Customer Service as a Differentiator
A Cross-Sectional Study of the Mobile
Market of Bangladesh
. Background of the Study
Findings of qualitative study..................................................................................................6
The big question:....................................................................................................................6
Rationale of the study.............................................................................................................7
Objectives of the Research......................................................................................................7
Hypothesis..............................................................................................................................7
. Executive Summary:.................................................................................................................8
Methodology:...........................................................................................................................10
Scope:....................................................................................................................................10
Limitations:..........................................................................................................................10
Sampling type:.....................................................................................................................11
Sample size:..........................................................................................................................11
Field survey method:.............................................................................................................11
ontribution of research:............................................................................................................11
. Analysis techniques used:.......................................................................................................11
. Findings & Recommendations:...............................................................................................12
Reliability:.............................................................................................................................12
Distribution of Sample.........................................................................................................13
What is Quality Customer Service?.....................................................................................15
Relationship between Quality of Customer Service & Impression about Operator.............17
Correlations # 1.................................................................................................................17
Correlations # 2.................................................................................................................18
Correlations # 3.................................................................................................................19
Quality of Customer Service: Determining the Key Components........................................20
Quality of Customer Service Determines Degree of Customer Retention..........................21
Perceptual position of the four operators (in eyes of the customers):..................................23
Recommendations:...................................................................................................................25
Limitations:.......................................................................................................................... 25
Conclusion:..............................................................................................................................26
Background of the Study:
Differentiation, as opposed to price-focus, is a feature-based strategy to outperform ones
competitors. This approach primarily focuses on creating a separate or unique identity of the
company or products to the eyes of customers. Whereby, price-based competition emphasizes
price cutting (cost cutting) and other methods of aggressive pricing, differentiation focuses on
a quality perspective by adding new or unique features to the offerings. In Bangladesh, mobile
operators have been unable to create any differentiated positioning in customer perception,
leading to price-based competition, fragmentation and lower profitability. This paper strives to
prove this hypothesis and offer new insight in mobile service differentiation.
Differentiation strategy is an integrated set of action designed to produce or deliver goods or
services that customers perceive as being different in ways that are important to them. It calls
for to sell non-standardized products to customers with unique needs. (Prof. Ferhat Anwar,
Undated)
Differentiation can be (a) the target market , (b) the brand, (c)a character or a personality, (d)
Positioning, (e) product benefits - More Value-Added (MVA), (f) a single, key persuasive
sentence, and / or (g) integration across communication. The factors can be summed up in five
ways Identity, Personify, Create a new generic, Change the name, and Reposition the
category
Strategies of Differentiation:
Getting into the mind with a new idea or product or benefit is an enormous advantage. An
attribute is a characteristic, peculiarity, or distinctive feature of a person of thing. Leadership
is the most powerful way to differentiate a brand. The reason is that its most direct way to
establish the credentials of a brand. And credentials are the collateral you put up to guarantee
the performance of your brand.
Positioning Strategy: Position is that one thing, that one descriptive sentence or slogan the
company is known for; that one specific idea that first comes to mind about the product; and
that one characteristic that sets the service apart from competitors. (Prof. Ferhat Anwar,
Undated)
Dimensions of Customer Service:
Availability of product or service (to what extent products & services of a company
are available)
Lead time (difference between time of placing the order and delivery-time) variability
System recovery (if something goes wrong, how quickly system can recover)
Presence of shadow system [ability to cater to the specialized needs of favored
customers]
Availability of system information [includes, information availability, quickness,
accuracy and completeness]
Post sale support system [accessories, maintenance, follow-up etc.]
(Prof. Nurur Rahman, Undated)
Findings of qualitative study
Customer retention
The Model
Differentiation in
customer Perception
Quality of
Customer Service
Availability
Lead time
variability
System
recovery
time
Presence of
shadow system
System
information
Post sales
support
The big question:
Is it possible to differentiate (a service offering) based on pre- & post- sales customer
services?
