You cannot maximise the value of already lost customers. Yet maximising customer value increases customer retention

According to the Database Marketing Institute^[1], annual churn rates for telecommunications companies average between 10 and 67 percent. While according to various surveys price and product invariably matter, dissatisfaction with the way they are treated is the biggest reason subscribers break ranks. One thing is clear: if you’re losing customers at that clip, you’re not maximising their value. That’s a problem that, clearly, needs to be addressed.

We can extrapolate from the numbers above that, in fact, around 75 percent of subscribers signing up with a new wireless carrier are therefore already “churners”. That’s because they’re arriving from a competitor who’s given them an inadequate experience, failing to maximise their value in the process. This is obviously problematic because churn represents an expensive operational failure. For service providers who pay hundreds of dollars to acquire new customers, their loss not only means the loss of future revenue but also of the considerable sums spent to acquire customers in the first place.

How (and why) to build customer value (using real-time automation)

The obvious question for telecoms service providers in light of the realities above is, then, “how should we tackle the problem?” How can telcos accrue maximum value from their hard-won customer bases and in so doing improve their customers’ experiences? Perhaps unsurprisingly, there are a myriad of steps they might take. In this blog we’ll focus on one – Customer Value Maximisation - because it leverages a now critical key to maximising long-term customer profitability. That is, real-time automation.  

It's real-time automation that enables telcos to deploy subscriber lifecycle models, real-time events and automated business rules to deliver dynamic customer engagement throughout the subscriber lifecycle.  For a service provide to identify and target specific opportunities to build customer value in hyper-competitive mobile markets, understanding the concept of Customer Value Maximisation is vital.

The three pillars for building CVM

So, what is Customer Value Maximisation?  In rudimentary terms, its function is to maximise the value that can be accrued from any existing customer base as rapidly and effectively as possible, while simultaneously enriching the customer’s experience and thereby reducing the chances of churn. If the service provider can put such a function in place, it gains an advantage in a fiercely competitive market. How is this done?

Customer Value Maximisation is founded on the presence of three pillars. These are:

• Comprehensive data to develop a complete picture of customer value
• Sophisticated analytics to pinpoint specific value enhancement opportunities
• The means to deliver tailored offers and promotions to specific customer segments

Presuming these are already (or can be put) in place, the CVM programme can be seen as a tool that harnesses or leverages their output, something that is done via the automation of rules and real-time processes. That being the case, CVM tools give the telco a variety of capabilities in functional areas such as Business Intelligence, Customer Segmentation, Predictive Analytics ,  Campaigns Management and others.

CVM as a foundation for MVNO launch success

Perhaps the most instructive way to quickly highlight the immediate benefit of deploying CVM is to consider a use case. In this example, a company which sold services both on-line and through a broad distribution network sought to enter the mobile market via an MVNO to further capitalise on the opportunity its existing customer base afforded.

The company concluded that to do this would require a solution to both address technical requirements that the company didn’t already have in the mobile industry and also provide the flexibility and real-time control over the company’s products, pricing and promotions that they needed to compete effectively.  CVM was identified as part of the latter.

Now implemented, the company has successfully launched an MVNO, with subscriber and traffic growth based on innovative service offerings that with high subscriber appeal. And it has done so without compromising its focus on lean operations, continuing to ensure excellent cost control.

There is, of course, a great deal more to learn about Customer Value Maximisation and how it can be harnessed (in a variety of different ways) to drive commercial success in the telecoms industry than we’ve been able to cover in this blog. The goal here has been to introduce some of the key concepts. If you’d like to take a deeper dive into the subject and find out more about how it could benefit you directly, please download our comprehensive CVM White Paper here. 

At Digitalk, our experts provide operators and service providers with Cloud services (including CVM) that enable them to exploit evolving network technologies across the mobile, fixed and broadband worlds to outflank their competitors. We’d be happy to discuss our experience implementing effective Customer Value Maximisation strategies with you directly. Please click here if you’re like to arrange an introductory meeting.

^[1] http://www.dbmarketing.com/telecom/churnreduction.html