (2011) ascertained that firms are all out to foil attempts by customers to switch retailers and indirectly retain them. In addition, Erdis (2009) established that firms direct their marketing efforts to please their current customers in order to retain them and foster long-term relationships with them. Customers will frequently patronize firms which meet their needs and hence, an enduring relationship will be fostered (Fill, 2005).
Customer retention has been found to be a primary goal in firms that practice relationship marketing (Coviello et al., 2002). While the precise meaning and measurement of customer retention can vary between industries and firms, there appears to be a general consensus that focusing on customer retention can yield several economic benefits (Reichheld, 1996; Buttle, 2004). As customer tenure lengthens, the volumes purchased grow and customer referrals increase. Simultaneously, relationship maintenance costs fall as both customer and supplier learn more about each other. Because fewer customers churn, customer replacement cost falls. The seller may incur more cost in attracting new customers through discounted offers. Therefore, retained customers may pay higher prices than newly acquired customers because they are less likely to receive discounted offers that are often made to acquire new customers. These conditions combine to increase the present net value that retained customers has to sell. Lindgreen et al. (2004), for example, compute that it can be up to ten times more expensive to win a customer than to retain a customer and the cost of bringing a new customer to the same level of profitability as the lost one is up to sixteen times more.
Gummesson (2002) indicated that in order to retain customer over time, professional service providers need to place more effort on the creation of personal relationships with the clients, as it is a strong bond tying customers to the firm. Creation of customer satisfaction and the creation of switching barriers are the main strategies employed by firms, for retaining customers. Other factors affecting professional service firm’s retention strategies are the firm’s ability to convey confidence, to get the customers involved, and to be able to deliver good quality services (Gummesson, 2002).
Recent marketing activity has seen a shift in emphasis among marketers from a traditional transactional approach, to one that seeks a more long-term relationship (Hollensen, 2003). The differentiation, according to Grönroos (1998), is that transactional marketing is supplier-focused, whereas relationship marketing is customer-focused. This has resulted in organisations moving away from merely attracting business to attempting to retain and sustain it for the long-term.
For a supplier, the financial benefits of retaining existing customers as opposed to sourcing new ones are clearly apparent. Nonetheless, customers also benefit from a close relationship in terms of customization through improved knowledge and better understanding of business needs by the supplier. Little and Marandi (2003) argue that quality and cost are important factors in supporting long-term relationship. In particular, customer concerns over switching suppliers and the suitability of the product and any associated rectification costs possibly negative potential cost savings is a key factor in supplier retention. Customization of product and knowledge exchange between customer and supplier therefore makes the switching cost seem higher (Gummesson, 2002).
The argument for customer retention is relatively straightforward. It is more economical to keep customers than to acquire new ones. The costs of acquiring customers to replace those who have been lost are high. This is because the expense of acquiring customers is incurred only in the beginning stages of the commercial relationship (Reichheld & Kenny, 1990). In addition, long-term customers buy more and if satisfied, may generate positive words-of- mouth promotion for the company. Additionally, long-term customers also take less of the company’s time and are less sensitive to price changes (Healy, 1999). These findings highlights the opportunity for management to acquire referral business, as it is often of superior quality and inexpensive to obtain. Thus, it is believed that reducing customer defections by as little as five percent can double the profit.
Customer expectations are evolving and the customers are more vocal and willing to share both when something is good and when something is bad. Customer service is also evolving, in order to keep pace with customers. The pace of the change driven by customers, is accelerating because the social web (commerce and network) has enabled and empowered customers. Thinking back 10-15 years ago, customers were not able to make purchases online. They only asked friends and there were no online reviews. When a customer needed to contact a company, when something had really happen, they might have even sent a letter, or pick up a phone and call.
In today’s competitive environment, the concept of customer service management has played strategic roles in the improving, managing, retaining and developing customer’s loyalty (Oluseye et al., 2014). When industries manufacturing and large cities began to grow, the service industry began to gain ground. Due to the changing economic trend, the outlook of business activities have significantly changed and shifted from high reliance on manufacturing companies to focus on providing timely and quality service delivery. The age of the service company has been alive and strong for some time now.
Therefore, in order to provide quality service to customers in this present time, organisations must have appropriate and comprehensive knowledge of who they are meant to offer services and what form of service should be delivered. In an attempt to resolve the question on what form of service should be rendered to customers, Davis and Heincke (2003) noted that, services are intangible and therefore more difficult for both service providers and the customers to measure and evaluate objectively. They went on to say that services are produced and consumed simultaneously, meaning that either the customer or a possession of the customer is involved in the process while the service is being delivered. Aronould, Price and Zinkhand (2004) posited that no organisation can produce essential and quality service delivered without the requisite to understand further than the basic characteristics of services and what they value.
