There is a valuable story hidden in your customer data – unlock it with propensity scoring analytics to reduce churn
Consider it survival of the fittest. Every company in every industry experiences voluntary churn. A commitment to improving customer retention strategy can enable an organization to gain a competitive edge on increasing the life time value of a customer while optimizing the customer experience.
From coffee lovers who suddenly decide to get their daily fix from Starbucks rather than Dunkin Donuts to more extreme cases, like enterprises choosing an entirely new supply chain solutions provider, managing customer churn is an important part of business survival.
High churn, however, is especially prevalent in the telecommunications industry. With increasingly competitive choices for services like cable TV, wireless and internet, customers are constantly jumping between companies for the best prices and products.
An estimated 75 percent of the 17 to 20 million subscribers signing up with a new wireless carrier every year are actually churning from another provider, according to Princeton University alumni, Database Marketing Institute founder and expert in the field, Arthur Middleton Hughes. He says customer retention boils down to one basic concept.
“Wireless companies today measure voluntary churn by a monthly figure, such as 1.9 percent or 2.1 percent. This is the average number of customers who quit their service per month,” Hughes wrote in his recent blog post. “Annual churn rates for telecommunications companies average between 10 percent and 67 percent. Industry retention surveys have shown that while price and product are important, most people leave any provider because of dissatisfaction with the way they are treated.”
When a customer leaves, telecom companies not only lose potential revenue from future services, they lose the hundreds of dollars they invested acquiring that customer. Since attracting new customers doesn’t come cheap, leveraging analytics to best manage customer experience is so imperative for the success of these organizations – and demonstrating this focus is an increasingly important means through which to maximize the life time revenue from the customer.
A Customer Focus Across the Lifecycle
By the time most companies detect a customer at risk of jumping ship, it’s often too late. If customer service satisfaction is a leading cause for customer defection, how can companies better engage them to prevent their departure? With the need for an increased market focus on enhanced customer experience, more specific avenues are needed for companies to create meaningful interactions with customers throughout their lifecycle. If customer service is where more attention needs to be spent, readily available customer history data including usage and customer account data as well as customer service interactions can become a basis to develop valuable and highly accurate predictive insights to detect propensity of a customer to churn.
Customer lifecycle management (CLM) is so much more than the interactions between customer service departments and frustrated customers – it assesses all touch points of business and customer interaction, aggregating details that tell the story of a customer relationship as it ebbs and flows. By fully leveraging the richness of internal data and combining it with externally available data about customer preferences and behaviors, businesses can create unique perspectives of each customer that can be used to understand customer behavior and optimize the customer lifecycle.
When analyzing customer data regularly, companies should ask themselves: for existing customers, what are the indicators to proactively target potential churners and what prescriptive strategies can be applied to retain them with a positive experience?
Recognize Your Top Customers
Savvy companies must think of all customer relationships as important, of course, but need to consider the following assessment for churn management: will the cost of retaining a customer exceed his or her future lifetime value, causing a loss in revenue even if the company was to preserve the relationship?
Because not all customers are created equal, it’s important to pay particularly close attention to the needs of your best customers – especially in an industry like telecom. When thinking of the 80/20 rule, is your company spending enough time tailoring experiences for customers who have been with the company longest? Who pay their bills on time, every time, month after month? Spending more resources – and applying more insights from data analytics to customer outreach – will enable you to manage churn effectively, in particular with the customers you value most. Asking these and other questions is key to effective customer lifecycle management and helps provide focus. Finding optimal answers to those questions hinges on creatively applying advanced analytics and discovering insights in the vast amounts of data available.
Know Your Customer Better
Decreasing churn isn’t the only benefit of applying predictive analytics to telecom customer data. For example, discovering the right time to upsell or cross-sell a customer is an illuminating opportunity for any organization that could yield enormous results. Combatting low margins in the telecom industry means being highly conscious of opportunities to drive new revenue streams from the right customers – and the right CLM techniques for data analytics helps companies assess when the timing is right to engage customers on new packages and options without being invasive.
Keep Customers Happy by Preventing Billing Errors
Data and analytics can also help keep customers satisfied through correct billing and collections operations. Imagine receiving an incorrect bill, a duplicate bill or a bill for a service for which you’ve already paid. Having automated business rules monitoring your data integrity reconciles payments, checks for duplicate transactions and analyzes completeness automatically which eliminates billing snafus from ever happening, keeping customers happy and loyal – a foundation for continued retention.
Understanding customers in the telecommunications industry is vital to success. A proper customer lifecycle management strategy leveraging data integrity and predictive analytics makes for an unprecedented competitive advantage in a highly-competitive environment.