Rationale of the study
Over the last 2 years, Grameenphone Ltd. has invested heavily in developing a aide network
customer service. Value-added services were introduced and specially, access to customer
service has been made available for the wider population. In this backdrop, the
Grameenphone management now wants to find out whether these investments have made
inroad to the customer heart and any position of differentiation has been created in terms of
retaining the customers.
Objectives of the Research
Broad Objectives of the Research: To find out whether quality in customer service retains
customers.
Specific Objectives of the Research:
To find out whether (pre & post sale-) customer service can make an operator
different (better or worse in customer perception) from its competitors -
To identify the effect of product / service availability on customers perception
To identify the effect of lead time variability on customers reaction toward an operator
To identify the effect of system recovery time on customers level of satisfaction
To find whether having a shadow system makes customers satisfied
To identify the effect of system information availability on customers perception
toward an operator
To identify effect of post-sale support system on customer perception
Hypothesis
Ho: Quality of Pre- & Post-sale customer service has direct relationship with the retention
rate of customers.
Executive Summary:
Findings from the study:
There was not reasonable ground to disprove the null hypothesis that quality of customer
service directly related to the retention rate of a customer (time with an operator). In other
words, Quality of customer service has reasonable relationship with the retention of
customers. Besides, other key findings of the study are:
A. Perception of customer service is strongly dependent on eight independent
parameters - Ease of use and customer friendly, Cost effectiveness of customer
service, Easy & cheap information about products & services, Behavior of customer
service people, Lead time variability, Availability & reach of customer service points,
Readiness to go the extra mile, Ease of access to customer service people
B. Quality of customer service can help build positive impression about the operator in
the perception of the customer
C. Quality of customer service can help build loyalty and attachment within the
customer. However, this relationship does not hold true if we try to incorporate timelength of subscription in the equation. As the correlation # 3 shows, people who have
been longer with a particular operator have shown less favorable attitude about the
respective operator
D. The principal component analysis identifies the following 06 components to be
consistent with the factor analysis (in order the importance):
Ease of access to customer service people,
Easy & cheap information about products & services,
Cost effectiveness of customer service,
Availability & reach of customer service points,
Readiness to go the extra mile,
Behavior of customer service people.
Recommendations:
Grameenphone should continue in its path to emphasizing customer service as a key
differentiator while positioning itself apart from other operators.
The key components while defining customer service are- a) Ease of access to
customer service people, b) Easy & cheap information about products & services, c)
Cost effectiveness of customer service, d) Availability & reach of customer service
points, e) Readiness to go the extra mile, f) Behavior of customer service people.
Appeal of a particular service might wear off with the length of time a customer sticks
with a particular operator. So, Grameenphone should continue to redefine the 6-factors
customer service with new features and facilities.
On a more general note, the operator instead of concentrating on price basedcompetition should focus on a qualitative positioning. Otherwise they might soon find
their profit base eroding rapidly.
Grameenphone should identify customer service as a core competence area (in
addition to network quality and value-based services) and continue build on that.
Methodology:
Scope:
The primary scope is to find the answers to the specific objectives as described above
The research will reflect the perception of mobile phone subscribers of Bangladesh
The report will reflect the opinion of the respondents, and findings will be based on those
sampled opinion
The mobile subscribes living within Dhaka city have been taken as the sample frame of the
study; however, the background of the study encompasses the whole mobile industry of
Bangladesh.
Only the subscribers of five operators (GP, Aktel, CityCell, BanglaLink and Tele Talk) have
been considered for the study. Subscribers of any other fringe operators were not considered.
Limitations:
A. Sample sizes for Tele Talk and City Cell subscribers are short of the planned number
(30); so any deductions based on these samples regarding Tele Talk and City Cell
might not be statistically correct
B. Many of the findings & concepts from the qualitative study could not be
accommodated. Some of them (as following) were dropped from quantitative survey:
Development of new features in mobile packages
Role of pricing in customer perception etc.
