Customer Experience Management - The Telecom Industry Ahead
The telecom service providers have always followed a growth trajectory in the past decade through increase in customer base as well as adding considerable numbers to their annual revenue. They have kept the pace with the competitors and have played the game with amazing success in the past.
But in the recent times, they are facing with an enormous challenge of adaptation to the matured, highly penetrated markets coupled with global recessionary effect. Therefore, a shift in paradigm to adapt their business models to the current situation is highly required and the need of the hour is the customer experience management to attain a higher retention ratio.
The Importance of Telecom
Challenge in modern telecom industry - Customer retention In the modern day telecom industry which has attained high penetration level, acquiring a customer is getting even costlier. Industry analysis states that only 25% of the acquired customers stay with the company after an year's time and on an average only 20 -30% of the entire customer base is revenue earning/profitable customers.
This dugs a deep hole in the balance sheet of the telecom service providers. Due to the churning effect of the customers, there is a huge imbalance created in gross additions of the customers and net addition. Forward path: Way to customer retention - Customer experience managementTherefore, the major challenge for the telecom operators around the world is managing customer churn.
It affects profitability of the company if a customer churns before the company can earn back the investment it incurred in acquiring the customer. Therefore, it is very critical to indentify the profitable customers and retain them.
Retaining the profitable customers includes 2 steps:
1. Identifying the revenue earning customers from the entire customer base
2. Managing the customer experience and customer value for the revenue earning customers Identifying the Revenue earning customers.
The telecom service providers need to define their business logic for identification of the revenue earning customers, for example: the customers with usage more than ARPU are classified as high valued customers, or in case of pre-paid, customers recharging more than INR 250 per month (In Indian scenario) are considered as revenue earning.
Depending on the business rules the entire customer base needs to be segmented into revenue earning customers and non-revenue earning customers. Managing customer ARPU Average revenue per customer. Managing customer data in scale of 40 - 50 millions is a challenge. This can be achieved with the help of various business analysis tools (eg: SAS, SPSS, Teradata, etc.).
Customer experience management
After the identification of the valued/revenue earning customers, managing those identified group of customers are of utmost importance. Focusing on customers instead of products Over the past years, the telecom service providers have concentrated on introduction of new products. They have originated new products/ services and then sought to find or create a market for them.
But increased competition among the existing service providers and lower barrier to entry for new players has resulted in the growth in predatory activities in the telecom industry. Moreover, the cost of acquisition of new customers has increased considerably. Hence, in the modern times, there is a gradual shift in focus from introduction of new products for acquiring new customers to customers' experience management is observed.
Currently, the Telco's need to concentrate on retaining the existing valued customers and targeting more wallet share of each customer by creating more value and improved customer experience. For example: In UK, O2 has aligned its functional silos to obtain its existing customer's perspective for making product decisions and designing promotional offerings. They have focused on retention by placing equal weight for renewals and acquisitions. By this the company has reduced its churn figure to half of its existing number.
But in the recent times, they are facing with an enormous challenge of adaptation to the matured, highly penetrated markets coupled with global recessionary effect. Therefore, a shift in paradigm to adapt their business models to the current situation is highly required and the need of the hour is the customer experience management to attain a higher retention ratio.
The Importance of Telecom
Billing Software
Challenge in modern telecom industry - Customer retention In the modern day telecom industry which has attained high penetration level, acquiring a customer is getting even costlier. Industry analysis states that only 25% of the acquired customers stay with the company after an year's time and on an average only 20 -30% of the entire customer base is revenue earning/profitable customers.
This dugs a deep hole in the balance sheet of the telecom service providers. Due to the churning effect of the customers, there is a huge imbalance created in gross additions of the customers and net addition. Forward path: Way to customer retention - Customer experience managementTherefore, the major challenge for the telecom operators around the world is managing customer churn.
It affects profitability of the company if a customer churns before the company can earn back the investment it incurred in acquiring the customer. Therefore, it is very critical to indentify the profitable customers and retain them.
Essentials For Telecom Business Continuity
Retaining the profitable customers includes 2 steps:
1. Identifying the revenue earning customers from the entire customer base
2. Managing the customer experience and customer value for the revenue earning customers Identifying the Revenue earning customers.
The telecom service providers need to define their business logic for identification of the revenue earning customers, for example: the customers with usage more than ARPU are classified as high valued customers, or in case of pre-paid, customers recharging more than INR 250 per month (In Indian scenario) are considered as revenue earning.
Depending on the business rules the entire customer base needs to be segmented into revenue earning customers and non-revenue earning customers. Managing customer ARPU Average revenue per customer. Managing customer data in scale of 40 - 50 millions is a challenge. This can be achieved with the help of various business analysis tools (eg: SAS, SPSS, Teradata, etc.).
Prefabricated Telecom Buildings
Customer experience management
After the identification of the valued/revenue earning customers, managing those identified group of customers are of utmost importance. Focusing on customers instead of products Over the past years, the telecom service providers have concentrated on introduction of new products. They have originated new products/ services and then sought to find or create a market for them.
But increased competition among the existing service providers and lower barrier to entry for new players has resulted in the growth in predatory activities in the telecom industry. Moreover, the cost of acquisition of new customers has increased considerably. Hence, in the modern times, there is a gradual shift in focus from introduction of new products for acquiring new customers to customers' experience management is observed.
Currently, the Telco's need to concentrate on retaining the existing valued customers and targeting more wallet share of each customer by creating more value and improved customer experience. For example: In UK, O2 has aligned its functional silos to obtain its existing customer's perspective for making product decisions and designing promotional offerings. They have focused on retention by placing equal weight for renewals and acquisitions. By this the company has reduced its churn figure to half of its existing number.
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