Empirical Study Of The Impact Of The Reward Program On Customer Retention In Telecommunication

At present, the unprecedented growth of competition in the telecommunications market has raised the importance of retaining current customers. Retaining existing customers is much less expensive, and will gain higher profits than recruiting new customers in a mature telecommunication market. Furthermore, the relevant study of the reward program in the retail, financial and aviation industry have proved that the reward program is a very important relationship marketing instrument (RMI), which has great effect on customer behavior. In contrast, few studies have examined the reward program in telecommunication industry. The reward programs are popular in telecommunication industry, how the reward programs affect customer retention and whether those can retain customers or not still need to study deeply.This paper proposes hypothesis based on literature and presents the model of customer retention in telecommunication industry. In this model, the effect of the perception value of the reward program, switching costs and customer satisfaction on customer retention are considered. And the switching cost and customer status (online time, the amount of services, average revenue per user (ARPU), redeem experience) as moderators are also considered, and the mediating effect is analyzed. This model is tested by Logistic regression used questionnaire data.The results show that the degree of fitting of the model is very better, the improvement of the perception value of the reward program, switching costs and customer satisfaction can enhance the probability of customer retention. And the effect of customer satisfaction on customer retention is more stronger than switching costs and the perception value of the reward program. For customers who have higher ARPU and redeem experience, the effect of the perception value of the reward program, switching costs and customer satisfaction on customer retention is weaker, and the mediating effect of redeem experience is larger than ARPU. However, the mediating effect of switching costs, online time, and the amount of services is not proved.This study analyzes the effect of the reward program on customer retention, and the results show that the reward program is effective in telecommunication industry in China. This study not only expands the reward program studying area, but also shows some suggestions on retaining customers of telecommunication operator.