C. Customer service (a comprehensive construct) was replaced by 6 parameters
product/service availability, lead time variability, availability of shadow system,
system recovery time, availability of system information, and availability of post sales
support service.
D. Respondents of the quantitative survey have shown a tendency to over state the time
for which they are using the current operator
10
Sampling type:
Quota sampling method was employed, where sample units represent the proportional
distribution of the population. Sample elements are individual subscribers of different mobile
operators (Grameenphone, Aktel, BanglaLink, CityCell, and Tele Talk). Sample frame is all
the mobile phone subscribers of Bangladesh. Sample elements were selected based on
convenience.
Sample size:
Sample size is 182 (calculation of the sample structure is given in the appendix # 2)
Field survey method:
As it is a cross sectional study, survey elements were chosen from the subscribers of five
mobile operators. However, individual elements were picked based on convenience. Although
the study covers the mobile phone industry of Bangladesh, the fieldwork was conducted only
in Dhaka. The researcher acted as interviewer. Sample elements were given the questionnaire
on the spot to fill up. The questionnaire was self-administered.
Contribution of research:
Individual: As a student of marketing, I am getting a hands-on learning in the pros & cons of
research. Learning to apply the tools & techniques from classroom to the applied world of
real-life business problems.
Organizational: findings and learning from the study can be used by the mobile operators of
Bangladesh to focus their attention to specific marketing issues like differentiation,
competition and customer satisfaction.
Society: Maybe the learning are minute and fraught with mistakes (of an apprentice),
however, it will add to the total understanding of mobile service marketing in Bangladesh as
very little have been done in areas of differentiation and per se.
11
Analysis techniques used:
Sections of the Findings
Reliability of data
Distribution of sample
Quality of customer service
Relationship between customer service &
Analysis Technique used
Cronbachs Alpha
Descriptive statistics, graphs
Regression model and ANOVA table
Correlation
impression about operator
Test of null hypothesis
Key components for customer service
Paired sample t-test and descriptive statistics
Key component factor analysis
Findings & Recommendations:
Reliability:
The reliability test shows Cronbachs alpha to be .649 proving the data to be reasonably
reliable.
Case Processing Summary
Cases
Valid
Exclud
ed(a)
Total
N
101
%
76.8
31
23.2
132
100.0
A List wise deletion based on all variables in the procedure.
12
Reliability Statistics
Cronbach's Alpha
Cronbach's
Based
on
Alpha
.649
Standardized Items N of Items
.746
17
Scale Statistics
Mean
51.3619
Variance
Std.
of
49.5601
Deviation
7.0399
Items
17
Distribution of Sample
Distribution of Sample According to Operator
Bars show Last Values
60
40
20
0
Aktel
City Cell
BanglaLink
Tele Talk
Grameenphone
Reference Category
13
Distribution of Sample as per Longivity (Time with Current Operator)
Less than 1 yr
1 to 2 yr
Reference Category
Aktel
BanglaLink
2 to 3 yr
City Cell
Grameenphone
3 to 4 yr
Tele Talk
More than 4 yr
Pies show counts
Interpretation: As the above pie-chart shows, Grameenphone has clearly lead the
pack in terms of retaining their customers over the years followed by Aktel. On
the other hand, BanglaLink has majority of their subscribers for less than 1 year.
This fact is consistent with the core hypothesis, as Grameenphone has been
spending heavily on customer service over the years; and currently has more
than 600 customer contact points through out Bangladesh, which provides an
edge over its competitors.
14
Distribution of Sample Based on Operator and Ag
60
50
40
30
Age group of the res
Percent
20
15-25 yrs
10
26-35 yrs
35+ yrs
Aktel
City Cell
BanglaLink
Tele Talk
Grameenphone
Reference Category
Interpretation: Both Aktel and BanglaLink have majority of their subscribers
coming from the age group of 15-25 year; where as Grameenphone has
substantial number of customers who are older than 25 years this fact can have
important implication regarding retention & loyalty as young people are
generally more inquisitive and less loyal; and whenever any new offers come
along they are the first to jump ship.
