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?Wireless churn rates are skyrocketing for several reasons. As mobile
service becomes a commodity, even minor problems can drive a customer
to a competitor. With more players and competing services, it?s
getting harder for traditional wireless operators to retain customers.
There?s also the matter of involuntary churn when customers default on
their bills.?
?Wireless operators are fighting back against churn, but most aren?t
getting the results they want. This Insight presents a comprehensive
approach developed by Booz?Allen & Hamilton that helps organizations
identify root causes of customer churn and enables them to move beyond
incremental fixes to achieve permanent process improvements and cost
reduction.?
Page 9:
EIGHT ELEMENTS TO REDUCE CHURN (EXHIBIT 8)
Page 10:
ANNUAL REVENUE IMPACT FROM CHURN REDUCTION INITIATIVES (EXHIBIT 9)
Page 11:
ROOT CAUSES: STRATEGIES FOR MANAGING CHURN (EXHIBIT 10)
Download full text here:
http://www.boozallen.de/content/downloads/insights/5J_Winningt.pdf
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Churn Modeling for Mobile Telecommunications
Churn is a Core CRM issue
?The core CRM issues include:
? Customer acquisition
? Customer retention
? Cross-sell/Up Sell
? Maximizing Lifetime Customer Value
Churn can be combated by
? Acquiring more loyal customers initially
? Taking preventative measures with existing customers
? Identifying customers most likely to defect
- Offering incentives to those customers you want to keep
Predicting Churn:
- Predictive modeling can assist churn management by tagging customers
most likely to churn
- High risk customers should first be sorted by profitability
- Campaign targeted to the most profitable at-risk customers
Typical retention campaigns include:
- Incentives such as price breaks
- Special services available only to select customers
- To be cost effective retention campaigns must be targeted to the right customers
Customers who would probably leave without the incentive
Costly to offer incentives to those who would stay regardless.?
See results on page 38 to 45.
Salford Systems
Download full report here: (45 pages)
http://www.salford-systems.com/doc/churnwinF08.pdf
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Predicting Subscriber Dissatisfaction and Improving Retention
in the Wireless Telecommunications Industry
ABSTRACT
?Competition in the wireless telecommunications industry is rampant.
To maintain profitability, wireless carriers must control churn, the
loss of subscribers who switch from one carrier to another. We explore
techniques from statistical machine learning to predict churn and,
based on these predictions, to determine what incentives that should
be offered to subscribers to improve retention and maximize
profitability to the carrier."
"The techniques include: logit regression, decision trees, neural
networks, and boosting. Our experiments are based on a data base of
nearly 47,000 U.S. domestic subscribers, and includes information
about their usage, billing, credit, application, and complaint
history. Our experiments show that under a wide variety of assumptions
concerning the cost of intervention and the retention rate resulting
from intervention, using predictive techniques to identify potential
churners and offer incentives can yield significant savings to a
carrier. We also show the importance of a data representation crafted
by domain experts. Finally, we report on a real-world test of the
techniques which validate our simulation experiments.?
Download full text here:
http://www.cs.colorado.edu/~mozer/courses/6622/papers/MozerWolniewiczetal2000.pdf
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Case Study
Chilean (Entel PCS) telco boosts customer loyalty with SAS
?With SAS customer relationship management (CRM), Entel PCS explores
historical data and predicts future client behavior, allowing the
mobile telecommunications company to obtain the lowest churn rate in
the industry.?
?With SAS Customer Retention for Telecommunications, companies gain
better control of one of their most critical business variables ? the
churn rate. Today, Entel PCS has the lowest churn rate in Chile's
local mobile market, and its rate is among the best even by
international standards.?
"When we began searching for a data mining tool that could explore
historic data and predict the future behavior of our customers, we
quickly chose SAS CRM since it's a world-class solution," says Enzo
Lepori, customer service manager for Entel PCS.?
?The churn models used at Entel PCS analyze historic client data to
help executives make decisions about the company's service offerings
and to implement effective marketing campaigns that bolster the
loyalty of the company's best customers.?
