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Article Excerpt
5.1 Taking a strategic approach
Any business trying to reduce churn needs to take a strategic approach and therefore churn reduction should be seen as affecting all areas of an operator's business from initial planning, through to marketing and interfacing with customers. All too often churn reduction has been seen simply as a customer support or sales issue. There has to be a fundamental change in attitude within operators, so that the entire business is involved in the strategic aim of retaining customers.
A variety of departments need to be involved in tackling churn within an operator or service provider environment:
* sales departments--need to help identify problems before they become serious
* planning and market strategy departments--should help determine how the service compares with that offered by competitors and how churn can be reduced
* IT and network departments--need to incorporate the necessary technical infrastructure (for example, in billing systems) to monitor and proactively address churn reduction
* the board--has to decide which market plan to follow.
Churn management should be planned from the outset and not added as an afterthought. It should incorporate the following principles:
* an overall company strategy on churn management should be formulated and consistently applied across the organisation. Every department should sign up to ownership of the project, because one "lukewarm" department can dampen the effort of all the others
* all departments should be involved to a greater or lesser extent and this will affect the whole business process. For example, the accounts department will no longer work alone, because it will need to invoke churn management procedures before removing a subscriber. This might involve a dialogue with the marketing department
* techniques should be regularly monitored and assessed, the results of which need to be fed back into ongoing modifications of the churn management processes--see Figure 5.1.
[FIGURE 5.1 OMITTED]
5.2 Improving overall levels of customer service
One of the key factors that influences a customer's propensity to churn is the quality of customer service they receive. Various strategies can be used to improve customer service in an organisation. These include:
* improving your understanding of your customers
* using customer data more effectively
* using CRM and e-CRM systems
* using self-care.
5.2.1 Improving your understanding of your customers
Since the whole telecoms customer care revolution began, operators have made assumptions about what it is that a customer wants and expects in terms of service. Quite often there is a mismatch between the perception of the operator as to what constitutes good customer service and what the customers actually want.
It is not always easy to elicit from customers what they want--they often reply that they want 'good' customer service and the operator is then left to determine what it is they mean. If the operator misinterprets the meaning then nothing has been learnt.
However, it should not be difficult to determine what constitutes good customer service. We are all customers and we all know what irritates us about poor service. Most customers want:
* to be offered treatment on a personal and relevant level
* to receive the services they have paid for
* quick and efficient service
* to be able to chose their own preferred method of contact
* for the service provider to exist within a seamless environment (that is, for employees and departments to talk to each other).
All customers want to receive the service they have paid for and want problems to be dealt with in a swift and satisfactory manner. What mechanisms are at work behind that process is irrelevant to them and should stay invisible. Whatever channel they use, be that email, web, SMS, telephone call and so on, customers want to be able to contact real service representatives when necessary, who can solve problems that are beyond the scope of the prompts on the VDU in front of them.
It is here that the operators--especially the established and incumbent operators--have a valuable asset that can be exploited to understand their customers better. They hold vast amounts of data about every customer interaction--every call, every bill, every product enquiry, every complaint. Other types of business would kill for this sort of amassed customer data in order to exploit it and grow their relationship with customers. In the past though it has often been the case that the operators have had so much customer data that they haven't known how to use it effectively. This is where data mining, which is discussed further in Section 6.4.2, comes into its own.
Swiss mobile operator Sunrise realised that it needed to change its approach to customers. Back in 2000 the cellco saw itself as being a very product driven organisation which was focused more on pushing new services into the market rather than focusing on customers. By its own admission it did not employ any loyalty programmes, there was no campaign management and it had no knowledge about customer value. All this resulted in a very high churn rate of 60%, which was clearly unsustainable.
Since then the company has radically transformed its strategy to become customer centric. Part of this strategy has been to develop more personalised customer contact. This has involved catching customers at key points in the lifecycle such as at registration where the company makes a 'welcome' call to the customer. The customers respond positively to the call and it also provides opportunity to cross sell other services. It has also incorporated a 'surprise' element for customers, which can give them a gift to the value of 20-80 [euro] (US$24-95). Sunrise has also found the benefit of direct mailing to high risk customers and, although it is unable to give actual figures, says it has achieved positive results both in terms of churn reduction and increase in ARPU.
5.2.2 Web self-care--helping customers to help themselves
In the current economic environment operators are moving away from aspirations of providing the best possible care to providing good enough levels of support as the industry undergoes an evolution from customer care to customer management. Key developments facilitating this development are the growth in IVR, websites (e-Care) and self-care capabilities. Self-care is of particular interest as prepaid encourages its use by the requirement to self-recharge prepaid accounts.
Customer self-care is a way for the customer to control the level and method of interaction they have with their service provider. It is important to offer it alongside the more operator-led interactions because it underlines the fact that different customers have different needs. Where proactive approaches to service may be what one customer expects from their provider, another customer can quite often view that process as intrusive and seek to initiate their own service interaction. Web self-care addresses the needs of customers that wish to have greater control over the relationship with the operator or to minimise their interaction with the operator. Self-care is also a lot cheaper to provide once it has been implemented than other methods of customer service, such as call centres, for example.
Hence there are clear benefits for the operator in offering self-care facilities in terms of apportioning CSR-based support. Those users who produce the most profit will receive the most personal support, such as CSR support at call-centres.
EBPP (Electronic Bill Presentment and Payment) is generally considered to be part of the web self-care process and has an increasing role to play in the relationship that a customer has with the service provider (see Section 5.3.2). Chorleywood has also published a report which deals with this topic--The Strategic Importance of Telecoms E-billing.
