Final Proposal_An action plan of Customer Retention Using the distinctive Strategies of IT/IS; A Case Study of Exploration and Production in Oil & Gas Industry
Category : Customer Care Examples, Customer Care Practices, Free Research Proposals, Free Sample Research Proposal, Research Questions Examples
Award Name: MSc in Technology Management
Site Name: Apiit Malaysia
Title of project: An action plan of Customer Retention Using the distinctive Strategies of IT/IS; A Case Study of Exploration and Production in Oil & Gas Industry
Please record which modules your topic is related to: Marketing (MKT). E-marketing
Today the most important business sector in the world is the oil & Gas industry which offers a benefit for every individual, group of people and government sector, given the high commodity prices and increasing the profit of economic.
the dependency on oil and gas products, the every day materials and resources from oil and gas are evident in all aspect of our daily lives (University of Aberdeen, 2006) and by exploration and production of oil and gas in order to impact upon many areas of the workforce it will help to sustain the oil and gas industry because without oil and gas exploration and production the world would literally grind to a halt (University of Aberdeen, 2006).
Recent rises in petroleum prices have spurred many new exploration activities. Spending on world wide exploration and production is estimated to have risen 30 percent in 2006 by US$ 268 billion (Upstream, 2007).
For example crude oil and petroleum products are widely traded and effectively have a single price after allowing for transportation costs and quality differences in more clarification in 1960 would have been worth 6.6 times more in 2005 this mean that the average oil price of $1.9 a barrel in 1960 is equivalent to $ 12.59 a barrel when expressed in 2005 U.S. dollars (World bank, 2007).
The reason behind successful oil & gas companies and becoming world wide business is because the ability to provide a clear approach of products, services, advance technology and successful customer feedback which can offer a higher profit for industry and providing a close-loop process for gathering customer feedback to continuous improve business practice (Parasuraman et al, 1985).
Customers in Oil & Gas industry should be seen as on-going opportunity, to better understand the rational behind this theory and to face the challenge of building customer loyalty, Hunter (2007) identified five types of customer such as: loyal customers, discount customers, impulse customers, need-based customers, and wandering customers.
Ahmad & Buttle (2002) stated that the organization should focus on existing customers because those are the once who can not only provide feedback about products and services, but also work together with suppliers to add-value to a particular service by improving the process.
Through successful customer care or creating an effective customer focus, Oil & Gas industry will be able to provide an opportunity to increase the customer satisfaction/retention, increasing the sales and revenue and creating value for Oil & Gas industry shareholder (Greenberg, 2004).
Focusing and identifying on customers which is the most important factor in Oil & Gas industry because through it Oil & Gas industry will be able to provide a successful program of customer retention plan and ability to retain its customers and satisfy them.
According to Eriksoon & Lofmarck Vaghult (2000) customer retention is central to the development of business relationships, is specific to the context of each firm, and this is rarely recognized in models for customer retention.
Customer retention is important to most companies because the cost of acquiring a new customer is far greater than the cost of maintaining a relationship with a current customer (Ro King, 2005) which have a significant advantages in the form of lower prepayments, increased revenue, improved pricing on securitizations, customer retention has been shown to be a primary goal in firms that practice relationship marketing (Gronroos 1991, Coviello et al, 2002) which mean satisfied and properly served customers are more likely to return to an organization than are dissatisfied customers who could choose simply to go elsewhere (Ovenden, 1995).
The main challenge faced by the mortgage industry is the continued price sensitivity of their consumers as a result the main objectives for many companies is to employ customer retention and development programs that will serve to reduce this price sensitivity and therefore reduce the flight risk of customers (Davis et al, 2007).
In additional customer retention programs allow companies to collect data about their customers, this data can be used to better understand target market, and communicate with customers or to customize future interactions with customers and also can be a relatively inexpensive means of making customers feel special, increase their purchases and recommend prospects (Ro King, 2007). However, successful implementation of customer retention has to be carefully planned, executed, maintained, and measured it also need to be accompanied by customer service, product development, and product deliver strategies that aligned with the targeted customer base (Davis et al, 2007).
Globally the major players in the petroleum industry are Exxon and Shell group, who account for roughly 20% of the world’s production (AL-Ghamdi & Suhail, 2006) and according to Passemard & Kleiner (2000) that the competitiveness of some firms arises from macro economic phenomena directed by exchange rate, deficit of the national budget or interest rate.