The concept of customer service has been defined by different people with different connotations. However, depending on an organisation’s focus, such as retailing, industry, manufacturing or service, the goals of providing customer service may vary. In fact, we often use the term of service industry as if it were a separate occupational field unto itself; in reality, most organisations provide some degree of customer service. Balaji (2009) defines customer services as the capability of well informed, consistent, efficient, proficient and passionate employee to provide/offer products and services with a view of identifying and satisfying the needs, demands, values and expectations of the customers (Ehigie, 2006).
Globally, in the process of achieving organisational goals and objectives, better customer services is a very important aspect in retaining customers. Better customer service is therefore an important and necessary activity at all time in the life of the enterprise. Every organisation, especially in the telecommunication sectors, has to take into consideration how best to serve it potential and current customers if it intends for such customers to retain its products or service. The development and expansion in the telecommunication industry today has paved ways for economic development and satisfaction. The most important development and discovery is the wireless telephone system, which comes in either in fixed wireless telephone lines or the Global system of mobile communications (GSM) of which Cameroon system is not left out.
The advent of GSM in 2017 marked a dramatic shift in Cameroon’s telecommunication industry. The Cameroon telecommunication industry is one of those industries that have experiencing in more than a decade now an increase competition. This all started in July 1998 when there was a revival of the Cameroon telecommunication sector. This revival was to make Cameroon broke-up the long monopoly it had in this sector since 1972. This was followed by the split up of the historical public monopoly International Communication Company Limited (Intelcom) in 1999 into two entities: CAMTEL and CAMTEL Mobile. Thereafter, the first competitive private mobile license was granted to the “Societé Camerounaise des Mobiles (SCM)”. With three telecommunication companies operating then, the government created the Telecommunication Regulatory Agency (ART) which acts as the sector gendarme (it guarantees and ensures the regulation, control and monitor of the activities of operators in this sector). This new legal and regulatory framework immediately attracted foreign investors. Since then, GSM licenses were granted to three (3) providers namely MTN, ORANGE and NEXTTEL.
Telecommunication product development are easy to emulate, and when the telecommunication industry provide nearly identical services, they can only be distinguished based on the prices and quality. The service failure in service industry is predictable due to the human involvement in the service delivery process, which eventually creates vitality for service providers to obtain complaints from angry or dissatisfied customers, in order to, retain them by provisioning of quick recovery option (Kaur & Sharma, 2015). In today’s cutthroat competitive environment, negligence in customer service or service quality can lead to business loss, which is not affordable in terms of cost of acquiring new customers. It is important to formulate proactive strategies to retain customers by determining the antecedents behind customer complaining behaviour (Karatepe, 2006; Kaur & Sharma, 2015). This behaviour is developed with experience and direct or indirect interaction with service (Meyer & Schwager, 2007). Customer experience is a term that explains customer collective incident with service provider and it also helps to determine the durability of relationship of that customer with service provider (Islam & Rima, 2013). Customer experience can be enhanced only when good customer service is maintained.
Therefore, good customer services is the potential and effective tool that telecommunication industry can use to gain a strategic advantage and survive in today’s ever-increasing telecommunication competitive environment. The majorities of telecommunication companies have non-domestic owners, and are not very diversified in terms of the products and services they offer (Hull, 2002). This suggest that most organisations have reached the maturity phase of the product life cycle and has become commodities, since telecommunication companies offers nearly the same products. This carries the danger of creating a downward spiral of perpetual price discounting; fight for customer share (Mendzela, 1999).
One strategic focus that telecommunication companies can implement to remain competitive would be to retain as many customers as possible. The key factors influencing customer retention in the telecommunication industry includes the range of services, rates, fees and price charged (Abratt & Russell, 1999). Furthermore, service excellence, meeting clients’ needs, and providing innovative products are essential to succeed in the telecommunication industry. Most private firms claim that creating and maintaining customer relationships are important to them and they are aware of the positive values that relationships provide (Colgate et al., 1996).
Cameroon Telecommunication (CAMTEL) was first a private telephone company known as INTELCAM which was a branch of an American Telecommunication company. Later on it became a parastatal, part government and part private. CAMTEL was created under decree No:98/198 on the 8th of September 1998, with a staff strength of ( 2197) workers. CAMTEL deliver services such as OPTICAL FIBER and CORPORATE NETWORK, which CAMTEL uses to distribute different available Network to its competitors.
