Retention and Growth


We’ve all heard the notion that it costs more to acquire a customer than to retain one. There are few that can beat the communications industry where it can cost up to 15 times more to acquire a customer.

Last week I read countless stories about the latest and greatest “shiny objects” manufacturers and service providers are putting into their mobile phone offers. In the old days, there was little choice – a handful of providers that offered pretty much the same phones and deals.

Today, if you want an iPhone in America, it can only be on AT&T.

Prefer the Blackberry Storm? It has to be on Verizon.

If you are concerned about retention and growth, those “shiny new objects” can have a major impact. To balance the threat, the communications industry has diversified their offers bundling wireless, fixed line, internet and TV. The theory being that the more you have, the harder it is to switch – a common philosophy in any industry. But they are also getting a lot smarter using analytics to understand customer behavior.

Bell Canada recognizes that bundling multiple services can add risk – risk of default. Knowing it’s cheaper to keep a customer than acquire a new one – a balance has to be made. The last thing they want to do is upset a “good customer” that simply forgot to pay a bill – we all do it at some point and how we get treated has a big impact on our propensity to do business with them in the future. To make the distinction (good customer or not), Bell Canada uses advanced analytical techniques to segment their customers, i.e. classify them according to likely behavior and profitability. With that knowledge, Bell Canada can respond accordingly – a gentle reminder or a firm demand to mitigate fraud.

Another provider used the same analytical approaches, coupled with a deeper analysis of cost and profitability. They had long thought their monthly $100 unlimited use plan was always profitable and that those customers should be retained at any cost. You can imagine the surprise when their cost analysis revealed that 25 percent of those customers could be costing as much as $200 a month to service. Rather than “fire” the customers, they used the same analytical technologies to identify profitable cross sell/ up sell opportunities that would reverse the situation. Over a nine-month period, they reduced that number from 25 percent to 12 percent.

HP’s announcement to buy Palm triggered another approach in my mind. That and a story about the tiny East Indian state of Mizoram. More than half the population of this state uses a mobile phone. India has half a billion mobile phone subscribers and is adding 15 million new customers every month. Smart phones are the future and today it’s all about text, whether it’s sending a message, browsing the internet or posting a comment on Facebook or some forum. The amount of unstructured data (text) flying around boggles the mind. But within that text is a gold mine of intelligence.

In another part of HP they are taking customer relationships to a whole new level. They are trawling through massive amounts of text stored in email, customer surveys, warranty claims and general feedback. Until recently, that would have been impossible. Today they use text mining to classify topics and extract the most useful information. By applying sentiment analysis you now have yet another way to identify whether a customer is happy or at risk of defecting.

Whether you are in the communications industry or not, understanding customer behavior (from all sources) will be the key to future growth/ success.

What’s your story?

What approaches have you seen to improve retention and growth in your industry?


About Author

Jonathan Hornby

Jonathan currently leads a team of marketers focused on message and global direction for SAS' solutions in the areas of Customer Intelligence, Performance Management and the SMB market. He is fascinated with understanding the future and how behavior, culture and communication influence strategic outcomes. Jonathan is the author of “Radical Action for Radical Times: Expert Advice for Creating Business Opportunity in Good or Bad Economic Times”

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