The central idea behind any web self-care system is to provide customers with immediately accessible online help to their problems. Frequently, the type of customers that use these systems are very busy,having little time to directly connect with a customer service agent to explain their problem. Knowledge bases and frequently asked questions (FAQs) have often formed the backbone to this type of offering. Increasingly though, as technology has progressed, the opportunity to extend to more interactive methods has emerged. This can take the form of a virtual representative--a piece of programming that simulates the kind of responses normally afforded by a real service representative in realtime.
Of course if the knowledge base, FAQs or virtual representative fail to provide the necessary level of help, then the customer should be able to engage a service representative in live interaction--be it through web-chat, voice-over-IP or a call back from the service centre. The ideal solution is clearly to achieve a balance between the two and allow the high value customer to make their own choice as to which they prefer.
Self-care need not be restricted to the web either. Some operators now offer an SMS help service as just one of the channels available to customers looking for assistance. From the customer's point of view it means a quick response is given to a simple question sent by text from their mobile phone. It has the added benefit of being the same cost wherever they are in the world and is available 24 hours a day. The operator can also see the benefits from this particular channel of communication. It encourages use of text messaging amongst its customer base, which increases its revenue (since the customers themselves are paying for the service). It also provides efficiency through the use of FAQs and is less costly to staff than other customer service options.
5.3 The role of billing in customer retention strategies
The role that billing systems have to play in the whole customer relationship should not be underestimated. For many customers, their bill is the only time that they interact with their service provider--however one-sided this 'relationship' may seem. It is important therefore for an operator to make sure that the billing experience is a positive one (the bill is correct and easy to understand, for example). A consistently negative experience of the billing process is likely to cause great dissatisfaction on the part of the customer, who will probably end up churning.
The plethora of billing vendors in the market is testament to the notion that billing is big business. Billing products offer the chance to reduce churn and provide simple routes for targeting promotions.
The data that is amassed over the duration of a call has become very important for operators in their efforts to learn about their customers' usage patterns, and hence the role of the billing system has become key to achieving this. The billing system deals directly with the raw data, via the mediation platform, that comes from call detail records (CDRs) and is therefore in the best position to be able to manipulate this data into a more useful format for the operator. Combined with methods of customer profiling and churn modelling, this data represents a valuable commodity to the operator in determining a customer's propensity to churn.
Advances in technology--particularly within the mobile sector with the development of GPRS and 3G services--combined with rising demands from customers, has made it a necessity for operators to invest in improved billing systems. For example, one of the latest strategies for service providers to retain customers is to encourage the participation of their customers in mobile commerce transactions. In order to do this, service providers need to be sure that their billing systems can support this service so that they can remain competitive in the market. There are a number of key attributes that need to be incorporated within the billing system to enable this:
* realtime rating engines that can differentiate between voice and data transactions
* robust IP support
* flexibility to integrate with existing infrastructures as well as new market developments.
5.3.1 The bill as a marketing tool
The bill is also a powerful way of allowing the service provider to communicate with customers on a one-to-one basis. The service provider knows that the customer is very likely to open the envelope and, at the very least, cast an eye over the information contained therein. Clearly the customer is interested primarily in the amount payable and there is every chance that they will ignore any superfluous information. The onus is on the biller to draw the customer's attention to their message. This can be done by:
* making the message as visually loud as possible without completely detracting from the point of the bill. In other words, make the reader look primarily at your message and then at the amount payable. Use of pictures and uncluttered, simple, bold text is certainly one approach
* linking your message to the charges--for example, by highlighting the money that could have been saved if the customer had joined a particular call package.
The message has to be relevant to the individual customer--bombarding every customer with the same advertising will not be effective. But this technique can have phenomenal results. Vodafone Northern Ireland, for example, once reported a 200% increase in business as a result of marketing via the phonebill.
The cost of using the bill as a marketing tool is also very little in comparison with using other methods. There is no additional paper cost and the postage is already subsumed into the cost of sending the bill. By employing the basic principles of customer segmenting, a mailing can be tailored to each customer.
5.3.2 Using EBPP to enhance the relationship with the customer
The real progress within the converged billing market, in terms of enhancing customer relationships, lies with electronic bill presentment and payment (EBPP), which enables the customer to control when and how they view their billing details. Itemised phone bills that detail every call have been around for a number of years. Web technology simply allows that detail to be displayed online. From the operator's point of view, it is a much cheaper and less time consuming method of achieving the same result. The web facilitates secure interaction between the operator and its customer and promotes the notion of convenience to the customer.
EBPP is potentially of most interest to corporate customers, allowing them the possibility to drill down on particular aspects of their bill. Multiple invoices for each service provided to the business by the operator, such as mobile phones, private branch exchanges (PBXs), leased lines or virtual private networks (VPNs), will become a thing of the past--replaced by a single, flexible, streamlined and customisable online bill.
The opportunities that are available to the operator in terms of marketing through EBPP soon become apparent if it is used as the basis for a front end to a web portal. The portal could offer a number of routes for cross-selling and up-selling additional products and services. Such an application will allow business customers to take advantage of a number of features:
* changeable bill formatting
* intelligent data mining within the bill
* service provisioning
* self-help through FAQs or similar methods.
To encourage active participation in these types of service improves the relationship between the operator and customer and will actually make it more difficult for a customer to churn because they will lose the functionality they have become used to. Evidence suggests that business customers are prepared to pay for the perceived added value they...
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