BALANCING CUSTOMER ACQUISITION AND RETENTION WITH CAPACITY EXPANSION IN A FIBER-TO-THE-HOME BROADBAND SERVICE PROVIDER

• Main Author: Victoria Sandroto, Indah
• Format: Dissertations
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/44108
• Institution: Institut Teknologi Bandung

In facing fierce competition nowadays, companies strive for loyal customers. Therefore the concept of customer relationship management (CRM) is growing very rapidly. Customers are expected to keep making purchases and provide profits for the company. There are two main activities in CRM, namely customer acquisition and customer retention. In addition to retaining existing customers, companies need to attract potential customers to become first-time customers as well. One of the main profit metrics for CRM is customer equity (CE). The research issue is based on literature study and preliminary study to PT Telkom Indonesia (Persero) Tbk (Telkom). Based on these, the aim of the study is to develop a model of balancing acquisition and retention in customer relationship management (CRM) process that could increase customer equity (CE) in a certain period of time and take into account activities of: (1) capacity expansion, (2) budget allocation for acquisition, (3) budget allocation for retention, (4) synchronization between acquisition and capacity planning, and (5) synchronization between acquisition and retention. Activities number (1) and (2) are actual conditions, while number (3), (4), and (5) are proposed conditions. The interrelationships among activities above in an attempt to boost customer equity were poured into seven research propositions. The model was developed in an endeavor of being able to explain the research propositions that were built so that the research could contribute to knowledge advancement in the area of balancing acquisition and retention as well as providing managerial implications. The approach employed to develop the model is system dynamics. This approach was selected because it was capable to model multi-issue problems endogenously, thus the causal relationships among variables and the behavior of each variable in a certain period of time could be analyzed in an attempt to boost customer equity (CE). The research model is characterized in seven submodels, namely: Demand, Capacity Planning, Existing Capacity, Capacity Expansion, Customer Acquisition, Customer Retention, and Profit Generation. It is represented in the form of stock flow diagram and causal loop diagram, along with the identification of the main positive and negative feedback loops. The model was simulated using Vensim DSS software for Windows version 7.1. The results showed the importance of integrating three proposed activities policy to the existing condition. The ranks of the three activities based on its ability to increase customer equity in the context of companies that already have high retention rate and experience low take-up rate (utilization rate) are: (1) synchronization between acquisition and capacity planning, (2) retention budget allocation, and (3) synchronization between acquisition and retention.