What should pay TV or wireless providers do when subscribers call to cancel? The obvious answer is to respond with an offer that will entice them to stay.
Retention offers are the most basic line of defense against churn, and communication service providers (CSPs) are becoming increasingly creative with such offers. Today, with advanced analytics technologies at their fingertips, service providers can even pre-empt cancellations by leveraging data to inform their retention strategies.
Retention offers cannot be one size fits all, and if providers want to truly stem churn rates and avoid giving money away to customers who don’t change their behavior, they must customize their responses. But with so many different levers to pull, how does one know which offers will be most effective with which customers? For many organizations, it is difficult to ensure the right callers get reached with the right offers and messaging, at the right times.
That’s why many leading service providers are taking a test vs. control approach to refine their outreach and offers to customers who are at risk of churning. By first testing various offers in subsets of the subscriber pool and comparing the response of those customers to responses from other, similar customers that did not receive a given offer, they can measure the offer’s direct, incremental impact. This method enables executives to establish a cause-and-effect relationship between new programs and any resulting changes, and to use these insights to better target high-risk subscribers and combat churn.
Even service providers who are already trialing various approaches are upping their game with sophisticated analytics software that enables them to truly test and better understand the impact of customer retention strategies.
For providers, rapidly testing programs to combat customer churn will be critical as they seek to refine personalized retention offers and responses based on caller profiles. Based on APT’s work with leading providers, key characteristics to consider when crafting custom offers include:
● Average revenue per user (ARPU);
● Home ownership;
● Tenure;
● Usage data, such as viewing hours, text message send and receive rates, data usage and more;
● Past customer interactions with the brand, including times they have issued complaints, requested service upgrades and more.
‘Right-Sizing’ Promotions
Using findings from test vs. control analysis, CSPs can take into account the characteristics of different customer segments to answer many key questions, such as: How do I offer this customer the right promotion without overinvesting in too large of a discount, or offering one that is too small to be enticing?
When trying to prevent customer churn, it can be easy to extend offers that are too generous — that is, an offer greater than what the customer would have been willing to accept. By testing different offers to learn which promotional threshold is best received by each customer segment, organizations can ensure they “right size” their promotions.
Another strategy that many providers turn to when customers call to cancel is offering free products or services, rather than a discount or promotion. These products or services can range from device giveaways like new phones to distinct offerings like home security services and free premium TV channels, and providers will need to determine which product and service giveaways will resonate with which customers.
Pre-empting Customer Churn
Some churn is inevitable due to outside factors, such as customers moving apartments, while churn due to factors such as expiring promotions is often preventable. Organizations have an opportunity to test many facets of an outbound offer, including the platform of communication, be it a call, text or email; its timing, in relation to the expiration of the customer’s contract; and the pairing of the promotion with add-on offers.
Testing also has the power to help pre-empt cancellation calls altogether by identifying which customers are most likely to respond positively to proactive outreach. For example, one effective way providers can reach customers likely to churn is through the common industry approach of trigger campaigns — outreach catalyzed by a customer hitting a certain threshold, such as calling three times to complain about service.
To inform elements of its retention strategy, a provider could test different versions of trigger campaigns — via different platforms, like mobile and direct mail, or with different offers — to identify which will lead to the highest retention rates among different customer segments.
As residential and wireless providers continue grappling with churn, many are experimenting with innovative new strategies. By taking a sophisticated test-vs.-control approach, CSPs can scientifically craft targeted retention strategies to maximize both customer satisfaction and long-term growth.
Jarred Brown is senior vice president at Arlington, Va.-based analytics software company Applied Predictive Technologies (APT).
