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Between in and out

Markets are the playing field for product and service providers, and their customers too. In reality a battlefield where the free-play of market forces gives the customer many choices as providers showcase to ‘win’ them.

Actually, it is a mouth-watering prospect for those who can stomach a fight. A well-prepared student eagerly awaits the exams; a well-bodied gladiator relishes a challenge; a confident provider looks forward to unleash products and services in a market full of competitors.

While competitors keep a tab on the market shares and the movements there is a complex interplay of a variety of factors that influence the outcome. For products it could be superiority, and for service it could be a technical edge.

If we study the case of telecom, it has some interesting lessons for those outside the industry as well.

20th January, 2011 was a landmark day both for the mobile network operators and subscribers alike in India. After months of speculation, the much awaited Mobile Number Portability (MNP) became a reality.

For a change both the provider and the customer were looking forward to it. The operators rubbed their hands in glee at the tempting prospect of poaching and the customers who had heard about being kings, had a chance to feel like one.

After a little over a month of MNP, the Department of Telecommunications released the following figures:

Between in and out

 

 

 

 

Like a balance sheet, conventional wisdom suggests that we look only at the last column which represents net additions. However to a strategic thinker, these numbers reveal much more than what they display.

Let’s understand what each column tells us.

The first column, ‘Subscribers in’ indicates the customers acquired and is definitely an asset to the company. It reveals the power of attracting new customers. It is a validation of all the marketing efforts and is harvest time for the seeds sown earlier. This indicates that the customers have dumped their existing provider in your favour. Smile!

The third column, ‘Net addition’ indicates what was gained minus what was lost. This equals to net gain or net loss. After all, in business, you win some and you lose some, and if at the end you have gained more than what you have lost, you have earned yourself a reason to feel good. Continue smiling.

The second column, ‘Subscribers out’ is what concerns a long term player. This column represents your dissatisfied customers. They have chosen to part ways with you – either because you were unable to meet their expectations, or your competition promised a better product or service. This is an alarm that your service and delivery is poor and found wanting.

To many the only concern is the net effect in business. As long as we are getting more than what we are losing, there is little cause for worry.

This is a Trojan horse. It is likely to hit you badly before you realize it. Focussing only on the net effect is like collecting water in a bucket full of holes. You are so happy with the constant flow of water that you hardly notice that a lot of water is dripping out all the time. You take cognizance of this only when the level starts dropping. We can keep on adding new clients but if we can’t hold them, we cannot win the long term game.

With competition in every business segment, there is nothing much to choose between products or services, and no one can be expected to have the winning edge for long. Players, new and old keep blunting the competitors’ edges and discovering their own in the quest to capture market shares. While a lot of emphasis is paid to attract new customers, the focus should also be on plugging the holes in the buckets or retaining what they already have i.e. satisfied customers.

We breathe in and out to survive, but success in the market is what we keep in, between.

The Article originally published at DQ Week, 20 May, 2014 http://www.dqweek.com/dq-week/news/214924/between-in-out

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