Question

Topic: Strategy

Mobile Customer Retention Vs. ‘show Us The Money’

Posted by Anonymous on 12/28/2006 at 8:24 PM ET 500 Points
I have recently joined a telecommunications company where my job is to take care of all retention activity of the Mobile Partners customers. The good news is that I have lots of ideas and hands-on experience on how to improve their customer retention rates, starting with lifecycle management programs and segmentation, up to revenue stimulation by up-selling, cross-selling, etc. On top of this, I have access to the learnings from the direct channel which will help me develop effective recommendations in terms of campaigns for the customer save/outbound telemarketing.

And now the bad news..As we don’t have ownership of these customers (the partners are acquiring and servicing their customers, the only thing we can see is their usage on our network), it seems that every retention initiative needs to be negotiated with every one of the service providers. Needless to say, they don’t have too many marketing people and everything spins around acquisition/commissions. Also, I’ve been warned that if I go to them with a retention strategy they’re going to ask for more money in order to implement that strategy (eg. ‘we need an extra $50 per customer for an outbound activity’). When asking the management about budgets, I’ve been told that we don’t have a specific budget for retention, but if I can prove that the campaigns will improve the revenue, then I might be able to get some funds.

Given all this info, would really appreciate your thoughts and help on figuring out the best approach on how to deal with the 'show us the money' questions.

Thanking you in advance for all your help.
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RESPONSES

  • Posted by Frank Hurtte on 12/29/2006 at 8:48 AM Accepted
    very interesting problem....

    I wonder if you couldnt convince your partners to turn over the customer list based on an analysis of what is in it for them if the customer stays on the system longer.

    Based on my experience and the comments of many of my clients, there is a tendency for people to switch carriers about every 2 1/2 years. I wonder if there is information on the average age of your contracts.

    Another idea, set up any new sales based on passing along customer data to you. At least then you are establishing a precident for the future.
  • Posted by charles.stannard on 12/30/2006 at 11:59 PM Accepted
    Very interesting post.

    Companies always talk about how much they value their customers, and most aren't willing to allocate any $ to retention.

    Lots of people try cross selling and upsellling to create stickiness by creating barriers to switching. "i.e. if I disconnect, there goes my phone, cable, and internet..."

    I believe that if you take care of your customers, they will stay.

    - follow-up call / letter welcoming new customers
    - call after a month to make sure they are OK and happy
    - user friendly information that allows them to get the most use out of their product (i.e. how to program the remote, or download ringtones)
    - informative, opt-in e-newsletters that talk about the product
    - courteous, helpful, professional customer-touching employees
    - a clean, quick experience on the IVR

    Tighten up the current customer experience, and you'll see an increase in retention, decrease in churn.

    Also, create "save" offers, and "winback" offers....When a customer calls to disconnect, do everything possible to appease him/her and keep him/her. Probe to find the reason fore leaving. Start with empathy and offers to help, and then slowly offer special offers and discounts to keep that person. Set a ceiling as to how low you'll go before you let the customer disconnect. Giving a $100 in discounts to keep a customer for another year is FAR cheaper than finding a new customer. Track the results of the Save Team, "we saved X people with offer no discounts, Y offering them $10, etc.) By saving these people, we saved $X in new customer acquisiton costs. See Sr. Mgmt, retention is important!"

    Don't lose as many customers, and you don't need to spend as many acquisition dollars to meet your targets.

    Any vendor that is doing extra work is going to ask for money, and commissions. I'd argue that they get much less commission for talking to a person they have an existing relationship with, than a "cold customer."

    I would tighten up the basics, create Save offers, and ask for a small amount of money to do an isolated cross selling test.
  • Posted on 12/31/2006 at 3:30 PM Accepted
    I would address the incentive side of the equation with a carrot and a stick. If the sales rep gets 5% for a sale. I would reduce it to 4% and then tell them they can get an extra 3% after xx months if the customer is maintained. The sales person receives an extra 2% and management saves 3% over replacing the customer(the 5% for the initial sale and 5% for their replacement). You may be able to sell it as a win-win situation. the sales rep will receive more commissions and management will save money and increase their growth rate, as the additional business they receive is no longer just replacing existing business, but adding to it. The trick will be getting everyone to think a little more long term.
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