Customer retention is 5- 10 times cheaper than customer acquisition.
It is natural then for Telco Operators to concentrate their efforts to avoid churn. Churn Prevention is one of the final goals of Customer Service and Customer Experience Management.
If Service Level, NPS, CSAT are operational KPIs to measure Customer Service and Customer Experience performance, the ultimate measure of the success is the Churn Rate and ARPU.
If we speak about Retention, we are speaking about 3 main areas:
This article is focusing on Reactive Retention showing some good and not so good practices.
Voluntary Cancellation and Reactive Retention
Bad practice👎: Many Telco operators are making very difficult for customers to resile their contract:
Even if at the first sight seems natural to try to keep customers by making as difficult as possible their cancellation, finally this has never paid-off. In most of the countries world-wide customers will just stop paying their bills, without cancelling their subscription (suit in court these contracts are financially not worthwhile for the Telco) or even worth, they goes to competition to sign-off a new port-in contract (portability strict regulated in most of the countries, in majority of cases the costs of portability compensated by the new operator)
There is always better to capture immediately the customer intention to cancel their subscription and take immediate actions to reactively retain these customers.
Bad practice:👎 Other usual practices are the retention call-back of customers after they signed-off a contract cancellation document or submitted online their cancellation request. Customers signing off the cancellation of their subscription have taken a decision and calling them back is a hard win-back effort, to convince customers to change an already taken decision.
Good practice: 👍Best results of retention efforts are achieved when contacting customers with the retention effort before customer finally decided to cancel their contract.:
Offer contract cancellation processes across all channels (calls, mobile apps, online) and intercept the process by putting the customer in contact with retention specialized agents during the contract cancellation sign-off:
Even if customer will physically visit a shop / service center to sign-off, design the cancellation process in such a way that customers don’t get the sentiment of “process completed” once they have signed-off the contract. Introduce a call-back from “save-desk” team within 24 hours to finalize the cancellation.
In a nutshell the best practices for the reactive retention efforts are to address customers which are intending to cancel their subscription before they have cancelled their contract, to capture their intention and address it immediately.
Once they have signed-off the contract cancellation the retention effort is practically a win-back effort which is much less promising
Obviously, the retention offer is as critical to the convince the customer to stay success as the cancellation and retention process itself.
Bad practice:👎 A financial discount as retention offer is not the most effective solution
One of the best practices 👍with retention results of up to over 70% is to create a specialized retention team which will personally ask the customer to give them a last chance to solve their issue, and the agent will personally take care of solving the customer issue. The “Save Desk” team should be empowered with highest priority when a technical or financial ticket is opened, so that customer problems will be solved in this very last chance to regain customer trust.
There are even countries with very “friendly” cultures , where only the personal excuse of the save desk agent produce wonders. I saw in Morocco for example retention rate of 25% only after a personal dialogue with the customer
Bad practice: 👎Sometimes customers are canceling their contracts due to financial reasons. To offer customers a flat-fee financial discount is not the most effective retention offer.
Best practices 👍are to foresee two levels of retention offers:
Involuntary Churn and Reactive Retention
In most of the countries of the world (western European countries are an exception), customers willing to stop using the services of the operators are just stopping to pay their bills.
The operators may well have the legal right to sue the customers, but in most of the cases the cost of legal procedures are higher than the amount of money which can be recovered from customers – therefore operators are not taken any legal action in most of the cases.
In many countries a big percentage of postpaid customers are waiting every month to be disconnected for not paying the bill to then pay within 24-48 hours their bill and reactivate their line. For these types of customers there is even natural to not pay the bill anymore if they decide to stop using the services of the operator
Obviously for all bill payments there are dunning processes with exhaustive steps – notification sent to customers per email, sms, outbound IVR – up to handing-over the disconnected customers to specialized collection companies.
Best practices 👍: The nonpayment of the bill after few days of line disconnection (first disconnected for outbound calls and data traffic) can be well interpreted as a contract cancellation intention. Similar Retention processes may be put in place to avoid the involuntary churn:
Prepaid Churn and Reactive Retention
We address here the prepaid customers who despite all proa-active retention efforts, they exhausted their balance and stopped using the operator services.
During the Sim validity period, many customers with no balance are still using their SIMs to receive calls and messages and use internet over WLAN access.
Best practices👍: These customers should be addressed with Retention offers sent over SMS, notified in the mobile app which will motivate them to recharge their balance and restart using all the services.
There are only very few of High-Value prepaid customers which should be even addressed by outbound retention calls