SAS
http://www.sas.com/success/entelpcs.html
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Predicting Customer Behavior in Telecommunications
ABSTRACT
?Predicting customer behavior helps service providers build customer
loyalty and maximize profitability. For the success of a project, data
preparation is often a critical part of the predictive algorithm.?
http://portal.acm.org/citation.cfm?id=977242.977301
Purchase article here:
https://newton.computer.org/DocDelivery/Shopping.nsf/NewCart?OpenForm&Query=311C9ETWZ&REFER=http://www.computer.org/publications/dlib/
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McKinsey & Company Report
Title:A more scientific approach to Managing the Customer Lifecycle
Can Create Significant Value
Overview
?Acquiring customers is difficult enough, but preventing the most
valuable ones from leaving is what really keeps marketing executives
up at night. Managing ? and maximizing ? the ?lifetime value? of
customers has emerged as the primary challenge of telecommunications
providers, media companies, and similar subscription-based
businesses.?
?The customer?s value over this lifetime is driven by a number of
discrete factors, all of which have a quantifiable effect on revenue
and cost?.
?Our research into the economics of the customer lifecycle,
particularly in the U.S. wireless sector, clearly indicates the need
for companies to take a more scientific approach to managing
customers. Companies adopting this emerging discipline, known as
customer lifecycle management, or CLM, need to incorporate five basic
principles into their marketing approach:
- Look beyond typical market research to segment customers
- Quantify the lifetime value of each customer
- De-average? customer segments and offers
- Avoid ?big bang? IT investments
- Pay special attention to organization and metrics
?Implementing a more CLM-savvy approach has clear benefits. Companies
we have worked with have shown EBITDA1 improvements of 3 to 5 percent
over the first 12 months of a CLM program, with gains of 20 to 25
percent by the end of the second year.2
McKinsey on Marketing
Download the complete document here: (13 pages)
http://www.mckinsey.com/practices/marketing/ourknowledge/pdf/Opportunity_of_Lifetime.pdf
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Paper:
Customer Churn Analysis in The Wireless Industry: A Data Mining Approach
ABSTRACT
?This paper presents a customer churn study in the wireless
telecommunications industry. An Oracle database of real customers was
analyzed using the Nave Bayes algorithm data mining option for
supervised learning that was implemented through JDeveloper. The
results of the study and future directions are then discussed.?
Read full text here:
http://computing.breinestorm.net/data+mining+churn+model+customer/
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Data Mining
?Data mining uses statistical modeling techniques to predict a
customer's response or purchase based on the combinations of
transactional and demographic variables known about that individual.
These techniques can also be used to estimate measures of value, such
as revenue obtained or profit derived from a customer.?
Source:
Should All Your Customers Be Retained?
Direct, June 1, 2003
http://www.findarticles.com/p/articles/mi_m3815/is_8_15/ai_102344223
Read the rest of this article here:
http://www.findarticles.com/p/articles/mi_m3815/is_8_15/ai_102344223#continue
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Providers are employing a number of techniques to reduce customer churn.
?Typical techniques to fight churn are free service offers that are
low-cost services to the carrier, such as short-term discounts or
temporary free ?in-network? services. It is obvious that much research
has been performed regarding churn.?
Attempts to reduce churn include:
?Offering best plan advice - where providers detail optimal plans to
customers when calling about billing issues.
Providing regular new phone upgrades to thwart customers jumping ship
because of dated phone functionalities.
Extending same network calling plan discounts to increase loyalty in a
network among family and friends
Providing promotional points which can be redeemed for value-added
goods or services.?
?Communications and marketing efforts based on demographic
segmentation variables have been extremely important in enhancing LTV
and reducing churn. One common objective is to bundle services that
increase the adoption or take-rate of multiple services such as
high-speed wireless data and mobile voice to enhance customer loyalty
and reduce churn. The more services a customer has with one provider,
the less likely a customer is to move on to another provider.?
Lucent Technologies: June 2004
http://www.lucent.com/osssentinel/june2004/topic1.html
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Customer Churn in the Telecom Industry
High cost of customer acquisition requires companies to make large
upfront investments in customers. Customer retention, therefore, is
becoming critical to customer profitability.
The following are certain factors that help in achieving profitability
driven customer retention:
?Calculating individual customers? value
Avoiding offers of financial incentives to the wrong customers
Applying appropriate discount levels for the high value customers and
avoiding over-discount
Preventing offers of ineffective plans and discounts that are
inadequate in terms of retention
Proactively promoting competitive pricing offers to customers with high churn risk
Offering up-to-date price comparison information to customers
according to their actual usage patterns
Identifying the overpaying customers
Offering personalized pricing, by using ?below the line? campaigns in
order to reduce churn rates.?
BSNL Portal : Knowledge BAse
http://www.bsnl.in/Knowledgebase.asp?intNewsId=40857&strNewsMore=more
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Reducing customer turnover, or churn, always has been a priority for
wireless carriers.