At first, CAMTEL had just the Land Line (fixed) telephone and fax, but when telecommunication competitors came to Cameroon with mobile phones, internet and (GSM), it was like an eye opener to CAMTEL. CAMTEL had to diversify its products, being the owner of the optical fiber CAMTEL had to come out with more advanced communication tools in order to retain its customers. In order to retain its customers, CAMTEL had to do everything possible to meet the expectations of the customers through improvement in technology and marketing mix.
To accomplish this target, CAMTEL had to turn a new page and came out with the following products: wireless fixed phone, mobile (CT) phone, pay phone, (GSM), smart phone, Wiffi, pack Mboa, Toli, Telecopy (fax). For internet services CAMTEL has: switching telephone NETWORK, Internet connections through CT phones, (ISDN) an internet in wireless fixed phones, internet through (ADSL) and internet connection through dedicated lines. In addition, CAMTEL has a short-term plan and a minimum investment program where: CAMTEL Laid the sub-marine optical fiber cable West Africa Festoon sub-marine Cable System(WAFS), With landing points in Kribi and Limbe, and a land extension from Limbe to Douala. CAMTEL has put in place a reliable modern system of managing Network from the technical and commercial standpoint with a view to ensuring rapid connection of subscribers and easy fault recording.
Studies on customers’ service, customer loyalty and customers’ retention are no longer a new topic in the field of customer relationship management practice and philosophies (Colgate & Norris, 2001; Bowen & Chen, 2001; Lauren & Lin, 2003; Lee & Hwan, 2005; Lucas, 2005; Mishra, 2009). However, after a thorough search, limited studies have been carried out regarding the effectiveness of customer service in the retention of customers in developing economy such as Cameroon and more precisely in a public company that had monopoly in the past and today is almost the last in the market despite urged investments. In addition, various researches (Douglas & Connor, 2003; Wong & Sohal, 2003; Parasuraman et al., 1988) have focused only on service quality in telecommunication sector while customer service being the focus of this study as well as its influence on customer retention has been given limited attention. This research therefore seeks to examine customer service (effectiveness and quality) in CAMTEL and its influence on customer retention.
1.1 Problem Statement
Telecommunication companies continuously strive to increase their customer base. They provide products and services to fulfill different needs of the customers. The focus is now moving from short-term satisfaction to long-term relationship between the firm and its customers as Grönroos (2000). Finding new customers is important for a business, but equally important is keeping the old customers since it has resultant economic benefits to the business (Buttle, 2004). The effectiveness of customer service and the delivery of high quality services are considered to be profitable strategy for success in today’s highly competitive market including the telecommunication industry.
The Cameroonian telecommunication industry has shown significant growth since 1998 with the liberalization of the sector. It was composed of a single monopoly the early days but now it is totally dominated by four companies. It is therefore crucial for companies operating in the sector to gain better understanding of their customers so that they are attracted as well as maintained for long period. If this is true for leaders companies, it is more relevant to followers such as CAMTEL which need to increase its market share. In fact, according to statistics from the Telecoms Regulatory Agency (ART in French), the telephone sector in Cameroon had 16.8 million subscribers (out of a population of 22 million inhabitants) as at end September 2015, against 16.6 million in 2014. This development is mainly due to the increase in the mobile telephone penetration rate, which now reaches 80% against 71% in 2014, according to the telecoms regulatory authority.
The couple made of the South African operator MTN and the French group Orange continues to lay down the law on the mobile market and telephone market at large, with 93.8% of market shares for both. In detail, MTN grabs 57.04% of the market, against 36.8% for Orange. The newest arrival on the market, Vietnamese operator Viettel which operates under the NEXTTEL brand, takes 4.66% of market share, a little over one year after launching its operations. At the tail end of this ranking established by ART is the historical operator, CAMTEL, sole landline telephone operator of the country, who commands 1.4% of the telephone market in Cameroon. However, from the telecoms authority’s statistics, the number of subscribers to the public operator, who at that time was preparing to start using its mobile license, reaches 412,000 clients, after stagnating for a long time at 22,000.
The competition in that sector has forced telecommunication companies to think of ways to generate profit by differentiating their products and/or services from their competitors so that customers are retained to a greater level. Nevertheless, it should be noted that, today, the differences in products or services offered among the different telecommunications providers are relatively insignificant, even the switching cost of customers is very low. To obtain an advantage in such a competitive environment, firms are now providing “value-added” service. According to Vandermerve (1993), the rationale is that the market power is in the services, because the value is in the result; which has to do with customer retention and loyalty.
