Need for Indian Telecom Service Providers to Adopt Loyalty Programs

Need for Indian Telecom Service Providers to adopt loyalty programs

1. India is the fastest growing mobile telephony market in the world. The telecommunication industry is growing at a neck break speed with leading players lapping up mobile subscribers by millions. The country's telecommunication market is the 4th largest in the world in terms of wireless subscribers and 5th largest in terms of total telecom subscribers. After growing its wireless (GSM and CDMA) subscriber base at a CAGR of over 122% during the period January 2004 to January 2007, the country is expected to take the number to 500 m telecom subscribers by the end of March 2010.

2. The problem is that despite the average use of mobile phones being the highest at 287 minutes a month, India has average revenue per user (ARPU) of around $8 (approximately Rs 350). Australia has the highest ARPU of $33 followed by Singapore with $32 and China at $12. The global average ARPU is a little over $ 21. Information technology research firm Gartner predicts that the ARPU in India is set to fall even further to $3-5.

3. Low ARPU is caused by the intense competition and the inherent price sensitive nature of the Indian market. In a bid to target low-end users and increase penetration in the Hinterland, players in the industry slashed prices, thereby causing low ARPU.

4. Despite the low ARPU, the Indian telecom players are compelled to provide highly proficient customer support because customers tend to compare customer support of one service provider with another and also of the telecom service category