Playing the customer retention game in communications services

For Communications Services Providers (CSPs), the difference between good and bad customers is stark. Retaining the high margin, high profit individuals and minimising the number of low margin, network-hogging customers is becoming a real priority, especially given the explosion in network services being enabled by the Internet of Things (IoT).

To date, opportunities to implement effective churn strategies have been limited. In a mature market, pricing or device offers have little impact; it is the quality of customer experience that makes the real difference. Yet the only quality of experience measure available is the somewhat imprecise, qualitative Net Promoter Score (NPS) – and too often, by the time the CSP realises a customer has a problem, it is too late.

In contrast, the Technical Promoter Score (TPS) identifies problems on the network in real-time to give a truly accurate perception of customer experience. Mapping the TPS specifically to the impact on good customers changes the retention game. From prioritising network development and repair to proactively contacting customers in real-time, CSPs can radically improve the experience of good customers and facilitate ‘positive churn’.

Good and bad customers

The received wisdom amongst CSPs is that customers churn for three reasons: price (thirty per cent), handset/device offers (thirty per cent), and the quality of network experience (forty per cent). However, as the way in which consumers explore mobile and fixed networks and exploit new Internet of Things (IoT) enabled services, the relative importance of the quality of the network experience is only set to increase.

While managing high levels of churn has always been the challenge for CSPs in a market that has never provoked strong consumer loyalty, the diversity in customer value is now stark, creating further pressure on marketing teams to ‘manage’ the customer portfolio. How, for example, can a CSP focusing on the top end market both ensure those high value, high margin business customers are retained and minimise the number of prepaid customers consuming masses of bandwidth with their live video streaming habits?

Whatever the strategy and target customer group, the traditional churn management tools available to marketing teams, namely price and device offers, are less effective in mature markets. The key differentiator is increasingly the quality and extent of the network. The challenge for CSPs is not only to build the underpinning high quality infrastructure but also to understand and improve the actual day to day quality of network experience – especially for high value customers.

Understanding the customer experience

While marketers may have become increasingly focused on the Net Promoter Score (NPS) measure of customer satisfaction, the truth is that this reliance on customer surveys to understand the quality of network experience is far too inefficient. Yes, if a customer contacts the call centre to express concern about the service, a company can ensure a positive response – crediting the account or sending vouchers, for example. But the process is unfocused, reactive and relies upon a customer actually making contact – many will simply switch to another provider without offering any insight into problems experienced.

CSPs could and should be far more effective in the way they address network service issues to ensure improvements and repairs are prioritised in line with the needs of the good rather than the bad customers. By integrating network monitoring information with billing data, a CSP can use analytics to rapidly identify the actual customer experience – from minor glitches to complete network outages or device-specific problems.

This Technical Promoter Score (TPS) provides essential insight to support two key aspects of effective customer retention. Firstly, repairs to network outages or problems can be prioritised based on the impact on good customers rather than traditional maintenance plans that take a generic network approach. Indeed, in this era of increasingly software-based networking and self-organising networks, such interventions can actually be programmed to occur automatically, creating an immediate improvement in experience for top rated customers.

This rapid response not only reduces churn in this key segment by improving the overall quality of experience but also minimises any downtime that could reduce call volume or data usage and hence revenue. Furthermore, by proactively managing the network to reflect customer experience in this way, an organisation can also begin to implement ‘positive churn’ strategies that minimise the number of low value, low margin customers. In addition, the CSP can track network performance and churn figures to create a profile and identify risk factors.

What is the impact of network outage of five, ten, or thirty minutes on customer churn within good and bad segments? Are specific handsets causing problems? Is the consistency quality for video calls more or less important than standard voice calls? With real-time tracking of the quality of service being delivered to top tier customers, the CSP can opt to proactively contact good customers to flag that an issue is being addressed. Even a simple SMS message confirming that a problem exists and is being solved significantly improves the customer experience and, as a result, reduces churn in this key group.

Changing network usage

This proactive approach is becoming ever more critical as the way in which network bandwidth is consumed changes radically. Hundreds of new IoT-enabled services are being added to voice, data, and video streaming demands on the network each year. CSPs will need to understand very quickly how these new services affect network usage and determine the potential impact on experience of different network conditions.

Companies will also have to identify the changing customer profitability profile associated with the new service demand mix. In a fast-changing market, this immediate network performance insight will not only inform day to day response to customer experience to improve churn management – both good and bad – but also support strategic planning and prioritising network development investment to attain the best long term value.

Jarkko Multanen, CEO, Accanto Systems

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