As such, in this system characterised by competition, companies want to meet up with the need of customers. Due to the unpredictable behaviour of customers, they can only be stimulated to buy and because of these companies are forced to better customer services to retain their customers. These functional characteristics have brought us to develop the various ways in which companies can better customer service and customer retention. Firstly, what is the nature of customer service in companies? And how does it impact customer retention? What are those strategies that can be used in customer services in other to retain its customers? Are employees satisfied, so that they can be willing to give customers the best service? This is because when a customer receives poor service, he or she will tell up to 30 people which will tannish the image of the company. This leads us to exposing the strategies to improve customer services and its impact on customer retention.
This notwithstanding, Hopewell (2014) found that the service quality of many telecommunication operators is very poor due to high number of complaints, bad customer experiences and customer satisfaction issue. Service providers are doing service upgrades and expansions in order to meet these market challenges. Service providers need to provide better data services and they need to upgrade technology from 3G (3rd Generation) to 4G (4th Generation) mobile technology for provisioning of faster data services. During the roll-out of network and services, lack of proper planning leads to poor customer service to clients (Taylor, 2013). This can contribute to poor voice and data services. This is highly evident in CAMTEL in that even after the launching of the mobile license, its situation and position in the telecommunication sector has not change. While MTN Cameroon, ORANGE and NEXTEL are making massive moves towards attracting and maintaining customers through an efficient customer relationship management and increased service quality, the state-owned corporation CAMTEL which is the pioneer in the country has over the years recorded no significant increase in its customer base when compared with the former. Ironically, CAMTEL customers keep on switching from this sector to enjoy the quality services offered by its competitors. This can be illustrated by a drastic decrease of CAMTEL South-West Region revenues from 1,377,044,457 CFAF in 2013 to 244,240,941 CFAF in 2017 (see Appendix 2). In view of the above, there is dire need to conduct a study on customer service quality in CAMTEL and how it affects customer retention rate. In addition, it is important to consider the observations of Fluss (2010) concerning the attitudes of competitors and the annual customer attrition in some industries and more particularly in the telecommunication industry. He notes that competitors are always on the lookout to steal customers through better deals. He has observed that annual customer attrition rates range from 7% in industries that have high exit barriers such as banking and insurance, to almost 40% in the mobile phone industry. It can therefore, be concluded that customers in the telecommunication industry keep on switching network providers for better deals.
2. CONCEPTUAL FRAMEWORK
Nowadays customer retention is of prime importance as it is necessary to understand what an organisation should do to retain its customers. Retention can be defined as the continuous possession, use or control of something. The main purpose of a corporation behind practising customer retention strategy is to reduce customer defections. Customer retention starts when an organisation has the first contact with the client, and it continues throughout the lifetime. The goodwill of the organisation increases if the organisation can retain and attract the customers and exceeds their expectations (Singh, 2006).
Customer retention has been defined in many ways, definitions often explain the length and breadth of the subject area, thereby adding value in understanding the nature of the field in totality. According to Peelen (2005), customer retention in a marketing sense means holding on to customers. If a company becomes aware in time of those customers who demonstrate an increased likelihood of ending the relationship, then it can take action to prevent this.
Menon and O’Connor (2007) on their part defined customer retention as holding and maintaining customers to maximize customer life time value by creating effective relationship with the firm. To them, there are different variables that can influence companies’ customer retention such as communication, customer information, empowerment, customization, loyalty programs, ethical behavior and technology of the firm.
Ramakrishnan (2006:1) defines customer retention as the marketing goal of preventing customers from going to the competitor. Customer retention is the way in which organisations focus their efforts on existing customers in an effort to continue doing business with them (Mostert et al., 2009:120). However, customer retention can also mean the number of customers who stay with the provider in the course of an established period, such as a year (Dawes, 2009: 232). Also, customer retention is defined by Hau and Ngo (2012), as a process or set of steps taken to reduce customer churn rate or defection.
In the light of these definitions, this study adopted customer retention as a situation where an organisation does every things possible to quit its customers from going to competitors.
Whenever a company retains a customer, it is retaining their lifetime value, that is, the value of their future relationship with its business. Therefore, retaining customers means retaining lifetime value of the customers in terms of their spending power as well as their power to influence another customer who can prove to be potential customers for the business.
Ang and Buttle (2006) described that when customers are loyal, the volumes of purchased items will increase and reduces costs of relationship because both organisations and customers know each other better than past, these loyal customers pay higher prices than the new ones, and are not claim for discounts which the organisation offer to new customers in order to attract and acquire them. Therefore, to maximize the share of these customers, all of the necessary conditions for Customer relationship management (CRM) programs should be integrated effectively. However some organisations perform different activities that can be associated with retaining the customers like the processes for planning, customer satisfaction measurement, complaint handling mechanism and quality assurance processes. Generally, to be successful in implementing this program, companies consider the related issues such as the type of customers to be retained and the nature of product or services provided to them (Buttle, 2002).
