Editor’s Note: Welcome to our weekly Reality Check column where C-level executives and advisory firms from across the mobile industry share unique insights and experiences.
Six months ago they were one of the world’s most vulnerable mobile service providers. A staggering 43% of customers said they planned to leave.
Now the company boasts one of the lowest churn rates in the industry. In less than six months, they reduced customers’ propensity to switch by an astounding 66%.
What made the difference: adoption of a new analytics-based approach that added massive computing power and data science to customer retention initiatives. By leveraging real-time customer insights as the foundation of customer experience management, they are keeping more customers and increasing lifetime value.
This mobile operator prefers not to disclose its identity. They’ve allowed us to publish the “how” part of the story. But first – consider that they’re not alone.
Combating today’s mobile churn epidemic
Churn is not an isolated issue. Every quarter, by one estimate, some 16.5% of customers say they consider leaving their current mobile operator at the first opportunity. Customer defection rates will further increase when Federal Communications Commission Chairman Tom Wheeler implements his plan to unlock all mobile devices.
Mobile operators are well aware of the challenge, and have rolled out new pricing plans and bundles while speeding response times to customer issues.
For example, as market demand for videos, games and other content has surged, mobile operators have smartly shifted plans to charge more for data. Others have adopted big data solutions that use backwards-looking heuristic (experience-based) approaches to profile customers – a step in the right direction. Thanks to these efforts, the significant average revenue per user erosion predicted by numerous skeptics two years ago has not happened.
Still, with one out of every six mobile customers either contemplating defection or already out the door, it’s fair to say that current approaches to CEM can be further refined and improved.
Moving beyond retention to increased customer lifetime value
The tool of choice for the mobile operator with high churn rates was an analytics solution providing both predictive and real-time capabilities.
Unlike BI and heuristic approaches, real-time predictive analytics applies business rules, statistical algorithms and workflow to provide deep insights into a customer’s present situation and future actions – in the moment.
Think of this as data science’s equivalent of a highly detailed customer video “selfie” – an up close and personal look. It’s complex, involving some 50,000 data points per customer, plus scoring and categorization of as many variables as there are pixels on a screen. Most remarkably, the “selfie” is only seconds old.
Armed with these unique insights, the mobile service provider was able see to a customer’s situation in real time and act on recommended ideal treatments to move them towards the desired actions, and a superlative, personalized experience. End result: lower churn, higher customer satisfaction and optimized customer lifetime value and ARPU.
Scenarios where they’ve used real time predictive analytics to personalize the customer experience include:
–Catering to video streamers. About 50 million people in the United States now watch video on their mobile phones. Globally, 15% of all online video hours are viewed on tablets and smartphones. Knowing their most active video customers and predicting their viewing interests in real time has allowed the operator create a winning cast of service packages at the perfect price point.
–Pinpointing potential problems. The operator can quickly identify “at risk” customers with the highest potential for churn and proactively target them with tailored service and offers that directly address their issues, thereby increasing satisfaction and loyalty.
–Creating pricing bundles and targeted campaigns. Real time predictive analytics improves the conversion ratio by letting the operator create campaigns that target an individual, niche or segment by known interests – and provide attractive bundles.
Remember too that data itself is the new currency of business, and none is more priceless than customer data. Down the road, the mobile operator can use aggregate insights on a well-defined niche as the basis of new marketing programs and smart targeted advertising.
Today’s customers expect and demand a superior experience. If the “comeback story” of one company points the way, market edge will go to mobile operators that leverage advanced technologies and techniques as the platform of the new CEM.
Charlie Thomas is CEO of Razorsight.
