Customer retention centres: A sign you’ve already failed

25th Jul 2011

Cindy Etsell outlines how telcos need to break down departmental barriers and use customer information to increase loyalty and prevent churn.

The telco market faces a number of challenges with the mobile market now exceeding saturation, fierce market competition, the emergence of mobile banking and bandwidth continuing to rise. Against this backdrop, even the smallest level of dissatisfaction can lead customers to deflect.
To deal with these challenges, many telcos are establishing dedicated customer retention centres to handle unhappy clients and lure them back in with cut price offers. But taking action from a departmentalised view can risk relationships with profitable customers. To my mind, dedicated customer retention centres are a sure sign that the company has already failed to engage individuals and keep them loyal.
The problem with retention centres
There are many ways to reduce churn but tackling it from one angle – retention – can damage relationships. This is especially the case if departments are disconnected with each having a different view of their individuals and a different objective for intervention programmes.
There are a number of issues with retention centres. Firstly they are established as yet another siloed department, separate from marketing, customer care, sales and customer relationship management activities. This leads to a lack of data integration, making it more difficult for telco executives to gain a complete holistic view of behaviours. Secondly the success of retention centres is typically measured by call resolution rates or call duration. Both of these metrics measure short-term cost-savings but do not help long-term profitability.
Telcos need to bring information together to better see where value is created in the customer lifecycle and maximise it, rather than further segmenting touch-points. This will give telcos a competitive edge, transforming them from a volume business focused on who sells the most into a value business that drives profitability from good customer relationships.
Managing churn
A diverse customer base and a wide portfolio of products and services (especially with the introduction of triple and quad-play offerings) makes it increasingly difficult for telcos to identify and prevent churners. They may have different reasons and dissatisfaction factors as well as being influenced by peers in different ways. An increase in prepaid mobile services has also limited the data available to telcos. Without integration with external data sources, these individuals can be difficult to target for retention. 
Reducing churn is not just about stopping people from leaving. It requires adapting their experience across all touch points and structuring the organisation in a different way to respond consistently, systematically and successfully manage the customer lifecycle. The key question for telcos is: ‘What can we do to reduce churn without reducing the average revenue per customer?’ to which analytics can provide the answer.
The importance of more informed customer segmentation strategies
With margins being increasingly squeezed in a highly competitive market, data strategies need to focus on learning why people do things not simply what they do. Deeper insight into behaviours will enable telcos to shape data strategies that determine new metrics which link back to actual behaviours, leading to loyalty.
Walking beside customers to learn what influences them is an important first step in establishing an effective segmentation strategy. Once a better knowledge of trends and issues is gained, telcos can better know how to establish the best strategies to start to influence how they behave.
If telcos truly want to prevent churn, they need to integrate analytics across all touch-points including marketing, customer care, call centres and customer relationship management functions. Analytics can help telcos move towards ‘real-time’ marketing by gaining greater insight across the business to give them a significant competitive edge.
Telco providers must find new ways to prevent the churn of their most profitable customers and improve their experiences. Analytics can enable telcos to better see behaviours and trends across business units to generate an integrated view of individuals. A single customer view allows telcos to prioritise key individuals and predict and pre-empt issues that lead to dissatisfaction and churn, taking into account social media influencers. This approach will not only allow telcos to design better informed retention campaigns but also measure the profitability of customers, products and services.

Cindy Etsell is head of commercial at SAS UK.

Cindy Etsell outlines how telcos need to break down departmental barriers and use customer information to increase loyalty and prevent churn.

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