The major competitors of oil and gas industry had a good leadership, competent project team, willingness of management to take risk and make changes, technology solution and successful implementation of energy management program will lead the oil and gas industry to be more competitors and providing a successful products and services to its customers (Davis, HA. & Chan, EKS., 2001), Petrochemical industry of Saudi Arabia can be an example of competition in petroleum industries sector which is primarily a petroleum economy with oil revenue representing 90-95% total Saudi export earnings 70-80% of state revenue and around 40% of countries gross domestic product (GDP) (AL-Ghamdi & Suhail, 2006).
Besides the competitive challenges, the Saudi Petrochemical industry faces a number of other challenges. Some of the significant ones relate to a high dependence on a skilled expatriate work-force, high costs of technology transfer, low levels of productivity of the Saudi workforce due to a lack of motivation to work, and the emergence of regional competitors (AL-Ghamdi & Suhail, 2006),
The key strength of Saudi petroleum industry lies in the low-cost of feed-stocks as well as cost of utilities which make the average variable cost lower than of its competitors (AL-Ghamdi & Suhail, 2006).
Ahmad et al (2001) identify the following six economic benefits of retaining customers such as: savings on customers’ acquisitions, a guarantee of base profits, growth in per-customer revenue, reduction in relative operation costs, free of charge referrals of new customers from existing customers and finally price premiums as existing customers do not usually wait for promotions or price reductions before deciding to purchase.
Through customer retention plan Oil & Gas industry can achieve its planning by colleting data and information about its customers which can enhance the Oil & Gas industry to enhance its operation and enhance its position in marketplace.
Previous research into customer retention has focused on the opinion that retaining customers are easier to work with and that a lot of vital feedback can be gained from these customers (Isaksoon & Suljanovic, 2007) and potential advantages of pursuing strategies for satisfying or retaining customers rather than on the concepts themselves (Eriksson, Lofmarck Vaghult, 2000) which will lead the Oil & Gas industry to gain many advantages such as:: employee retention and satisfaction (Reichheld, 1995) providing a long-term relationship strategy between Oil & Gas industry, opportunities for new business, increasing the sales and creating value for Oil & Gas industry’s shareholder (Greenberg, 2004).
Customer retention can be an important factor in Oil & Gas industry because through customer retention, Oil & Gas industry can increase the opportunities to industry and its customers and ability to increase the customers’ profitability in higher level of performance.
The aims of this project are to provide a successful action plan of customer retention plan using the distinctive strategies of IT/IS in Oil & Gas industry, also exploring how individuals and groups in Oil & Gas able to offer a clear structure and ability to provide higher-level of customer retention plan this will lead to an understanding of how the benefits of customer retention plan can drive Oil & Gas industry to be more competitive and to retain its customers.
To examine difference customer care program in Oil & Gas industry.
To examine the importance of customer retention in Oil & Gas industry.
To examine the improvement of customer retention in Oil & Gas industry.
To examine the distinctive strategies of IT/IS that enables Oil & Gas industry measure the customer behavior and attitude.
Stage-1 (Duration one month)
Gather an appropriate materials and resources in Oil & Gas industry. This would include journals, articles, and academic research.
Analyzing the case studies such as: Microsoft, BMW, Shell Company and Petronas Company.
Select the customer retention area in case studies
Stage-2 (Duration one month)
Identifying a development program such as: customer loyalty program, customer retention program and customer satisfaction program.
To identify a development program in order to increase customer loyalty and decrease turnover in Oil & Gas industry.
To understand first hand knowledge from specific numbers of customers from the Oil & Gas industry based in overseas industry.
Stage-3(Duration two month)
Identify the most profitable customer and customer segment.
Exploring how individuals and groups serving the concepts of e-customer retention.
Understanding the process of using the IT/IS strategies in Oil & Gas industry.
Exploring how individuals and groups serving the concepts of e-customer retention.
Stage-4(Duration two month)
Developing the frame work of customer retention plan in Oil & Gas industry through stage-1 and stage-2.
Evaluating the concepts of e-customer retention in Oil & Gas industry.
Testing the frame work of e-customer retention plan from the interview in Oil & Gas industry.
Stage-5(Duration one week)
Deliver a successful frame work of customer retention plan in order to retain customers, and to establish new information and control system.
To deliver a difference customer care program for various industry.