Hau and Ngo (2012) asked the question; how do companies can retain their customers? According to them, this is done by understanding the customer journey, that is, the lifecycle of a customer. Through this way, a company can identify its weaknesses and strengths to deliver better services to the customers. So, before retaining customers, it is essential for the companies to understand why their customers are exiting to their industry peers (Hau & Ngo, 2012).
Still in this light, Smith (2006), stated that to retain customers it is vital to keep a dialog going and keep the customers in control. Using the web, a customer with a need can complete a form. Depending on how this form is completed, the solution finder processes the request. Depending on the mode of communication or need a customer gets a call back, a text message, or e-mail. Customers enjoy being in control of their relationship. With the information the customer provides, transactional information and a set of business rules, a company can choose various methods of customer contact (like e-mail and messaging), the timing and the message that is the most likely to connect to the customer (Smith, 2006).
Lastly, in appreciating customer retention, the level of commitment between the customer and the organisation is to figure out about which customers to retain. If the customer is highly committed, they will be impervious to the appeals of competitors, and there is no need to invest so much in their retention rather the apt approach is to give him or her a unique customer experience. However, if the organisation have highly significant customers who are not committed, there is a need to invest considerable sums in their retention. Reichheld (1996), stated that some companies prefer to focus their retention efforts on their recently acquired customers. They often have greater future lifetime value potential than longer tenure customers. There is some evidence that retention rates rise over time, so if defections can be prevented in the early stages of a relationship, there will be a pay-off in future revenue streams.
A further justification for focusing on recently acquired customers comes from research into service failures (Bolton, 1998). When customers experience service failure, they may be more forgiving if they have a history of good service with the service provider. In other words, customers who have been recently acquired and let down are more likely to defect or reduce their spending than customers who have a satisfactory history with the supplier.
There are several benefits attached to the adoption of customer retention strategy by companies, that is, there are much remuneration organizations derived when customers are retained. In this view, this study found that some of the benefits included:
• It helps in building strong relations with the customers: Serving a repeat customer is more beneficial for the company rather than acquiring a new one. Thus, it is very important for the retailers to maintain hormonal relations with their customers. In this regards retention strategies play an important role as through such strategies companies can provide benefits to its customers without affecting its cash flow. If customers get good quality products and services at competitive price, they get satisfied and remain loyal to a particular player. Thus, retention strategies are fruitful in building a strong relation with the customers.
• It enhances the goodwill of a brand: Retention strategies involve giving extra or added benefits to the customers at the same price. In the present business environment, companies can attract and retain its loyal and potential customers only if they deliver something new and unique or extra to its customers as competitive price. If the company is able to deliver such benefits to the customers.
• It identifies future needs of the customers: Several retention strategies involve collecting personal information of the customers and their shopping patterns. For example, if a company has its loyalty cards, it collects information of the customers and with every purchase of that particular customer they update the profile of the customers. On the basis of this information, companies can determine the market trend and thus can identify the future needs of the customers.
• It identifies and explores various sales opportunities: Customer retention strategy is beneficial for the companies. It plays a huge role in increasing the sales and profits for the firms. For example, if a retailer is able to offer various attractive strategies to its customers, it is able to attract more and more customers. Thus, the retention strategy helps the retailers to design and explore various sales opportunities.
• It rectifies the flaws within the organisation’s policies and processes: Many times it may be the case that any strategy designed by the company is not able to achieve its purpose. In that case, retention strategies such as club cards can help the companies to accumulate information regarding the customers and thus can design the strategies as per their shopping behaviour.
• Through this customers can easily provide feedback to the companies: Many customer retention strategies help the retailers to collect data regarding the shopping pattern of the customers. Companies record the items that are frequently purchased by the customers and on that basis determine the needs and wants of the customers. Moreover, through such strategies customers can also provide feedback to the companies regarding their products and services.
• Organisations can increase revenue and reduce acquisition costs of the customers: It is beneficial for the retailers to serve existing customers rather than attracting new or potential customers. Through such scheme, companies can earn the loyalty of the customers and thus can increase their revenue streams. Moreover, if the companies have a huge base of loyal customers, there is no need for looking new customers and thus they can save a lot on acquisition cost (Woo & Fock, 2004).
Similarly, Parker, Nitse and Tay (2009) clearly stated the following five customer retention benefits:
• It is cheaper to retain customers than to acquire them.
