Abstract
This paper introduces a database marketing strategy to help customers pay less for mobile telecommunication services. Many customers are subscribing to the wrong calling plans, and pay more because it is difficult for them to forecast their future calling patterns and to evaluate the complicated pricing schedules offered by firms. By encouraging those customers to switch calling plans, a company is shown how to increase its long-term profits through increased retention rates although it will lose its short-term profits. Based on the authors' research of 10,000 randomly-selected customers from a mobile telecom company, it was discovered that customers with the correct calling plans have higher retention rates when compared to customers with the wrong calling plans. About 40 per cent of customers are subscribing to the wrong calling plans. Additionally, not all customers with the wrong calling plans should be encouraged to switch to the optimal calling plans. From the authors' empirical application, this marketing strategy is shown to be worth implementing for approximately 20 per cent of those customers with the wrong calling plans.
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Joo, YH., Jun, JK. & Kim, BD. Encouraging customers to pay less for mobile telecommunication services. J Database Mark Cust Strategy Manag 9, 350–359 (2002). https://doi.org/10.1057/palgrave.jdm.3240083
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DOI: https://doi.org/10.1057/palgrave.jdm.3240083