In recent years, telecom providers have focused on offering more competitive rates and services, often at the expense of customer engagement and brand loyalty initiatives. Given telcos’ struggles to stand apart from the competition, it is not surprising that the industry typically sees high rates of customer churn: in 2020, for example, U.S. telcos experienced 21% churn. As telcos seek to increase their value to their customers, retaining them will be extremely important. When telcos develop a better understanding of the factors that contribute to customer churn, using data monetization more effectively will result in better retention.
Factors leading to customer churn in the telecom industry
According to a recent survey, more than half of Americans (52%) listed poor customer service as the main factor behind their decision to cancel their phone, internet, TV or cable contract. Of these customers, 64% said that they had experienced poor customer service over time, compared to just 17% who ended their contract after a single negative interaction. A majority of cancellations occur because the problem requires more than one contact or because the customer is tired of repeating themselves to numerous customer service representatives.
An additional factor in high customer churn is competitive advantage. Approximately one in five (21%) customers left because they learned that another company offered better service, and nearly as many (18%) left because they received a better offer from a competitor.
Finally, telcos need to consider the impact of network outages and poor service delivery. This is clearly demonstrated by a recent analysis of real-time call data, which showed that customers experiencing more than 10 dropped calls per month were 8 times more likely to churn.
How can the telecom industry benefit from data monetization?
In a turbulent economy, it is not surprising that telcos are starting to focus on customer experience as they look for new strategies to reduce customer churn: research undertaken by McKinsey shows that improving the customer journey can increase revenues by 10-15% while also lowering the costs of providing service by 15-20%.
One of the best ways to improve customer service and reduce churn is data monetization, which lets telcos leverage customer and usage data to increase revenues and lower costs. In addition to monetizing data, telcos can use data and analytics to improve business processes and decision-making processes for customers, deliver personalized products and services, and optimize sales and marketing efforts. Adopting these hyper-personalized strategies plays an essential role in helping telcos monetize customer data and contributes to a stronger bottom line.
Reducing customer churn rates by monetizing data
Data collected by telecom companies lets them generate a comprehensive picture of the customer journey. This data includes personal information, device and usage history, upgrades and rebates, interactions with customer service channels, network access history, and downtime logs.
Telcos can use this data to identify customer demographics that may be more or less likely to churn in given circumstances, and tailor their communications and offers accordingly. For example, data from a Canadian telco shows that customers on prepaid plans are consistently 2-4 times more likely to churn each month than customers on postpaid plans. By identifying when a prepaid customer is likely to churn, the company can send targeted offers before that time to encourage that customer to convert to a contract. Similarly, if the company knows that postpaid customers are more likely to churn after a service interruption, they can offer upgrades or other incentives that will encourage them to stay.
Telecom companies can also use big data and analytics to tailor their marketing strategies and deliver precisely-targeted offers to specific customer segments. Analyzing interactions with customer service representatives can build a more complete picture of each customer’s pain points, and algorithms can be trained to identify high-risk customers who may be about to cancel a service.
Using business text messaging to improve customer retention for telecommunications companies
How does business text messaging reduce customer churn? Studies show that 90% of text messages are read within three minutes, and 82% of people say that they open every text message they receive. In fact, 70% of customers say that they pay attention when a business sends them a text message. Compare that to the mere 20% of emails that get opened, and the benefits of text messaging for business are clear.
According to Deloitte’s 2021 outlook for the US telecommunications, media, and entertainment industry, decreased in-store traffic during the pandemic highlighted the need for telcos to adopt multiple channels and touchpoints as a way to deliver more personalized experiences and increase customer satisfaction. Telcos have an opportunity to leverage contactless channels such as messaging and can drive engagement by linking these channels to rewards programs and exclusive opportunities.
Today’s consumers are looking for meaningful connections from the companies they do business with, and they want to receive personalized communication at every touchpoint. Using business text messaging is an ideal way for telecom companies to deliver the hyper-personalized experiences customers expect, get ahead of each customer's pain points quicker by leveraging available data and ultimately reduce churn.
Telcos already have access to the customer usage data needed to identify customer pain points: adding hyper-personalized business text messages is the next step in improving their customer service strategies delivering offers that persuade customers to stay. Lowering customer turnover rates depends on delivering the right messages at the right time, and Statflo makes this happen.
Increase customer satisfaction and reduce the customer churn rate in the telecom industry by sending precisely-targeted messages, powered by data. Book a demo today to learn more.