By Trent Taylor, Strategic Marketing Director, XO Communications
The telecommunications industry is ultra-competitive and growing at a rapid pace as more and more people become active Internet and mobile users. This presents both enormous opportunities and challenges for communication service providers (CSPs) who have to keep pace with an ever-changing marketplace, and meet rising consumer demands efficiently. Where Internet and mobile phone access used to be considered a luxury, it is now a necessity. Simply consider the landscape for the consumer today:
- In 2011, there will be over 2 billion users on the Internet, and about half of those will access the Internet through a non-PC mobile device — a more than tenfold increase in just the past five years according to IDC.
- More than 330 million converged mobile devices will ship this year, a 24 percent increase over 2010 volumes.
That’s a lot of people using a lot of phones and web time. As such, today’s customers are more informed and decisive than ever before – and they demand top-drawer service. In order to better help CSPs navigate this competitive landscape, now more than every they are turning to business analytics so that they can use all available data to predict business outcomes, spot trends as they emerge, improve customer service, identify problems before they begin, limit network downtime, drive customer value and reduce churn (or customer loss) by building a better understanding of the customer. If you think about it, CSPs know where you shop, when you talk on the phone, and where you sleep – rich, vast data that helps shape an understanding of their customer. With the vast amounts of data they posses, CPSs can create a pretty strong profile of the customer – their wants, their likes, and their tendencies.
By leveraging real-time information from every point of contact, CSPs can proactively manage their customers based on their preferences and behavior, which will improve customer satisfaction and revenue growth, while reducing marketing costs and lost business.
Recently here at XO Communications, we implemented IBM predictive analytics, helping us reduce customer churn by nearly 50%, saving us millions of dollars by uncovering deeper insights into customer behaviors, spotting trends, identifying those likely to defect, and taking proactive actions to keep our most valuable customers.
Like many CSPs, XO has vast amounts of customer data, including demographics, transaction history, calling patterns, and conversations with call center agents. We compiled more than 500 data variables on our customers, and used the software to identify specific trends and correlations in those variables that were the most predictive to voluntary churn. By applying those results to our current customer base, we could then accurately predict and prioritize proactive engagement with customers who carried the highest churn scores.
Traditionally, retention programs focus on keeping customers in contract, and focus on when contracts should be renewed. IBM predictive analytics allows us to go beyond just looking at contract end dates by developing a better understanding of the entire customer experience. This allows the organization to prioritize proactive outbound calls to “high risk” customers and better organize resources. Now, each client services manager can monitor churn risk on up to 400 accounts. Before, XO would otherwise need twice as many client services managers to achieve the same level of churn intervention through frequent contact and relationship building.
Predictive analytics reveals that some data patterns can be counterintuitive. For instance, XO had a number of customers who were more susceptible to churn if they received a suspension notice early in their contract, rather than more recently. We soon realized that these customers had billing errors that were not quickly resolved. Soured by this experience, the customers chose not to pay until the errors were corrected. Acting on these results, we changed our billing process to “first bill” reviews with customers to prevent billing errors at the beginning of the customer relationship. This has dramatically reversed the churn trend of these customers because they feel engaged and in turn are happier, and it has helped us stay relevant and more productive. In the end it’s a win-win for everyone.
Read more here about how IBM Business Analytics is helping improve customer retention by nearly 50 percent at XO Communications: www.ibm.com/press/us/en/pressrelease/35740.wss
This week IBM is hosting its annual Information on Demand Conference and Business Analytics Forum in Las Vegas. XO Communications Trent Taylor is among several thousand attendees who are learning how to unlock the potential of big data and analytics. Check out more about the conference here: www.ibm.com/press/IOD2011