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Customer Retention is a Priority for Mobile Phone Providers

Customer Retention is a Priority for Mobile Phone Providers

Customer Retention is a Priority for Mobile Phone Providers

10/15/2008
By Donna Fluss
G-CEM

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A fundamental truth in the business world is that competitors are always looking to steal your customers, and many customers are on the lookout for a better deal. Customer attrition rates range from 7% annually in some industries with high exit barriers, like banking and insurance, to nearly 40% in the mobile phone industry. Slowing the customer “churn” rate by as little as 1% can add millions of dollars to any sizable company’s bottom line. As it’s a great deal more expensive to acquire customers than to retain them, an effective customer retention strategy is crucial to a company’s success.

Mobile phone service is viewed as a commodity by customers all over the world. As is often the case for a new market, cell phone providers have concentrated on customer acquisition at the expense of service quality and retention. This has created a buyer’s market where customers are motivated to get the best deal possible during the sign-up or contract phase of their relationship with a carrier. The majority of customers are open to changing carriers to reduce monthly fees, increase their number of minutes, or to receive a better phone.

Adopting a Customer-Centric Culture

As their rate of growth begins to slow, mobile phone providers are looking for new and creative approaches to build their businesses. After years of spending a large percentage of their investment dollars on growing network capacity and coming up with new programs to acquire customers, many mobile phone providers must now reinvent themselves in order to shift the focus of their corporate culture to providing an outstanding experience and retaining customers.

Altering strategies and adopting a customer-centric culture has proven to be challenging for many companies in a variety of industries. This transformation is expected to be even more difficult for the many mobile phone providers that have not yet invested in building a centralized back-end servicing infrastructure.

The competitiveness of the mobile phone market means that providers are going to have to be creative in addressing operational and technical challenges, so that they can continue to grow as their build their service infrastructure. Below is a case study of how a European mobile provider used speech analytics to provide an outstanding customer experience and increase customer retention.

Using Speech Analytics to Reduce Customer Churn

Speech analytics has given Orange, a leading European mobile communications company, a substantial competitive advantage in the crowded cellular industry. While most cell phone service providers around the world receive millions of complaints and have high customer churn rates, Orange is an exception.

The Challenge

From the company’s inception, Orange has emphasized the delivery of outstanding service as a means of differentiating themselves in the market. As part of their ongoing commitment to customer satisfaction and retention, Orange wanted to take steps to minimize the increase in customer churn expected as a result of number portability coming into their region. Number portability is a regulation requiring that customers be allowed to keep their phone numbers when changing telecom providers. This regulation makes it much less of a hassle for cell phone users to change service providers and has been observed to substantially increase the rate of customer defections in other markets. A second goal for Orange was to enhance their brand image and reinforce their reputation for providing outstanding service.

Orange Implements a Customer-Centricity Strategy

Orange implemented a series of internally and externally-focused proactive measures to protect and retain their customer base. The company adopted a strategy of customer-centricity and concentrated on improving their service quality and customer retention. On an internal basis, Orange invested in training and quality programs to improve agent knowledge, communication skills, and responsiveness. All of the company’s new service agents participated in a one-month basic training course at Orange University prior to being allowed to handle customer interactions (calls, emails and chat sessions). Even after completing the training course, agents were placed in a nested environment with a high supervisory ratio for a few weeks to ensure that they got all of the support they needed to learn how to deliver outstanding service.

Orange also rolled out a formal quality assurance (QA) program to measure how well their agents adhered to internal policies and procedures. Every month, supervisors reviewed 4 to 7 calls per agent to identify areas of opportunity for training and coaching. When an issue was identified, a customized coaching session was immediately delivered to the agent’s desktop to remedy the situation. To further enhance the performance of their QA program, Orange moved from traditional quality management to precision monitoring. A speech analytics application was implemented to review all calls and identify those that required additional management attention.

On an externally focused basis, Orange built a Predictive Churn Model to identify “at-risk” customers so that they could proactively reach out to them via phone calls or emails, before the customers called to cancel their service. Orange realized that they would significantly reduce the churn rate and the volume of incoming calls if they could accurately predict which customers were at risk of defecting before they attempted to close their accounts. As a 1% reduction in customer churn represents a 5% increase in the bottom line, the pressure was high to retain customers.

