Adapt quickly to retain customers

KUALA LUMPUR--Local telecommunication companies are facing new challenges in customer management, and will need to adapt their businesses quickly to encourage customers to stay loyal, according to global consulting firm Frost & Sullivan.

Speaking during a joint media briefing with Oracle Malaysia on Tuesday, Manoj Menon, partner and managing director of analyst firm Frost & Sullivan Southeast Asia, said these challenges include learning to more effectively utilize information gathered by the telcos' customer relationship management (CRM) systems.

"The new communication paradigm centers on the user," Manoj said. "[As such], if telcos want to [continue] participating in this competitive space, they had better get to know their customers really well."

He said consumers today are not just merely using the Internet to surf, they are participating and personalizing the Web to their preference.

This phenomenon, driven mainly by Web 2.0 companies such as Google, MySpace and You Tube, is changing the way the consumers interact with service providers, he added.

"These Web 2.0 companies' business models revolve around the consumer," Manoj explained. "They have built such a strong brand loyalty that despite not having any contractual obligation to revisit the sites, customers always come back."

"In short, they have figured out how to monetize customer loyalty," he noted.

Manoj said telcos need to position themselves the way these Web 2.0 companies have done, and develop a similar roadmap to ensure customers stay loyal.

"We believe that significant revenue streams for telcos by 2010 would come from the advertising business model," he said. "As this happens, telcos have to learn how to monetize advertising-based revenues."

"This is especially important as Malaysia is about to implement mobile number portability (MNP). Telcos will need to capitalize on the information they have about their customers--from location information to billing patterns--to help them retain subscriber numbers and reduce churn."

MNP allows users to switch services from one operator to another without having to change their phone numbers. It has been implemented in countries, such as Hong Kong and Singapore. Malaysia is expected to implement MNP by end-2008.

Andrew Lau, general manager of service industry at Oracle Malaysia, said it is hard to predict how the implementation of MNP would affect the industry.

Lau said: "But what's significant is that telcos will not want to lose their customers to their competitors. A recent study by a U.S.-based research firm estimated the cost of acquiring a new customer to range between US$50 and US$200, while the cost of retaining a customer ranges only between US$20 and US$30.

"This is why CRM systems employed by telcos need to evolve from being in silos, to one that is driven by services, as this is the key to helping them retain their customers," he said.

Edwin Yapp is a freelance IT writer based in Malaysia.