Opinion: Customer Value Management can identify customers that are worth keeping

big data, customer experience, customer value management

By Luis Rodeia, Product Manager at WeDo Technologies

Half of the world’s population today now has a mobile subscription—up from just one in five 10 years ago.

With the number of unique mobile subscribers reaching 4.7 billion unique subscribers, or 63 percent of the global population in 2015 according to the GSMA, market saturation within the telecoms industry has never been higher. 

Communication Service Providers (CSPs) are therefore under constant pressure to increase their market share.

Traditionally, the quickest and easiest way to do this was to slash prices in order to attract customers.

However, as CSPs have tried to attract customers in this way it has had an adverse effect on both revenues and margins.

New subscribers have become increasingly expensive to acquire, with reports from Bain & Company suggesting it costs six to seven times more to acquire a new customer than to retain an existing one.

It’s therefore vital that CSPs look to leverage the vast stores of data they have available to improve the customer experience and retain their profitable customers, while also allowing unprofitable customers to leave of their own will.

Most CSPs have business intelligence and analytical teams to leverage these large sets of operational and customer data.

However, many of these initiatives have not yet been able to analyse the huge amounts of data at the depth or speed required to help extract the most value from customers.

Using a Customer Value Management (CVM) approach, CSPs can holistically identify and evaluate individual subscribers in order to give a complete view of every customer, provide better user experiences and generate higher returns.

There are five key features that CSPs need to focus on when developing a CVM strategy:

Profitability
It is important to not only consider the profit margin of each subscriber, e.g. a customer with a high ARPU, but also who uses the network intensively and who doesn’t pay their bills on time, which can have a negative effect on margins.

It may also be necessary to treat customers differently based on their margins; when contacting call centres for example, high value customers could be transferred directly to the operators, who can better ensure the customers leave happy.

Customer optimisation
Knowing subscribers’ characteristics and behaviours allows CSPs to optimise their offerings in order to treat them as individuals, and not as a large, homogenous group.

This allows for better relationship management and enables CSPs to implement tailored marketing campaigns.

This is an improvement on the usual scattergun approach that sees operators spamming subscribers with offers and deals that may not be appropriate to them or their usage; for example sending offers of unlimited data to older customers who may usually have low data usage.

Churn
Identifying customers that are likely to leave in the near future is an obvious competitive advantage, as CSPs that utilise their customer data will be able to offer tailored retention campaigns to customers that are at risk of leaving.

Also, by identifying those at risk of churning, the reasons for churn can also be investigated and mitigated.

Social value
Measuring subscribers’ social capital is another way of identifying high value customers.

Targeting influencers who can evangelise products to large and receptive social media audiences is an effective way to ensure the spread and adoption of new products most effectively.

Monetisation
Price will always be a key aspect of churn. If a subscriber’s payment plan is not balanced to their usage profile, it is highly likely that they will leave the network.

It is therefore important to offer the rate plan best suited to the subscriber’s actual usage, while simultaneously maximising ARPU.

Ultimately, implementing a complete CVM strategy has many advantages.

It can provide an in-depth understanding of the behaviour and needs of customers based on a carefully tailored analysis of each individual subscriber.

This allows CSPs to use well-defined value improvement tactics that can deliver measurable results, and ultimately offer a way to consistently improve value and profitability, especially under challenging market circumstances.

Given the increasing saturation of markets, the rising pressure to retain existing customers and the constant need improve to the bottom line, every operator should view CVM as an essential addition to their analytical skills.

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