The Solution

Orange implemented a speech analytics solution to give them the information and insights they needed to proactively identify “at-risk” customers and minimize the impact of customer service issues. The speech analytics solution automatically separated calls into the following categories: customer complaints, requests for account cancellation, technical issues, repeat calls, professionalism issues, long periods of silence, heightened emotion, and service issues. The information from the speech analytics solution was used as an early warning mechanism to accurately and rapidly identify operational and service issues. This enabled Orange to set up internal processes to react to emerging problems and prevent them from continuing to impact customers.

Orange integrated speech analytics into their agents’ daily routine and their existing analytics environment. The speech analytics system identified who called, why they called and their emotion level. These insights, combined with information from the customer relationship management system, data about customer usage and many other proprietary inputs, enabled Orange to accurately predict which customers were at risk of defecting. Within 24 hours of the initial contact, Orange’s outbound group was busy proactively calling all of the “at-risk” customers to take the necessary actions to keep their business. This group of outbound specialists was highly motivated and rewarded to retain their customers. Their outreach efforts also significantly enhanced customer satisfaction and loyalty.

The Benefits

The telecom industry has one of the highest customer churn rates in the business world, often exceeding 40% annually. Business leaders know that their companies are often to blame when customers defect, but either do not see good service as a priority or do not identify the underlying problems until it’s too late. Customer retention is a significant business issue confronting most companies, even when the economy is good. However, during an economic recession, when finding new customers is especially challenging, customer retention becomes a major corporate priority.

Orange’s customer centricity strategy, supported by their Predictive Churn Model, provided the following benefits:

  1. 75% of the interactions that identified “at-risk” customers were validated as accurate.
  2. 80% of the customers identified by the Model had not been picked up as being “at-risk” by agents or other systems.
  3. Within just 9 months, the overall accuracy rate of the Model was at 75% and increasing.
  4. “At-risk” customers were identified within 24 hours of the initial contact, instead of either days later or never.

While continuing to recognize the importance of customer acquisition, Orange’s number one corporate priority was to reduce customer churn by providing an outstanding experience and eliminating reasons for customers to go elsewhere. Using speech analytics, Orange has achieved results that are the envy of the cellular industry and has proven that customer attrition is not an inherent problem of this market, but instead is the direct result of poor service. In addition to reducing customer attrition, Orange has also realized other significant internal and external benefits, including:

  1. 25% increase in overall company satisfaction ratings (based on survey results)
  2. 20% increase in satisfaction with customer service
  3. 15% reduction in repeat calls
  4. 15% to 20% increase in first call resolution rates
  5. An over 600% increase in the number of agent evaluations performed each month, from 700 to 5,000

Using Speech Analytics to Grow the Business

The results reflected in this case study were realized in a nine-month period. Orange plans to extend the use of their speech analytics solution to identify additional areas for operational and service improvements. The company also plans to use its speech analytics application to identify new revenue and marketing opportunities. Lastly, as Orange is extremely pleased with the results of its Predictive Churn Model, they’re already in the process of enhancing it to increase the accuracy rate and increase its benefits.

Final Thoughts

The mobile phone industry is highly competitive as its customers have many options and offerings are hard to differentiate. Companies that want to grow their businesses must continue to invest aggressively in customer acquisition programs, as well as implement new and creative initiatives to retain their existing ones. It is challenging for enterprises to listen to their customers’ issues and respond appropriately and on a timely basis. Quality assurance programs enhanced with speech analytics can give a company a competitive advantage by allowing them to identify and resolve customer issues quickly, before they become expensive problems. Speech analytics combined with an appropriate customer churn model can become the centerpiece of a program to identify “at-risk” customers and reach out to them to repair the relationship before they leave.

The mobile phone industry has matured to the point where companies have to take immediate steps to shift their emphasis from pure customer acquisition and facilities growth to product enhancement and customer centricity. Unfortunately, mobile phone providers have traditionally been decentralized and cannot afford to invest the time and resources required to shift their resources to a centralized servicing culture and infrastructure. Instead, the mobile companies must use technical innovation to build a customer-centric culture, while continuing to invest in growth. A well-developed speech analytics implementation accompanied by senior management support and best practices can give a company a strategic advantage, even in the most competitive markets.

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