To analyzing the implementation of customer retention in Oil & Gas industry.
To evaluating the need of customer retention in Oil & Gas industry.
To evaluating the need of IT/IS in customer retention in Oil & Gas industry.
To offer successful project of customer retention plan in Oil & Gas industry the following resource are required:
Oil & Gas company experts.
Experts of customer service.
Public and APIIT library.
The list of references
Ahmad & Buttle 2002, Customer retention management: a reflection of theory and practice, [online], Sydney, Australia, Available from http://emeraldinsight.com/0263-4503.htm, [Accessed 2 December 2007].
AL-Ghamdi & Sohail 2006, Sustaining Competitive advantage in the global petrochemical industry: a Saudi Arabian perspective, International Business and Entrepreneurship Development, 3(1/2), pp. 4-17.
Ahmad et al, 2001, Customer retention: a potentially potent marketing management strategy, Journal of Strategic Marketing, No. 9, pp. 29-45.
Coviello et al 2002, How firms relate to their markets: an empirical examination of contemporary marketing practices, Journal of Marketing, [online], 66(3), Available from http://www.emeraldinsight.com, [Accessed 2 December 2007].
Davis, H.A. & Chan, EKS. 2001, Facilities, [online], 19(7/8), Available from http://www.emeraldinsight.com, [Accessed 2 December 2007].
Davies et al 2007, Customer Retention in the consumer Finance Industry, [online], Available from http://www.pwc.com, [Accessed 2 December 2007].
Eriksson, K. & Vaghult, AL. 2000, Customer Retention, Purchasing Behavior and Relationship Substance in Professional Services, Industrial Marketing Management,[online], 29(4), pp. 362-372, Available from http://www.emeraldinsight.com [Accessed 2 December 2007].
Gronroos, C., 1991, The Marketing Strategy Continuum: toward a marketing concept for the 1990s, Management Decision, [online], 29(1), Available from http://www.emeraldinsight.com, [Accessed 2 December 2007].
Greenberg, P. 2004, CRM at the speed of light: Customer Relationship Management, Essential Customer Strategies for the 21st Century, 3rd ed, McGraw-Hill, United States of America
Hunter 200, The 5 Types of Customer: Increase Your Loyal Customer to Increase Your Sales, [online], Canada, The New York Times Company, Available from http://sbinfocanada.about.com/od/customerservice/a/customertypesmh.htm, [Accessed 2 December 2007].
Isaksson, K. & Suljanovic, M. 2001, Customer Retention in Service Firms: Three case studies of companies in the Transport-Logistic Industry, [online], Lulea University of Technology, Department of Business Administration and Social, Available from http://www.emeraldinsight.com, [Accessed 2 December 2007].
Ovenden, A. 1995, Keep your customers happy and your competition will slowly fade away, The TQM magazine, [online], 7(1), pp. 46-49, Available from http://www.emeraldinsight.com. [Accessed 2 December 2007].
Parasuraman et al 1985, a conceptual Model of service quality and its implication for future research, Journal of Marketing, [online], Vol 49, PP. 41-56, Available from http://www.emeraldinsight.com, [Accessed 2 December 2007].
Passemard, D. & kleiner, B.H. 2000, Competitive advantage in global industries, Management Research News, 23(7/8), pp. 111-117.
Reichheld, FF. 1995, Loyalty and the renaissance of marketing, Marketing Management, 2(4), pp. 10-21, Available from http://www.ermeraldinsight.com, [Accessed 2 December 2007].
Ro King 2004, Customer Retention Programs, [online], New York, The Alexander Group, Available from http://www.saleslobby.com/Mag/0601/FERK.asp, [Accessed 2 December 2007].
University of Aberdeen 2006, Overview of the North Sea Oil and Gas Industry: A key business training event for non-specialists, [online], UK, Available from http://www.abdn.ac.uk/northseaoverview/intor.shtml, [Accessed 2 December 2007].
Upstream 2007, E& P players plan New York firework, [online], Available from http://siteresoruces.worldbank.org/INTOGMC/Resources/cambodia_oil_gas_newsletter_1, [Accessed 2 December 2007].
World bank 2007, Introduction to Oil and Gas, [online], Available from http://siteresoruces.worldbank.org/INTOGMC/Resources/cambodia_oil_gas_newsletter_1, [Accessed 2 December 2007].
Project plan: (refer to appendix for project plan).