India has 1.16 billion mobile connections (that is huge), making it the second largest market in the world. With this connection base and low data costs, it is not very surprising that the country’s networks today are transporting more than 10 million TBs of data in a quarter, higher than that of the US and China combined.

Accompanying the recent growth in mobile data traffic, the country has also witnessed tremendous telecom M&A, reducing the number of mobile players from 13 in 2016 to only four in 2018.

Why does any of this matter?

Because, consolidation delivers an opportunity for surviving players to acquire new customers, requiring an understanding of customer preferences and brand switching behaviour.

You only need to look to porting request trends to see this brand switching in action: requests in the country have witnessed an average growth rate of around 30 per cent over the last four years, while connections grew at an average of 6 per cent over the same time (see chart, below, click to enlarge).

So, what is driving this behaviour? While we know that Reliance Jio disrupted the market, there are other factors that affect the brand switching behaviour in consumers.

Price perception
India is a prepaid driven market with a large share of price sensitive customers. It’s no surprise, then, that pricing has a major impact on brand switching with customers moving to a new operator when they feel prices surpass the reference of “reasonable.” It’s even less of a surprise that operators understand this and revise their tariff plans frequently to cater to individual needs and requirements.

A good example of pricing strategy in India comes from Reliance Jio, which captured more than 20 per cent market share within two years of its launch, riding on an aggressive strategy of low tariff plans. Consequently, the new entrant grabbed a significant market share from incumbent operators. Bharti Airtel and Vodafone India joined the league and played the price card to attract and retain the customers resulting in the tariffs as low as $2.50 per month for unlimited voice and 1.5GB of data per day. Where one operator leads, the others generally must follow.

Brand image
Brand image is a result of myriad strategies and messaging opportunities: word of mouth; adverts; public reputation building; and marketing communication.

In India, Airtel and Vodafone maintained a brand image of network reliability and high-end customers, while Idea had affiliated its image to the youth. On the other hand, Reliance Jio presented itself as a cost-effective brand. Based on these images, customers would gravitate towards the brand that better aligned to their needs.

In the face of stiff competition, however, this has had to change: operators are now connecting their brand images with value added services and converged offerings, with the focus on increasing their market shares.

Ease of portability
Ease of number portability acts as a catalyst to customers’ switching behaviour. It doesn’t cause switching, but it sets the stage for one operator to more easily poach subscribers.

Yet, if tremendous growth in porting requests weren’t enough to create strong competition, the Indian government and policymakers are taking steps to further ease the process of switching among the brands. The Indian regulator, TRAI, has proposed to reduce the time taken by an operator to give a clearance to porting requests within the same circle to two days from a mandate of four days currently.

The Indian mobile telecommunication industry is entering a transition period: due to easy access to information and a wide range of offerings it is easier than ever before for customers to switch between service providers.

While we might understand the factors which have impacted the brand switching in the past, operators also need to consider strategies that will help them to retain customers. Operators understand this and are now moving away from conventional retention strategies, instead finding progressive solutions to make their customers remain loyal.

For example, as the market shifts from a voice- to data-driven economy, operators are now offering data-driven solutions to customers as their value added proposition including converged offerings, partnerships with OTT players to offer benefits like free annual subscriptions to Amazon Prime or Netflix, to their customers. This is a common strategy in many mature markets, but the fact that it’s now a feature of service offers in India is telling. It points to impressive development in only a short amount of time.

As tariff wars have reached maturity, it’s only natural to expect service wars to ensue as a customer retention feature. Where India has moved to quickly catch up with the rest of the world in terms of data usage and, now, customer retention, it will be impressive to see what innovations are coming.

– Radhika Gupta – head of Data Acquisition, GSMA Intelligence
– Lakshya Rastogi – research analyst, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.