What is Quality Customer Service?
Customer Service, to the best of understanding, is a construct, which can mean both pre- &
post- sales services. But, when customers talk about quality of service, they usually mean
speed, convenience, availability and other related concepts. So, for our analysis, customer
service has been replaced by the following 8 parameters or concepts:
a) Ease of use and customer friendly, b) Cost effectiveness of customer service, c) Easy &
cheap information about products & services, d) Behavior of customer service people, e) Lead
15
time variability, f) Availability & reach of customer service points, g) Readiness to go the
extra mile, h) Ease of access to customer service people
The following regression model tries to understand the strength and direction of relationship
between these eight parameters (independent variables) and perception about customer
service based on survey results.
Model Summary
Mode
l
R
Std.
Error of
R
Adjusted the
Square R Square Estimate Change Statistics
R Square F
Change
Change
Sig.
F
df1 df2 Change
.
678( .460
.422
.729
.460
12.042
8
113 .000
a)
a Predictors: (Constant), Ease of use and customer friendly, Cost effectiveness of customer
service, Easy & cheap information about products & services, Behavior of customer service
people, Lead time variability, Availability & reach of customer service points, Readiness to go
the extra mile, Ease of access to customer service people
ANOVA(b)
Model
1
Regression
Residual
Total
a Predictors: (Constant),
Sum of Squares
df
Mean Square F
Sig.
51.228
8
6.403
12.042 .000(a)
60.092
113
.532
111.320
121
Ease of use and customer friendly, Cost effectiveness of customer
service, Easy & cheap information about products & services, Behavior of customer service
people, Lead time variability, Availability & reach of customer service points, Readiness to go
the extra mile, Ease of access to customer service people
b Dependent Variable: Overall impression about customer service of current operator
16
Interpretation: From the above regression model, the R score (0.678) and the level of
significance imply perception of customer service is strongly dependent on eight
independent parameters. However, there might be other factors (apart from these 8) to
consider as the ANOVA table shows Residual values constitute a significant portion of the
total sum of squares value.
Relationship between Quality of Customer Service &
Impression about Operator Correlations # 1
Descriptive Statistics
Overall impression Overall impression about
about
current customer
service
of
operator
current operator
Overall impression about Pearson
current operator
Correlation
Sig. (2-tailed)
N
Overall impression about Pearson
customer service of current Correlation
operator
Sig. (2-tailed)
N
.591(**)
.
128
.000
126
.591(**)
.000
126
** Correlation is significant at the 0.01 level (2-tailed).
127
Interpretation: As the above correlation table shows, variable overall impression
about current operator and overall impression about customer service of
current operator have strong correlation (0.591) and they are both
unidirectional. Thus, it can said based on this analysis that quality of customer
service can help build positive impression about the operator in the perception
of the customer.
Interpretation: The following correlation tries to measure the degree of correlation between
the variables feel love & pride to do business with current operator and overall impression
about customer service of current operator. Result of this test also shows quality of customer
17
service can help build loyalty and attachment within the customer (correlation score 0.548).
However, this relationship does not hold true if we try to incorporate time-length of
subscription in the equation. As the correlation # 3 shows, people who have been longer with
a particular operator have shown less favorable attitude about the respective operator
(negative correlation).
Correlations # 2 Descriptive Statistics
Mean
Std. Deviation
Feel love & pride to do business with
3.13
current operator
.956
128
Overall impression about
service of current operator
.968
127
customer
3.39
Correlations
Overall
impression
Feel love & pride to about
customer
do business with service of current
current operator
operator
Feel love & pride to do Pearson Correlation
business with current
operator
Sig. (2-tailed)
N
Overall impression about Pearson Correlation
customer
service
of
current operator
Sig. (2-tailed)
N
.548(**)
.
