P/re/tention: the art of increasing customer lifetime value through prediction and retention
“Churn” a taboo word widely used within many industries but has a very strong link with the telecom industry across the world. In simple words churn means losing customers, reasons may differ from moving to a competitor due to poor customer experience or better offer to non-payment of bills ..etcs. Thus, many of the telecom operator worldwide have been investing heavily in finding ways to prevent churn as much as possible.
The mobile sector and the concept of implementing churn prevention models or retention strategy using advance behavioural analysis, loyalty schemes have evolved tremendously within the past 10 years, from analysing usage behaviours of voice and data, to understanding travel patterns and most visited areas to make sure that the customer experience is uninterrupted when it comes to using their mobile devices. Linking that as well to interactions within call centre or within social media to try and bring about a 360-degree holistic understanding of what, when and how customer interacts within the mobile atmosphere. Operators as well try to hook the customer to their value chain of products and services then link them to loyalty schemes to make sure that retention percentage remains high always and the decision of moving becomes harder for the customer when they know they will lose all the privileges they have received from the certain operator.
In a study conducted in 2019 by techsee done in the USA , 39% of Americans who cancelled a contract with a company cited customer service as the primary reason for cancellation. 52% of them cancelled a phone, internet, TV or cable contract. 64% of these customers cancelled after an ongoing negative experience, while only 17% cancelled after a one-time crisis. 79% of customers admitted sharing their disappointment about the telco’s level of service with others. 73% discussed the company negatively with friends, family or colleagues, 222% shared it on their social media channels, 12% posted on the company’s official social media channel or website, 10% shared it in an online forum, and 4% even discussed it with the media. Within the same research when customer was asked reasons that encouraged them to leave their current operators.
The COVID 19 Pandemic has proven to be a very strong test for retention strategies, where volumes and revenues went down dramatically globally in the telecom sector. Focusing on the middle east a large number of expats had to relocate due to changes in working and living conditions. This has forced large number of churns within the mobile and fixed sector, these are very clear when reviewing the quarterly and yearly reviews of the telecom providers. For example, Etisalat in the UAE according to several reports had saw a drop in customer base by 3% to 12.2 million losing 366k customers, but has managed to maintain a 4.4% net profit pushed from the group performance that helped in increasing maintaining the business (1). On the other side Emirates Integrated Telecommunications Company (EITC), Du, has revealed a net profit of AED257 million ($70 million) for the first quarter of the 2021, down 27.6 percent from the AED355 million ($96.7 million) recorded for the same period in 2020 (2). Same situation in Oman where Omantel has posted a decline in the Group’s revenue for the first quarter of 2021, which slid to RO 602.7 million this year, compared to RO 651 million for the corresponding period of 2020 (3). The same effect on Ooredoo Oman, Batelco in Bahrain ..etc. Basically, organizations that survived, maintained and grew during the pandemic were relying on the performance of the group, coupled by an increase demand on the of bandwidth in the international links from the wholesale market, cost optimization from OPEX and CAPEX and a small support of some of the non-core products and services and existing retention strategies.
Coming to 2021 and moving onwards, the need to strengthen, automate and execute retention programs are crucial towards maintaining and increasing healthy revenue streams at the same time building stronger propositions and diversifying income within telecom operators. P/re/tention is the process to build a fully prediction + retention model to cater to both mobile/fixed customers. Maybe clearer and more articulated in the mobile sector ,as stated before, it is vital for telecom operators to maintain and manage Customer Lifetime Value (CLV) across all products and services and that only comes when all the elements is linked to serve best customer experience from customer service, to customers’ social media/digital media activity, type of device, store visits, payment behaviours, engagement with current services, usage behaviour , movement on daily, or weekend (in mobile) thus increasing the ability to predict whenever there’s a risk from this customer to default from the services that is currently provided, then automatically activate a mechanism that is AI driven to be able to create/activate the necessary tool to force a certain result out of a customer.
One example of the above, if my current service provider gives me a certain package worth of X OMR, where I am considered a good payer, high value customer, with very high usage on bandwidth, no interruption in calls or data usage, most of my usage are watching videos on youtube, device type is a certain model, active on social media …etc. With a good P/re/tention system, the AI algorithm should make sure that my experience overall is uninterrupted by making sure that I am prioritized when it comes to my needs (watching videos) and if any repeated interruption of my current behaviour has affected my experience, then a trigger point will suggest the best retention method to solve the issue seamlessly and make sure my experience is still maintained to the highest level.
For fixed broadband similar elements applies but with more emphasis into home behaviour. The P/re/tention model will not look into every individual rather than every device linked to every home service, then start creating trigger points that can push certain data that will give an understanding of how does a home consumes the bandwidth across multiple devices. What we know now is there is a huge trend to smart home and on cloud home services including security, storage, application ..etc. Developing the right strategy and tools for P/re/tention will not only help in retaining the customer but could increase the CLV on any network provider, combining it with an AI brain that can run actions based on the home behaviours to help in maintaining customer experience overall, customer loyalty, trust will eventually create loyal organic ambassadors to the brand.
There are more innovative ways that telecom operator should be forced to look into if they are really serious about maintaining health incomes and growing the business that is beyond the promotions and offers. Executing the right P/re/tention strategies, methods and tools will always add great value for any telecom operator in the long run. More importantly setting up the right teams to build such a model is a key factor to transform the business positively towards the next decade. Keep in mind that such method does not only relate to the telecom sector only but can also be cascaded to any sector within the market with a different objective, method to implement, manage and monitor.