Telecoms Need a Quantum Leap in Customer Centricity
July 24, 2014
July 24, 2014
To engage customers beyond basic subscription levels, telecoms will need to make a quantum leap in customer centricity by enhancing customer intelligence capabilities for personalized offers and service. Retaining customers is a cornerstone priority that will help telcos to increase profitability as their revenues become more dependent on providing access to digital platforms and data, rather than voice services.
Harnessing customer data to personalize offers is an imperative that can help with customer retention. Rather than placing a relentless focus on chasing new customer acquisition, consider a few reasons why making existing customers happier, will pay dividends over the longer term:
The probability of selling to an existing customer is 60 – 70%. The probability of selling to a new prospect is 5-20% – Marketing Metrics
A 5% reduction in the customer defection rate can increase profits by 5 – 95% – Bain & Company
It costs 6 – 7 times more to acquire a new customer than retain an existing one – Bain & Company
A customer is 4 times more likely to defect to a competitor if the problem is service related than price or product related – Bain & Company
Dissatisfied customers whose complaints are taken care of are more likely to remain loyal, and even become advocates, as those that are ‘just’ customers – Strauss & Seidel
Considering that customer profitability tends to increase over the life of a customer—even with product and service commoditization—it’s critical that telecoms focus on retaining the market share they have in the face of intense competition. The lines have blurred between service providers.
Wireless providers have poached landline customers from phone companies. Satellite TV companies are stealing cable TV customers and new categories are further fueling the battle to stem customer churn. There must be a better way to stop your customers from becoming your competitor’s acquisition targets and break out from flat to moderate growth that restarts the delivery of shareholder value.
This is the time to consider the value that your contact center vendor can provide in helping your telco gain a long-term foothold with customers—before the churn becomes too costly. It’s one thing for a telco to say it’s focused on becoming customer centric and another to deliver. Just look at the failure of K-Mart, for example. After it didn’t walk its talk on the promise of customer centricity it filed for one of the largest bankruptcies in the history of the retail industry.
Contact center vendors are positioned by their very nature to help telcos put customers at the center of the company—rather than products. Their job is to focus on your customers’ happiness more than any other operational function in the company. They have more one-to-one contact with your customers and more data about their likes, dislikes, preferences and needs than any other department.
While it’s important to measure the profitability of average revenue per account (ARPA), it’s also important to measure and manage the cost to service, satisfiers and dis-satisfiers; data which your contact center can provide to help connect those insights to customer segments to drive operational improvements across the enterprise.
By understanding the drivers of customer sentiment that increase satisfaction, your contact center can help you to:
Customers are assets that will generate profits over the longer term. As such, they should be treated as investments, rather than viewing the provision of support and service as a cost of doing business. But, for profitability to remain the focus, telecoms must shift their perspective from product performance to customer performance. The pivotal point is to create more lifetime value per customer which means extending the length of the relationship and the product and services mix that customers will acquire and use over time. The contact center is the strategic point of contact for building this relationship.
When you do the calculations, you’ll find that even a small reduction in churn matched with an incremental increase to margins can lead to a major increase in lifetime value. If your current contact center providers aren’t helping you to accomplish this outcome, it may be time to consider a vendor that has the expertise backed by solid, tried and tested methodologies that can help turn customer lifetime value into a metric that transforms the profitability of your company. The Temkin Group Q1 2013 CX Survey found that 82% of companies considered competency leaders in customer experience beat those considered laggards in financial results. There’s no reason your telco can’t achieve this result, as well.