• The costs of serving long-life customers are less than those of serving new customers.
• Long-life customers improve the reputation of the company and attract new customers through word-of-mouth advertising.
• Long-life customers are less price sensitive than new customers and are therefore more willing to pay higher prices in some cases.
• Long-life customers are more likely to buy more from the company so the company can increase their share-of-wallet through up-selling and cross-selling.
According to other publications, Ahmad and Buttle (2002) express that the overwhelming argument for customer retention is that it is cheaper to retain than to acquire new customers. The authors claim that a 5 percent increase in retention rate leads to an increase in the net present value of customers between 25 and 85 percent. Hennig-Thurau et al. (2002), agree and add that retaining customers opens up considerable cost-reduction potentials that have led to a strong emphasis of customer retention.
On the other hand, Ahmad and Buttle (2002) stated that customer retention management can be problematic if it is not defines in a way that is appropriate to the firm’s business. In some cases, suppliers are not capable to notice hidden defections of their customers. These defections occur when firms fail to recognize a slower growth in sales to a particular retained customer relative to the growth of the market. The author identifies ethical problems and involuntary factors as two causes of customer switching behaviour which providers of service are not able to have power over. The reasons for staying or leaving with one supplier vary from one customer to another.
In view of the above, it is clear that the effective customer service brings into customer retention. The one prominent benefit of keeping long-life customers is profit maximization to any business as potential customers are also attracted through various factors influencing customer retention
There are many, varied factors which influence the customer retention in an organisation like product, price, communication, distribution, customer clubs, customer cards, complaint Management, the input procedure, the case processing procedure and information collection procedure. Customer retention can be achieved in various ways with the quality services provided to the customers and giving more priority to the existing profitable customers. A critical explanation to these factors is given below.
Price is the key element in the reaching the customer satisfied. Price plays and important role in the functioning of economic system. Giving discount and bonus on purchasing will attract customers towards the products. Customers can also be made loyal by satisfaction dependent pricing systems and money back guarantees in case of dis-satisfaction. In this case, special contracts and standard customers pay different prices, which are graded according to purchase quantity. A potential customer, who is granted better conditions with the growing length of the business relationship or with increased purchase quantity, will carefully consider whether they will choose another supplier, and thereby pay with this benefit. On the other hand, possibility consists of contracts that vary in the level of basic amounts and in price per unit (Rowley, 2006).
The Quality of Product or Service
The quality of the product can attract customer for example through a product development process shared by the customer and the provider. The essential fulfilment is thereby achieved in that jointly developed product achieves the customers’ expectations. Furthermore, the customer is strongly integrated through the development process, getting to personally know the company contact and therefore develops an emotional connection. Therefore, quality standards, designs, and additional product services can also contribute to customer commitment (Raab, Ajami & Gargeya, 2008).
One way to retain customers through customer service is effective communication. The continuous communication with the customer would lead to an increase in the customer’s loyalty to the company. Classic elements include personal contacts with the customers in the form of customer’s forums, field service, direct mailing efforts, telephone contact and complaint management system. Companies are more active using the internet, email and voice over IP technology. For example, Raab et al. (2008) using the case of the internet based company; stated Amozon.com has recently got success in achieving repeat purchases by tracking not only what individual customer purchases, but also what other customers who also purchased the same item have purchased in the past. Through email communication, customers of CAMTEL can view similar items based on purchases made by other customers. If customer has an interest in a certain topic, certain form of music or certain hobby reviewing items of interest as determined by Amozon.com can be very helpful. If there is lack of such communication efforts, then customers may choose their purchasing requirement elsewhere.
The standard modes of distribution are commerce, catalogues sales, direct delivery and subscriptions. The sales product over the Internet is also becoming increasingly more important. The emails sent to customers detailing similar items of interest often act as customized sales catalogues for the seller.
The customer club is an organisation of the customers who are offered special services because of their membership. Interested customers can join these clubs on a voluntary basis. Special services can include up to date information, payment options and the entitlement to special services, attract offers and private event. A company can at-tempt to offer a membership with extra value to suggest exclusivity or additional benefit. Customer clubs can be divided into closed and open club groups. Open clubs are freely accessible to everyone or to all customers whereas in closed clubs there are limitations, such as membership fees. Not every customer can afford or want to pay these fees. Therefore, it is possible to specifically evaluate members and target groups. The customer club service centre is the hotline of the club. This hotline caters to the needs of the customers and, at the same time, maintains the customer databank.
