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Network effects, Customer Satisfaction and Recommendation on the Mobile Phone Market

  • Thomas Cadet

    (University of Rennes1 - CREM UMR CNRS 6211, France)

  • Sophie Larribeau

    (University of Rennes1 - CREM UMR CNRS 6211, France Keywords: network effect, mobile operator, satisfaction, recommendation)

  • Thierry Pénard

    (University of Rennes1 - CREM UMR CNRS 6211, France)

On mobile phone markets that have reached the maturity stage, customer recommendation becomes a critical focus for operators to attract subscribers from rival operators. Referral propensity is also an indicator of subscriber satisfaction and loyalty. The aim of this paper is to examine the factors that influence customer recommendation. Precisely, we want to know whether referral propensity is more driven by supply-side effects (i.e. characteristics of mobile services) or demand-side effects (i.e. network effects). We use data from French subscriber surveys. The main findings are that referrals depend primarily on supply-side effects: operators’ brand image, the price and quality of services, and customer relations. Price, however, is considered to be a less significant factor than the quality of service when it comes to recommending an operator. Also, information on services and the variety of offerings available, as well as network effects, do not seem to influence referral propensity.

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Paper provided by Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS in its series Economics Working Paper Archive (University of Rennes 1 & University of Caen) with number 201242.

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Date of creation: Dec 2012
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Handle: RePEc:tut:cremwp:201242
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  1. Daniel Birke & G. Swann, 2006. "Network effects and the choice of mobile phone operator," Journal of Evolutionary Economics, Springer, vol. 16(1), pages 65-84, April.
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