?Churn rates are an important reflection of customer satisfaction.
High churn rates often indicate customers are not pleased with a
carrier's service and coverage offerings. Low customer turnover
demonstrates strong product and customer loyalty.?
?While churn happens at each stage of the customer life cycle, most of
the focus has been on customer contact and customer support. Carriers
need to go further. They must harvest data from all possible sources
and examine their subscribers across the entire delivery cycle,
including billing, order processing and service availability and
delivery.?
?Consider the issue of service availability and delivery. A customer
who experiences poor coverage and a high percentage of dropped calls
is likely to switch carriers. Data that is limited to customer contact
and customer support leaves the provider ill-equipped to respond in a
timely fashion.?
Analysis of Call Detail Records
?Fortunately, new innovations in data collection, aggregation and
cleansing give carriers the ability to analyze call detail records
(CDRs) comprehensively and quickly. These emerging methods of
providing comprehensive access to the valuable data contained in CDRs
provide carriers with unprecedented insight into the reasons behind
turnover. Marketing and engineering groups can use this information to
resolve coverage and service issues before customers think of taking
their business elsewhere.?
Wireless Week: March 1, 2004
http://www.netezza.com/media/2004/Wireless0301.htm
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Real-Time Rated Data Helps Reduce Churn
?An example of the many benefits offered by this technology is its
ability to help identify and turn around customers before they churn.
Data analysis methods can identify patterns in customer behavior, such
as declining usage or changes in call patterns, that predict churn.?
?UMS combined with an ODs can generate the historical and live data
that are needed to apply these models to existing customers and
identify them while there is still time to take action. You can then
establish an action plan, such as making an outbound call to the
customer to understand the problem and providing a special offer to
retain the customer. The offer could be a free value-added service
tied to the customer's usage profile. These methods might be combined
with an analysis that highlights the profitability of the customer.
The offer that is provided to the customer might then depend on their
profitability with the least profitable customers not receiving any
offer at all. The availability of real-time information can also be
used to address churn at the inbound call center level.?
Verizon
http://www22.verizon.com/it/aboutus/news/intug.html
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?According to Compete, 20 percent to 35 percent of pre-churners
(subscribers evaluating competitive carriers online) switch to a
competitive service provider within 60 days of exhibiting pre-churn
behavior online.?
Wireless Week: June 15, 2004
http://wirelessweek.com/article/CA426382.html?spacedesc=Departments&stt=001
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Predicting churn and promoting loyalty among wireless telecoms customers
?MINEvision Churn-IT application focuses on customer retention in the highly
saturated and competitive wireless market. Churn-IT brings together
sociodemographics
with call detail records and call behaviour in a compelling data
mining environment. This allows the telco operator to predict the
likelihood of customer churn and take proper action to promote
loyalty.?
MINEvision
http://www.minevision.com/solutions/churn-it/DS%20ChurnIT0506.pdf
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Adjoined Case Study
?Adjoined Consulting proposed and implemented a novel approach. In
order to better target churn management initiatives, Adjoined used the
client's internal data to predict customer churn and divide customers
into "clusters" that each had their own respective churn
characteristics. The clusters therefore were defined, or segmented, by
the client's own internal data. So, for example, one high churn
cluster may have contained customers that exhibited poor usage, a high
number of technical service calls per month, a high degree of problems
connecting to the service, and were recruited in by a certain
promotion. Each cluster was similarly described and associated churn
rates by cluster quantified.?
Read the rest of the article here at Adjoined
http://www.adjoined.com/clientscase/Telecom1CS.php
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Customer Churn and Loyalty Programs
Many telecom firms have initiated loyalty programs to reduce customer churn.
?In-Stat/MDR (however, found that, in a telephone survey of US
consumers, the correlation between loyalty to one?s service provider
and churn was not clear. Across the services examined, services with
high loyalty ratings, such as wireless, also had among the highest
churn rates.?
According to a recent report, ?Avoiding the Churn Burn: Loyalty
Influencers and Churn Potential for Core Residential Services? the
issues contributing to customer churn are as follows:
Quality counts:
?While the survey results reflected the drivers one would expect for
customer loyalty, there is an important point in these findings:
customers value quality more than price.?
Handholding only goes so far:
?While survey respondents indicated an appreciation of customer
service, they showed a stronger preference for the quality of the
actual service. This suggests that customers want a timely and
courteous response to service failure, but they would strongly prefer
a reliable service, where that failure was less likely to occur in the
first place.?