The success of customer cards depends on the function and services offered, which should benefit the customer. Customer cards have over time evolved from their original function as a means of payment into a marketing tool. Companies attempt to bind the customer to them with original service offers and systems of discount. Whether department stores, supermarkets or gas stations, many companies are currently at-tempting to entice with varying forms of customer cards. Whoever owns one can obtain, for example, a special price, advantages, trust and bonus points as well as credit. Through offering special services, companies validate the feeling of being a regular customer thus encouraging the customer to take the companies more seriously. The consumer is personally addressed, receives offers only for cardholders and can see himself or herself as being a valued company patron. With customer cards, the frequency of visits increased and, on average, a rise in the quantity of purchases is observed.
Customer management motto `do it right the first time` enjoy an advantaged place, complete satisfaction of all customer wishes is not always assured and possible mistakes in the adaptation of services may not be omitted. Effective complaint management should therefore be seen as an important tool. Customers invariably complain when they are not satisfied with the service received or with individual elements of the service. The motive because of all complaints is accordingly the disappointment of expectation that have been experienced concerning a product or service. The service received does not add up the customer’s personal wishes. Therefore, the customers look back to the company, complaints with the hope of solving the problem that has arisen (Christianus, 2002).
Christianus (2002) mentioned that an active complaint management system should truly benefit the company, by re-establishing customer satisfaction, through a handling of the complaint that is as persuasive as possible. In order to assure a professional way of dealing with complaints, the following three aspects should be considered.
Farquhar (2004) describes that, customer retention requires a clear direction from top management which serves as the first motive for customer retention practice. Top management needs to implement more common approach in order to make more receptive towards latest changes within the industry in serving and satisfying their customers. Switching cost plays an important role on customer retention (Chen & Hitt, 2002; Kim, Park & Jeong 2004). It involves all costs incurred when a customer switches between different brands of products or services and it consists of both loss and gain costs. Loss cost occurs when customers withdraw from service providers while gain cost occurs when customers start to promise to new service/product providers (Burhn, 2003; Hongyi & Man, 2011).
Customer retention is highly depends on customers perception towards service delivery system (Kim et al., 2004). It is based on unique attributes of products, value added services, customer treatment, price and convenient transactions greatly influence the customers perception towards the service provider. According to Kim et al. (2004), and Molapo and Mukwada (2011), retained customers tend to have higher levels of perceived service quality which subsequently results in improving firms’ performance. Relationship marketing is an important tool that promotes long-term relationships with all customers in general and profitable customer in particular throughout the process of creating and maintaining effective relationship. Interactions with customers would be effective when sustained through effective relationship marketing, where firms can interact effectively with customers (Farquhar, 2004; Ang & Buttle, 2006).
Employees are able to provide the required products/services to their customers’ beyond their expectations when they are empowered, well-informed and have access to customers’ information (Farquhar, 2004). Price of firm’s offerings can affect customer satisfaction and also it influences customer retention. It is perceived that price set is expected to enhance both post-purchase satisfaction and repurchase intention. Firms should also match prices with value of the products or services to promote repeat purchases which in turn influences customer acquisition and retention. Relationship allows firms to register detailed information about the individual customers. This information will be linked to customer database, which forms the basis for individualized marketing measures. Existence of effective information systems facilitate record keeping of customer membership and would be helpful for the firm’s decision making process (Farquhar, 2004).
A customer life cycle consists of different stages and can be defined through various methods. The most common approach is that of Sterne and Cutler (2000). They proposed different ways of calculating the customer lifetime value. The customer life cycle proposed by them is as follows
The Customer Lifecycle (Clerck, 2014)
– Reach: The first stage of the customer lifecycle is a reach. In this, companies try to attract its potential clients from whom it has designed the products and services.
– Acquisition: In the acquisition stage, companies attract and bring the customers, into the influence sphere of the organisation that was attracted in the previous stage (Clerck, 2014).
– Conversion: In this stage, as once the company has reached to its customers and has established a relationship with them, the customers decided to make the ultimate decision of purchase.
– Retention: This stage comes when the customer decides to buy a product or service for the second time from the same provider. It can be either the same product or service or cross-selling or up-selling (Tsai, 2013)
– Loyalty: All companies desire to reach to this stage in the customer lifecycle. At this stage, the customer becomes more than a customer, or in other words, it can be said that the customer becomes a brand advocate or a loyal partner.
This study intended to examine customer service of CAMTEL South-West Region and its ability to bring about customer retention
The study made used of the descriptive survey research design. Descriptive research involved gathering data that describe events and then organizes, tabulates, depicts, and describes the data collection (Mugenda & Mugenda, 2003). The justification for using this design is that it has the ability to explore the existing status of two or more variables at a given time. It is usually associated with a deductive approach and is conducted usually in business and management research to prove or disprove certain assumed propositions and hypothesis. As such, it was apt to employ this design to examine the effect of customer service especially of CAMTEL on the customer retention in the company.