128
.000
123
.548(**)
.000
123
** Correlation is significant at the 0.01 level (2-tailed).
127
18
Correlations # 3
Correlations
Feel love & pride to do Pearson
business with current Correlation
operator
Sig. (2-tailed)
N
Overall impression about Pearson
current operator
Correlation
Sig. (2-tailed)
N
Time with the current Pearson
operator
Correlation
Sig. (2-tailed)
N
Feel love &
pride to do
business
with
current operator
Overall
impression
Time
with
about current the current
operator
operator
.491(**)
-.278(**)
.
128
.000
125
.001
128
.491(**)
-.033
.000
125
.
128
.710
128
-.278(**)
-.033
.001
.710
128
128
132
** Correlation is significant at the 0.01 level (2-tailed)
Quality of Customer Service: Determining the Key Components
Communalities
19
Sl
01
02
Initial
1.000
Extraction
.562
Lead time variability
Ease of use and customer friendly
1.000
.618
03
Behavior of customer service people
1.000
.644
04
Readiness to go the extra mile
1.000
.648
05
Availability & reach of customer service
1.000
.737
06
points
Cost effectiveness of customer service
1.000
.779
07
Easy & cheap information about products &
1.000
.787
08
services
Ease of access to customer service people
1.000
.809
Extraction Method: Principal Component Analysis.
Interpretation: The principal component analysis identifies the following 06 components to be
consistent with the factor analysis (in order the importance):
a) Ease of access to customer service people, b) Easy & cheap information about
products & services, c) Cost effectiveness of customer service, d) Availability & reach
of customer service points, e) Readiness to go the extra mile, f) Behavior of customer
service people.
Thus, we can conclude a model for determining the quality of customer service:
20
Customer Service = f (Ease of access to customer service people, b) Easy & cheap
information
about
products
&
services,
c)
Cost
effectiveness
ofcustomerservice,dAvailability& reach of customer service points, e) Readiness to go the
extra mile, f) Behavior of customer service people)
Quality of Customer Service Determines Degree of Customer
Retention
Test of HypothesisHo: Quality of Pre- & Post-sale customer service has direct relationship with the retention
rate of customers (time with current operator).
Decision rule: If the mean value of the variable time with current operator is not
significantly different from the mean value of variable overall impression about the current
operator, then there is not sufficient ground to disprove the null hypothesis.
Paired Sample t- Test:
T-Test
Variables compared= longevity with current operator and Overall impression about
customer service of current operator
Paired Samples Statistics
Mean
Std.
Deviation
Std. Error
Mean
21
Pair 1
Time with the current
3.09
operator
Overall
impression
about customer service 3.39
of current operator
127
1.414
.126
127
.968
.086
Paired Samples Correlations
N
Pair 1
Time with the current operator &
Overall impression about customer
127
service of current operator
Correlation
Sig.
.022
.808
Paired Samples Test
Paired Differences
Mea
n
Pair 1
Time with the
current
operator
Overall
impression
-.30
about
customer
service
of
current
operator
Std.
Deviation
Std.
Error
Mean
95%
Confidence
Interval of
the
Difference
Low Upp
er
er
1.696
.151
-.60
.00
df
-1.988 126
Sig.
(2tailed)
.05
Interpretation: The level of significance for T-test is low but not lower than the
critical point (0.05). The Lower and upper limit of the confidence interval
22
contains zero among them. So, there is not enough evidence to disprove the
null hypothesis.
So, quality of customer service has reasonable relationship with the retention of
customers. However, the correlation value of the paired sample variables show a
weak (0.22) relationship among the two variables.
