Factors Leading Customers to Switch Operators in Moroccan Telecommunication Sector

Factors Leading Customers to Switch Operators in Moroccan Telecommunication SectorFinal Project

GBU 3401: Advanced Quantitative MethodsSpring 2013Done By: Iname Msaidi Zahya El Amrani Saad FoukaraSupervised By: Dr. Ahmed Baijou

Table of Contents

Introduction2Literature review3Descriptive Data4Description of the population of Ifrane:4Methodology5 Independent variables5 Dependent variable6Analysis6Presentation of Estimation:6Before we run the Regression (SPSS) we need to test for the following assumptions:61.Testing for Normality72.Testing for Linearity74.Testing for Multicollinearity83.Testing for Equal Variances or Homoscedasticity8Interpretation:9The significant variables :10Significance of the model (R, R adjusted, and F-test)10Significance of F test11Conclusion11Recommendations:12Appendices:13References:17

Introduction

The most important assets of any company are customers. That is, companies are trying to satisfy the needs and preferences of their customers especially to keep them loyal to their products. Telecommunication sector is a vivid sector where there is a fierce competition that can push a customer to switch from an operator for a reason or another. In our research paper, we are going to figure out the socio-economic factors that lead to churn a telecommunication operator and that affect the customers satisfaction and loyalty. In our paper, we are interested in Moroccan telecommunication operators. Many researches were conducted in this field such as a study done in Bangladesh by Md. Rabiul Kabir, Mirza Mohammad Didarul Alam and Zahidul Alam called Factors determining the Customer Satisfaction & Loyalty: A study of Mobile Telecommunication Industry in Bangladesh and another study conducted in India by P.S.Rajeswari, Dr. Ravilochanan called Churn Behavior of Youth on Telecom Mobile.The aim of our research paper is to answer the following question: What are factors chosen for our model that affects switching telecommunication operators in Morocco?Literature review

Concerning the study of mobile telecommunication industry in Bangladesh (2009), a survey was distributed in order to determine the factors that affect customer satisfaction and loyalty. The model of this research was built to identify the relationship between service quality and customer satisfaction also service quality, switching cost and trust with customer loyalty. For conducting this study, 300 pre-paid mobile subscribers perceptions were collected from three different operators which are Grameen Phone, Bangla-link, and Aktel through a survey questionnaire. Based on their regression analysis, they found that there is a linear relationship between the service quality and customer satisfaction. Also, they found that 10.2% of the variation in customer satisfaction is explained by the service quality. The regression analysis showed also that there is a significant relationship between the service quality and customer loyalty. It was found that only 4.6% of the variation in customer satisfaction is explained by the service quality. Another linear relationship exists between the switching cost and the customer loyalty. Only 5.4% of the variation in the customer loyalty can be explained by the switching cost. The regression analysis indicated a linear relationship between the trust variable and the customer loyalty. 38.1% of the variation in customer loyalty is explained by the trust. This research was helpful for researchers in Bangladesh since it allowed them to expect a mobile operators explosion. The second study conducted in India had a purpose of investigating the operational factors that influence the loyalty of customers towards Indian mobile telecom sector. Primary and secondary data were collected through questionnaires, previous research findings and telecommunication reports. The sample was composed by 200 respondents within the age group of 18-34. Thanks to this research, they found that telecom marketers have to improve the performance of Internet services and in designing tariffs plans through conducting some differentiated marketing strategies. That is, the study showed that Indian telecom operators should keep good quality of phone call, coverage and quality of SMS.

Descriptive DataDescription of the population of IfraneIfrane is one of the most touristic places in Morocco that is situated on the Atlas. According to the statistics of Ministre de la sant in 2010 , the population of Ifrane was 153.888 and it is expected to grow to 163.476 in 2015. (Ministre de la sant, 2010)The data of our project was gathered in the region of Ifrane, mainly down Town and near restaurants and cafeterias, March, and Ain Vitel. Surveys were conducted during 3 successive week-ends from 10 am to 9pm.

Friday 26th, Saturday 27rd , Sunday 28th Friday 3rd, Saturday 4th , Sunday 5thFriday 10th, Saturday 11th , Sunday 12thThe sample size was 308, male and female who came to Ifrane from all regions of Morocco to spend their week-ends and vacation holiday.

Descriptive Statistics is as Follows :

MeanStd. DeviationN

churnRate1.81.392308

Gender1.6071.48918308

CurrentOperator1.8636.93131308

MonthlyIncome3.14942.04281308

SatisfactionLevel2.73051.13090308

Tarrifs3.20781.11066308

NetworkCoverageQuality2.61041.22041308

QualityofCustomerService2.70131.30211308

Methodology

Definition of variables:Independent variables

1. Gender: male or female ( how can gender affect churn rate telecom operators).1. Current operator: how can the current operator that a customer is using affects his/ her intention of switching his/her telecom operator.1. Monthly income: how can the monthly income of a customer affect his/her decision of switching from a specific operator to another.1. Satisfaction level: it is a measure of how services that are provided by a company meet the expectations of its customers.1. Tariffs: how can tariffs charged to customers affect his/ her decision of switching the operator. 1. Coverage network quality: refers to the quality of the network that transports traffic if it is good or not.1. Quality of customer service: refers to the provision of the service and product to customer before, during and after the purchase. Dependent variable

The dependant variable, the change of operator, is a binary variable:-It will be coded as 0 if the customer will not switch the operator.-It will be coded as 1 if the customer has an intention to switch the operator.We will be based in our analysis on regression methods. We will first check the following assumptions: linearity, normality, independence of errors and the equality of variances. We will use the necessary test methods ( t- test statistics or Z-test) to evaluate the relationship between the independent and the dependent variables. We will need to use the SPSS to run the multiple regressions.

The model:Churn rate (change of operator)i = 0 + 1 Gender( X1) + 2 current operator( X2) + 3 monthly income( X3) + 4 satisfaction level ( X4)+ 5tariffs ( X5) + 6coverage network quality ( X6) +7quality of customer service service ( X7) + Analysis Presentation of Estimation

Before we run the Regression (SPSS) we need to test for the following assumptions: Normality Linearity Autocorrelation Multicollinearity ( to test if predictor variables are themselves highly correlated)1. Testing for Normality : (Appendix 1) H0: Residuals follow Normal DistributionH1: Residuals Do Not follow Normal DistributionThe demonstration is based on SPSS output of K-S test, we found that the residuals are normally distributed because of horizontal lines in the graphs 2. Testing for Linearity :(Appendix 2) H0: Dependent and Independents variables are Not linear. (There is not a significant relationship between Changing Operator, Maroc Telecom, Mditel, Wana, and these factors: Gender, Current Operator, Monthly Income, Satisfaction Level, Tariffs, Network Coverage, and Quality of Customers Service. H1: Dependent and Independents variables are linear.(There is a significant relationship between Changing Operator, Maroc Telecom, Mditel, Wana, and these factors: Monthly Income, gender, satisfaction level, tariffs, coverage network quality, quality of customer service).Excel was used to test linearity of every single independent variable (X) and the dependent variable. After plotting the Y axis against each of the independent variable we found that linearity is not achieved. To solve the problem, we added a log, a square, or a square root. But still linearity is not achieved because of the nature of our data, (we have dummy variables, Gender,, etc) .3. Testing for Autocorrelation : (Appendix 3)H0: Residuals are Not correlatedH1: Residuals are auto-correlated. In this model the Durbin-Watson equals to 2.560. This means that, 2