The population of this study constituted all the customers of CAMTEL in the South-West Region with special focus in Buea Municipality
The sampling strategy used for the selection of a sample can either be random or purposive (Robinson, 2014). This study adopted the purposive sampling technique given that there was not a known size of the total population. As a consequent of this, respondents were selected based on their willingness to participate and their availability. This enabled to target a sample size of 150 respondents. Out of the 150 targeted, just 90 finally participated to the study, giving a response percentage of 60%. Thus, the study sample is 90 respondents who were customers of CAMTEL.
There are two sources of data collection techniques. Primary and Secondary data collection techniques. Primary data collection uses surveys, experiments or direct observations. Secondary data collection may be conducted by collecting information from a diverse source of documents or electronically stored information, census and market studies are examples of a common sources of secondary data.
Data for this study was collected mainly from the primary source using questionnaires. Questionnaires are the most regularly used data gathering method (Saunders et al, 2007) as it is a highly effective way in gathering empirical data from large samples within a short period of time. The questionnaire contained a list of questions either an open-ended or close -ended for which the respondent give answers as such this study mainly focused on the use of questionnaire for data collection
The data for the present study were personally collected by the researcher with the help of a self- structured non disguised questionnaire and interviews. Five points Likert Scale was used in the questionnaire which was a semi-structured questionnaire. The questionnaire framed was simple easy comprehendible and consistent of closed ended questions. The focus of the questions were regarding the customer service, service quality and their impact on the retention customers in the telecommunication sector. Five points, Likert Scale was used in the questionnaires to know the responses of the customers.
The Statistical Package for Social Sciences (SPSS) version 21 was employed to analyze the data. The collected data were first edited, coded, and checked to see whether there was any missing data. For analyzing the quantitative data, SPSS is a widely used technique for managing data adequately and analysis appropriately
Before we present findings of this paper, it is very important to look at the demographic information of our respondents
The demographic information of respondents is deemed necessary because the ability of a respondent to give credit-worthy information on the study variable greatly depends on their background. This section solicited data on respondents’ gender, longevity in the South-West Region, longevity as a customer to CAMTEL and what they use CAMTEL services for. Frequencies and percentages were used to present the demographic profile of the respondents as seen below. Table 1 and the following figures disclose the distributions of respondents according to the variables retained in this research.
Table 1: Distribution of Respondents by their general information
Results on appreciation of customer retention of CAMTEL South-West showed that most respondents 34(37.8%) indicated that they did not derive satisfaction on the total service rendered by CAMTEL in the South-West Region of Cameroon. Substantial proportion of them 31(34.4%) were indecisive on this issue; they neither agreed nor disagreed. On the positive note, some of them 25(27.8%) expressed satisfaction with the services rendered at CAMTEL. As such, 32(35.6%) of the respondents could actually boast that they are loyal to CAMTEL unlike 26(28.9%) of them who totally disagreed. 32(35.6%) of these respondents neither disdained nor accepted this statement.
Also, a good number of these customers 26(28.9%) attested that they would always remain loyal to CAMTEL South-West as far as they were still in the region; 33(36.7%) castigated this while 31(34.4%) were neutral. A good number of them 28(31.1%) were equally ready to and happy to repeat or renew their contracts with CAMTEL; though majority were not.
Almost half of these respondents 43(47.8%) accepted that they solely depend on CAMTEL services for both internet and calls unlike 19(21%) and 28(31.1%) who were indefinite in their responses. 29(32.2%) of these respondents patronized only CAMTEL internet services and other network companies for calls. Nevertheless, 20(22.2%) of them indicated that they would not hesitate to change their telecom provider, if communication is not smooth with CAMTEL South-West.
36(40%) refused this, indicating that their loyalty with CAMTEL was such that even poor communication would not make them to change their telecom provider. More than a quarter of these respondent 34(37.8%) were neutral on this issue. More so, 30(33.3%) of the respondents admitted that their relationship with CAMTEL South-West was a long-term one such that they were motivated to resist offers of CAMTEL’s competitors
The study has noted that customer retention in CAMTEL showed that most respondents are not satisfied with the customer services which reduce their loyalty, their level of contentment in staying with CAMTEL rather leaking on to competitors, their trust of the services and their desire to stay with CAMTEL. There is therefore an urgent need to reestablish a sustainable customer service style that will cause customers to stay loyal to CAMTEL services.
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