In August 2017, we were approached by one of the biggest Polish telecoms with almost 1 million customers. They were struggling with growing customer churn, which was their biggest problem, and they couldn’t prevent it due to multiple factors, including ineffective customer retention strategy, lack of essential information, and too long feedback loop.
The customer retention strategy was based on randomly contacting as many of the customers whose contract would expire in the next couple of months as possible, and giving hefty discounts to the ones that have already cancelled their contract.
The client had a huge number of product bundles (aka. offers) that were created “just in case”. The number was so high that it was literally impossible for sales force to learn how to sell the services, and they ended up learning a few selected offers that were the easiest to sell.
The staff was lacking information about which customers were most likely to churn and what the factors impacting such risk were.
The feedback loop on how employees’ actions and campaigns affected sales metrics (especially churn) was extremely long; as a result, decisions on who to contact and what should be offered were based on gut feeling of front-line sales force and their managers instead of hard data.
Many of the employee’s actions were based on guessing and randomly choosing customers to contact or offers to make, so it was difficult to reduce churn, and using the old strategies and techniques made it virtually impossible. Instead of making use of data, they were trying to make use of their intuition. As our client’s employees put it: “we were blind on one-and-a-half eye”.
The aim of our cooperation was to reduce churn by 2 percentage points in the customer segment where churn was the highest, and the then strategy proved to be ineffective. Assuming market averages for that market:
- Average Monthly Recurring Revenue Per Customer (ARPC) of $15,
- Average Contract Duration of 18 months,
we would be saving our client $500k a year if we delivered such results. Success also meant implementing our solution for the whole customer base.