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Consumer Insights on Reducing Churn in Telecommunications

Posted by Tom Smith on Thu, Jul, 18, 2013 @ 06:07 AM

consumer insights on reducing churn in telecommunications

This is another "real life" example of consumer insights improving business and accelerating sales by improving customer retention. 

By having one-on-one's and in-depth telephone interviews, in addition to paper surveys, we were able to get a good idea of what customers wanted in a cell phone provider.

In 1992, the cellular industry was going through dramatic changes.  Our client was hemorrhaging market share.  Aggressive competitors were growing rapidly.

We conducted in-depth interviews with customers who were leaving (churning) to go to another provider and learned their primary reasons for switching: 1) better rate plan offers;  2) lack of coverage; and, 3) poor service.  We also learned our client needed to build stronger relationships with customers.

These findings enabled us to create a customer bonding and customer satisfaction measurement and improvement (CSMI) program which involved multiple mailings based on usage and demographics.  It also allowed us to build a dialogue with customers since they knew we were interested in what they were thinking and were willing to make changes based on their feedback.

Every customer received between two and 12 personalized communications packages over 12 months.  The packages varied by customer type and segment.

In the first year of our customer retention program, we were able to reduce churn by 29% in year one and change the perception of the wireless provider from uncaring utility to customer-focused service provider.

Heavy users were less affected by the customer bonding and CSMI programs so we did additional research among this segment and introduced a rewards program whereby the top 10% of customers were rewarded based on their loyalty and patronage -- the number of minutes used. 

This was the first frequent usage program in the cellular industry.  Rewards were based on the feedback we received from heavy users and included things like free minutes, enhanced features and services and free hardware upgrades -- everything you'd want to give a heavy user to reinforce phone use.

The rewards program was very successful reducing churn by 9% during the first year.  This reduction resulted in $16.2 million in saved revenue for our client.  Customers believed they were special and also believed our client recognized them as being so.

This program is another example of if you want to know what your customer wants, just ask them.  And once you ask them, let them know you heard them by making changes or at least reporting the results of your findings and next steps back to them.

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Tags: dialogue, customer satisfaction, customer retention, Consumer Insights on Reducing Churn in Telecommuni