Customer Experience Management: The Telecom Industry Ahead
Resume
Telecommunication service providers have always followed a growth path in the last decade by increasing the customer base and adding considerable numbers to their annual revenue. They have kept pace with the competitors and have played the game with amazing success in the past. But in recent times, they face a huge challenge of adapting to mature and highly penetrated markets, coupled with the effect of global recession. Therefore, a paradigm shift is very necessary to adapt their business models to the current situation and the need of the moment is customer experience management to achieve a higher retention rate.
Challenge in the modern telecom industry: customer retention
In today’s telecommunications industry, which has reached a high level of penetration, acquiring a customer is increasingly costly. Industry analysis states that only 25% of acquired customers remain with the company after one year and on average only 20-30% of the total customer base are profitable/revenue generating customers. This digs a deep hole in the balance sheet of telecom service providers. Due to the churning effect of customers, a large imbalance is created in gross customer additions and net addition.
Way Forward: Road to Customer Retention: Customer Experience Management
Therefore, the main challenge for telecom operators around the world is to manage customer churn. It affects the company’s profitability if a customer leaves before the company can recoup the investment it incurred to acquire the customer. Therefore, it is very important to identify profitable customers and retain them.
Retaining profitable customers includes 2 steps:
1. Identify revenue-generating customers from the entire customer base
2. Manage the customer experience and customer value for revenue-generating customers
Identification of customers who earn income
Telecommunications service providers must define their business logic for identifying revenue-generating customers, for example: customers with usage above ARPU are classified as high-value customers or, in the case of prepaid, top-up customers more than INR 250 per month (in Indian scenario) is considered income. Depending on the business rules, the entire customer base must be segmented into revenue generating customers and non-revenue generating customers. Customer ARPU management Average income per customer. Managing customer data on a scale of 40 to 50 million is a challenge. This can be achieved with the help of various business analytics tools (for example: SAS, SPSS, Teradata, etc.).
Customer Experience Management
After the identification of valuable/revenue generating customers, management of those identified customer groups is of paramount importance.
Focus on customers instead of products
In recent years, telecommunications service providers have concentrated on the introduction of new products. They have originated new products/services and then sought to find or create a market for them. But increasing competition among existing service providers and lowering the barrier to entry for new players has resulted in the growth of predatory activities in the telecom industry. In addition, the cost of acquiring new customers has increased considerably. Therefore, in modern times, there is a gradual shift in focus from introducing new products to acquiring new customers to managing the customer experience. Today’s telcos need to focus on retaining existing, valuable customers and targeting a larger share of each customer’s wallet by creating more value and a better customer experience.
For example: In the UK, O2 has aligned its functional silos to gain insight from its existing customers to make product decisions and design promotional offers. They have focused on retention by giving equal weight to renewals and acquisitions. With this, the company has reduced its churn figure to half of the current one.
Nintendo has established an online community to capture customer feedback and offers incentives in exchange for customer feedback. With this, Nintendo has obtained valuable information about the needs and preferences of the market.
Customer Driven Personalization Model
There is an underlying assumption that service providers will dictate the future of telecommunications products and services. But with the increasing bargaining power of customers, there is a paradigm shift and service providers need to customize their model based on individual customer preferences. The company will now follow the lead of clients in designing and promoting services designed to meet specific client needs. Under this circumstance, service providers need to identify the unique needs of individual clients and then attempt to develop services that meet those multifaceted needs.
With this model, mass marketing will give way to personalized market research, and service providers’ survival will depend on the company’s ability to continuously meet customer demand. In other words, customers will dictate the terms of service they intend to receive.
Multi-channel development.
Service providers need to develop multiple sales and support channels to improve the customer experience. Increasing the footprint by adding retail outlets is one of the options that telecom service providers have practiced for a long time. Traditional channels, such as call centers, had also been in the spotlight. With increased competition and a downturn in the economy, carriers are looking for affordable ways to serve their customers while keeping quality of service intact. Eventually, service providers would like to move most of their online sales and services through the web for better economics. In addition to achieving a cost-effective solution by moving to web channels, operators can empower customers to perform various activities at a much lower price than retail channels.
Through the web channels, a client can carry out a series of activities such as:
– View invoices and pay online
– Online registration of a complaint for support
– Alteration of the price plan and subscriptions.
– Visualization of the product catalog and purchase of products/services online
In addition to the activities mentioned above, operators may offer promotional services and cross-selling of other products through the web. Operators can earn additional income by managing tickers on their websites and advertisements.
To provide customers with a consistent and connected experience, operators must integrate all existing channels. When a customer walks into a retail outlet, the customer service representative must be able to retrieve their previous interactions across all channels in order to serve them in the best possible way.
The operator needs to analyze/monitor how customers use these channels. Depending on the data available on the use of these channels by customers, operators can identify the preferences of individual customers and shape their offer accordingly. In this way, operators can develop the customer experience by empowering them to perform activities and thus increasing the value of the service for them.
conclusion
There are several ways to initiate a customer-centric, value-driven transformation. Operations can start with high-visibility initiatives like balancing spending on customer acquisition and retention with a greater emphasis on improving the overall customer experience and empowering customers. This transformation is the key for today’s telecommunications service providers to stay in the race and excel in the future. Hence the need for Telcos to reorient their business and marketing models to manage the customer experience in a better and more efficient way.