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Successful churn reduction techniques for cell phone providers

• My company offers a subscription based service (not cell phones) in which customer churn is a factor. I'd like to use cell phone providers as a model for us. Particularly, I'm interested in: Churn programs - what examples can be found describing programs to reduce churn, particulalry those that discuss implementaiton and results Saving customers - what offers do wireless companies make to customers that are cancelling, and which are most successful? Triggers of churn: what factors most influence whether a customer is likely to churn - is this based on usage information, or demographics Thanks

• Answer:

  Hello Below you will find reports, white papers and articles that address the topic of your question. ?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 ------------------------------------------------------------------------ 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 ------------------------------------------------------------------------ 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 ------------------------------------------------------------------------ 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 ------------------------------------------------------------------------ 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/ ------------------------------------------------------------------------ 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 ------------------------------------------------------------------------ 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/ ------------------------------------------------------------------------ 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 ------------------------------------------------------------------------ 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 ------------------------------------------------------------------------ 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 ------------------------------------------------------------------------ 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 ------------------------------------------------------------------------ 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 ------------------------------------------------------------------------ ?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 ------------------------------------------------------------------------ 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 ------------------------------------------------------------------------ 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 ------------------------------------------------------------------------ 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 ------------------------------------------------------------------------ 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 ---------------------------------------------------------------------------- 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 ---------------------------------------------------------------------------- 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 ---------------------------------------------------------------------------- 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 ---------------------------------------------------------------------------- ?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 ---------------------------------------------------------------------------- ?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 ---------------------------------------------------------------------------- ?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 ------------------------------------------ Commercial market rthat might interest you ------------------------------------------ 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 Search terms used: Wireless churn prediction Predicting churn wireless customers Wireless churn prevention programs Cellular churn prediction report Churn reduction techniques cell phone Successful churn reduction +telecom Churn reduction case studies Churn factors telecom Churn programs analysis providers telecom Predicting wireless customer churn Wireless Carriers churn analysis techniques Factors for churn + telecom I hope the information provided is helpful! Best regards, Bobbie7