?Providers can no longer rely on loyalty by default, most consumers
have other options.?
Older customers ? less churn
?Age is extremely important in determining loyalty and churn: One of
the most significant findings was the correlation between age, loyalty
and churn. The older respondents had higher indications of loyalty,
which actually resulted in lower levels of churn.?
In-Stat/MDR
http://www.instat.com/press.asp?ID=1191&sku=IN0401295IA
The report is available for purchase here:
http://www.instat.com/abstract.asp?id=95&SKU=IN0401295IA
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An analysis from Legg Mason Capital Management
Page 5: The principles of Churn
Exhibit 4: The Value of Loyalty
Download the full text of this document here:
http://www.leggmason.com/funds/ourfunds/whats_new/The_Economics_of_Customer_Businesses_12_09.pdf
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Churn Prevention Strategies in Cellular Markets/CRM
Complaint Handling
Problem Resolution
Loyalty Programs
Upgrade Strategy
Customer Devp?mt
Sticky
Services/Tariffs
Prepay vs Postpay
Enterprise Retention
http://www.gii.co.jp/sample/img/pd11856.pdf
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Whitepaper
CUSTOMER CHURN MANAGEMENT: RETAINING HIGH-MARGIN CUSTOMERS
WITH CUSTOMER RELATIONSHIP MANAGEMENT TECHNIQUES
Download here:
http://www.kpmg.com.au/Portals/0/ChurnMgmt-whitepaper_0226.pdf
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An Empirical Study on the Influencing Factors of Customer Churning
Intention after Introducing Mobile Number Portability in Korea. (28
pages)
Download here:
http://userpage.fu-berlin.de/~jmueller/its/conf/berlin04/Papers/Kim_Park_Paik_Seol_Park.pdf
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?Subscribers churn for reasons such as their contract is up, they want
a new phone, they have bad coverage in their area, they are on the
wrong rate plan, or they move.?
Expert Answer Center
http://expertanswercenter.techtarget.com/eac/knowledgebaseAnswer/0,295199,sid63_gci974389,00.html
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?Some of the common driving factors for churn are poor performance,
poor customer care, rate plans and hanset issues. We?ve for instance
found that contact centres can drive away customers to a rival service
provider if a customer has to wait long before his problem is looked
into.?
SAS
http://www.sas.com/offices/asiapacific/india/sasnews/et_oct25_02.html
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?Many subscribers shift to another vendor due to brand image.?
?Higher churn is generally attributed to the numerous tariff options
available to customers. A customer may also churn due to billing
disputes with a particular vendor?billing fraud also comes into play.?
??More than tariff plans it is the quality of customer service that
prompts a customer to churn or remain loyal.?
?If an operator doesn?t anticipate market needs or does not provide
value-added services offered by the competitor, then the customer is
likely to churn."
?? Some of the key factors that encourage churn are inadequate network
coverage, which includes dropped calls that occur in places where
network coverage is thin and blocked calls that occur when the demand
for network services exceeds capacity. ?
?The churn problem is more prevalent in the prepaid segment.?
Indian Express Group
http://www.express-computer.com/20030922/indiatrends01.shtml
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Commercial market rthat might interest you
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Minimizing Churn and Building Customer Profitability
?Minimizing Churn and Building Customer Profitability from Chorleywood
provides an evaluation of the global telecoms market with specific
reference to the impact of customer churn and the resulting decline in
revenues. It addresses and provides guidance on how to tackle churn
both in terms of business processes (refining customer care, loyalty
schemes, customer segmenting and personalization, and improving
network deficiencies) and through the use of software solutions
available.?
Informa Telecoms & Media - Previously Chorleywood Consulting
http://www.biz-lib.com/ZCC69823.html
Retaining Customers and Minimizing Churn: strategies for mobile markets
?Retaining Customers and Minimizing Churn: strategies for mobile
markets models the effects of relative churn, showing clearly how
persistently beating the market average for churn is an effective
vehicle for continued growth in saturating markets. It looks at the
strategies for controlling churn employed by mobile operators in
Western and Central Europe and identifies the most effective
strategies for different types of operator. It focuses on some
real-world examples where operators have benefited strongly from
effective churn control.?
Analysys (Analysys Mason Group Limited)
http://www.biz-lib.com/ZAY66502.html
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I hope the information provided is helpful!
Best regards,
Bobbie7 |
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