23
F
re
u
q
n
e
y
c
W
h
A
y
te
k
lisD
fernt
0
0
1
0
2
3
0
4
5
0W
6
yA
h
te
k
lisD
fern
t
Perceptual position of the four operators (in eyes of the
customers):
[Ref:
Differentiation
in
Mobile
Market of Bangladesh, by this same
author]
A significant
number
of
the
respondents did not answer this
question, while asked to differentiate
Aktel from other operators based on a
certain factor. This can lead to the
conclusion that Aktel has failed to
create any clear position in the
perception of the customers. Apart
from that- low call charge, 10-second
pulse and features
& facilities
offered by the operator (Aktel) has
been cited as consistent factors with
Aktel. (Fig-3)
Similarly, regarding CityCell most of the
respondents
position
for
struggled
the
to
delineate
operator.
Most
a
of
respondent could only cite the CDMA
technology as the major differentiating
factor for the operator.
(Fig-4)
24
requn
F
cy
W
h
G
y
P
d
retn
fe
tnetqualityfaceurties&
tg
o
e
iv
lo
n
e
w
rp
e
ic
a
o
rv
s
&
g
e
c
w
lo
ris
e
te
a
rn
ife
d
g
k
c
a
p
0
2
0n
4
0
6
0
8
0
0
1
0W
y
h
G
P
fe
d
is
rn
t
However, when asked with the same
question
regarding
GrameenPhone,
most of the respondents talked about
the nation-wide coverage and higher
quality of network for the operator.
(Fig- 5)
h
W
yB
L
in
sd
k
ifern
t
F
req
u
cy
n
e
0
5
0
1
5
0
2
5
0W
3
h
B
yL
in
ksd
ifern
t
Regarding BanglaLink, respondents
could not identify any one or two area
for differentiation, prompting one to
speculate
that
BanglaLink
although
vibrant & dynamic had given away to
many messages cluttering the perception
of
the
customer;
and
forcing
from
forming
any
customers
the
clear
perception about the company.
Results of the above analysis is presented
in the following table:
Table: Perceptual position of the 4 operators (in customer mind)
Area of Focus
GP
Aktel
CityCell
Service,
Low price, 10- CDMA
Coverage & Net secod pulse and technology
Quality
Features
& lower rate
facilities
BanglaLink
No
clear
& position
25
Recommendations:
Grameenphone should continue in its path to emphasizing customer service as a key
differentiator while positioning itself apart from other operators.
The key components while defining customer service are- a) Ease of access to customer
service people, b) Easy & cheap information about products & services, c) Cost
effectiveness of customer service, d) Availability & reach of customer service points, e)
Readiness to go the extra mile, f) Behavior of customer service people.
Appeal of a particular service might wear off with the length of time a customer sticks
with a particular operator. So, Grameenphone should continue to redefine the 6-factors
customer service with new features and facilities.
On a more general note, the operator instead of concentrating on price basedcompetition should focus on a qualitative positioning. Otherwise they might soon find
their profit base eroding rapidly.
Grameenphone should identify customer service as a core competence area (in addition
to network quality and value-based services) and continue build on that.
Limitations:
Lack of availability of the respondents forced the study to be completed with 132 sample
elements rather than the initial 182 (stipulated). However, the researcher tried to meet the 30sample mark under each category of population. At the end, the sample was more or less
representational of the population groups.
26
Conclusion:
There was not sufficient ground to disprove the hypothesis that Quality of Pre- & Post-sale
customer service has direct relationship with the retention rate of customers (time with
current operator). In other words, customer service can give an edge to a particular operator
over its competitors. Grameenphone already has some degree of perceptual positioning
distinct from its competitors (in terms of customer service and network quality). However, the
problem with any service is competitors can quickly catch up with ones position and emulate
Grameenphones current offerings. So, the challenge is to redefine the basic concepts of
customer service (a) Ease of access to customer service people, b) Easy & cheap information
about products & services, c) Cost effectiveness of customer service, d) Availability & reach
of customer service points, e) Readiness to go the extra mile, f) Behavior of customer service
people) with innovative offers and facilities. Only, thus, Grameenphone can stay ahead of its
competitors and create a differentiated position in terms of retaining its customers.
27
28
