Wednesday, September 28, 2022

Telecom operators and reducing customer churn

Telecom operators usually consider two main factors in their plan to maintain and increase their business revenue. The first factor is the act of acquisition where companies are more focused on acquiring new subscribers to use the service being offered by the telco. The second factor is the act of retention whereby the goal is to maintain the current users of the service for as long as possible. In terms of costs – in the majority of cases – acquiring a new user can cost up to 5 times more than retaining a current one. In parallel, a slight increase in the retention rate by 5% can lead to increasing profits by an average of 60%, according to a report by Bain & Company.

Churn rate introduction

According to the American Customer Satisfaction Index which measures the overall customer satisfaction and its determinants by sector, the report cites that the telecommunication sector is one of the top 10 with a score of 72.2. 

From the above insights, we can understand the importance of retention. The opposite of this is churn rate, which addresses users who are leaving a specific service. Customer churn is considered an essential factor for any innovative service that a telco intends to launch.  

How can telcos reduce customer churn? 

Reducing the churn rate for telcos is challenging and can vary from one service to another. Tapping into the user experience is key to reducing the rate. By using data collected on customer behaviors, telcos can tailor a service to match customer interests to ensure they deliver the best service and reduce the customer churn rate significantly.

A daily-life scenario 

Let’s consider a family of 5 who use data on a daily basis. In the morning, the mom may be looking for recipes and meal inspirations, which would enable a telco to customize content to match the needs of the user. In the afternoon (when school ends), telcos ascertain that the content being consumed is primarily by the kids in the family, hence, telcos can push relevant content which may peak a young person’s interest at this particular time of day. 

The way forward

The conclusion that can be made here is that telco services are in need of more real time decision making on the type of service/content offered to their subscribers, which amplifies the need for intelligent systems like AI, ML, etc. to be integrated seamlessly within their network.

Article Written by Mr. Hussein Taki, Business Development Director at Mondia Group.