Customer Retention Can Be Tricky!

Without a doubt, the rapid growth of the global telecommunications space seems perfect on paper. Sample this-according to data released by GSMA Intelligence, the total number of mobile connections (including Machine-To-Machine) worldwide stood at 7,747,629,404 (and counting!) while the number of unique mobile subscribers stood at 3,819,504,999 (still counting), both as of the first quarter of 2016. Meanwhile, revenue per year (for financial year 2014) stood at a staggering $1.06 trillion, a 1.99 per cent year-on-year growth.

That, in a nutshell, represents the overall (extremely rosy) picture. Now, let’s examine a few parameters more closely, beginning with a trend that has somewhat recently reared its head and thrown the old order into a tizzy. I allude, of course, to the number of SIM cards per unique subscriber, which has been growing steadily every quarter. Again, as per GSMA Intelligence, in the fourth quarter of 2014, each unique subscriber across the world had 1.80 SIM cards. This number fell to 1.79 from the first to the fourth quarter of 2015, to reach 1.80 once again in the first quarter of 2016. Going forward, the firm has predicted that this number will remain steady, at least until the second quarter of this year. Thereafter, it is expected to rise to 1.81 in the third quarter of this year, where it will remain until the fourth quarter of 2017. (Actually, it is expected to remain at this number beyond this period as well but that would mean going well-beyond this blog’s frame of reference. So, let’s put it on the back burner for the present).

Next up, let’s look at the minutes of use (MoU) per connection worldwide. Now, this parameter has showed an interesting, if somewhat skewed trend. In the fourth quarter of 2014, it stood at 287 and then marginally dropped to 286 in the first quarter of 2015. It then spiked to 292 in the second quarter of 2015. Likewise, the average revenue per user (ARPU) per subscriber displayed similar attributes. It stood at $20.25 in the fourth quarter of 2014 and then continued to marginally decline. In the first quarter of 2015, it fell to $19.76, rose somewhat to $19.95 in the second quarter of 2015 and then reached $19.98 in the third quarter. Then came the fall-specifically to $19.82 in the fourth quarter of 2015 to $19.58 in the first quarter of 2016. And finally, perhaps an operator’s biggest nightmare-churn rates. Though GSMA Intelligence remains relatively tight-lipped on the subject, they have mentioned that churn rates stood at 3.22 per cent in the fourth quarter of 2014. After that, well, it’s anybody’s guess, really, but I reckon the number would be roughly in the same range, give or take.

Now to throw a spanner into the works. The idea of bombarding you with data wasn’t to provide a ready reckoner of the inside workings of the global telecom sector (though that never hurts!) It was merely done to point out that the telecom space is a bit of a paradox, really. Why I stated that the sector is performing well on paper is that while there is little doubt that operators are raking it in, let’s not ignore the fact that parameters like SIM usage, ARPU, MoU and churn rates have a different (and perhaps less pleasant) story to tell.

The very existence of the multiple SIM card trend, for instance, is testimony to this. If we examine the trend at the grass-root level, it boils down to this-industry experts agree that the prime motivation for using multiple SIM cards is to take advantage of inherent price differentials across competing operators in domestic cellular and roaming scenarios. Breaking this theory down further, needless to say, this is most prevalent in emerging markets, where customers are typically more price sensitive. So, obviously, the most lucrative opportunities for price arbitrage are because of on-net and off-net pricing.

The bottomline is this: operators, please sit up and take notice, a customer may be registered on your network but may not be using your services at all! In other words, you may have the number to boast of but the fact is that a part of your revenue is being “leaked” onto your rival’s network, by virtue of the customer using multiple SIM cards!

What’s an operator to do in this situation? Well, one way to go is to pull out the big guns to maximize the share of spend across a single individual’s multiple cellular accounts. This approach will serve to plug any revenue leaks. The inherent problem with this approach, though, is that price no longer holds the pride of place with which competition can be kept at bay. Well, to a fair extent, at least. This brings us to the other (and, in my opinion, the far more interesting way) to hold onto the customer.

Operators, a viable way to keep customers hooked onto your network is to build the right value propositions to mitigate the practice of holding multiple SIM cards. How? By focusing on providing a fair mix of the all-important elements of quality of experience and services, coupled with the services bouquet itself.

Easier said than done, of course. Which brings us to the crux of the piece-what role can customer experience management (CXM) play to help? Well, first things first-telecom operators, please move away from offering limited products and services through limited channels. The first rule of understanding what CXM can do for your business is developing more sophisticated and personalized offerings, which ought to be delivered and serviced through multiple channels. This will help assure the customer your brand is omnipresent and is willing to lend an ear to what they have to say.

Next, let’s dwell on the importance of a multi-channel CXM strategy. The keywords to focus on are these-consistency and ease of interaction. There is (and as customers ourselves, I am sure you will agree) nothing more frustrating than having to having to wait for minutes (yes, really) to contact a customer care representative, or having to contact the same company for the same query over and over again. You just lost a viable customer, dear operators! Not all is lost, though; just ensure you’re listening to your customer very carefully. Once you get a sense of what they need, it’ll be easier to anticipate their demands the next time around. Now THAT is CXM at its best!

Of course, it doesn’t end there. Besides the assurance that your brand is “always-on”, the availability of real-time services is a brand’s trump card. Today’s customer expects, no, demands, a brand to deliver convenient and immediate services. And, naturally, this brings us to the importance of self-service. Simply put- enable your customers to carry out transactions like purchase additional data, pay bills, update contact details, or their plans or handsets-immediately of course-and enjoy the benefits of having implemented a win-win proposition-i.e.-customer stickiness, reduced cost and churn, increased sales and reduced usage of call centres.

To sum up, this is by no means an exhaustive list of the best ways to leverage CXM. Indeed, it isn’t even the tip of the iceberg. Though, while we’re on this note, may I please add that by all means, go ahead and leverage CXM the way best suited to your business requirements. Don’t forget, though, pointers like those given in this blog are mere theory-you will need a long-term strategy that is clearly defined and well-researched. Add to that a focus on the customer’s journey (in an end-to-end manner, of course) and you’re good to go!


Originally published at blog.mahindracomviva.com on February 17, 2016.