New Delhi, Oct 8: Telecom companies are spooked by churn —which is the rate at which loyalty-deficient customers switch over to the rival’s service.
They have good reason for worry about this phenomenon because the “churn” in the cellular business is as high as 25-30 per cent, with the most fickle customers belonging to the pre-paid category.
Enter SAS, a business intelligence player in the information technology sector, which boldly claims that it can bring down the rate of churn in the telecom sector.
SAS, which has launched a customer retention solution for AirTel in New Delhi, says its software solution monitors the levels of dissatisfaction among customers and gives up-to-the-minute feedback on the rate of churn so that the company can immediately deal with a potentially dangerous situation before it goes out of hand.
Gourish Hosangady, managing director of SAS India, says, “There are various factors which lead to the drifting of customer base. Our solution helps to clearly detect the real areas of trouble for any operator”.
If a customer is dissatisfied with the services of his existing operator, he might choose to switch to another operator, with price and high marketing costs continuing to be the biggest differentiators and attraction for any customer to switch loyalties from one operator to another.
With the fourth cellular operator launching operations in 17 out of 22 circles in the country, the Indian cellular market is in for rapid change and growth. Fierce competition has seen large price cuts and value-added services being offered to retain and gain market share.
“One of the key deterrents to churn is effective customer service. It therefore is necessary to have solutions in place that segment and analyse customer behaviour and predict the propensity of existing customers to churn. It also provides critical information for proactive action on part of the management to provide effective client service,” Hosangady said.
The primary goal of a churn analysis is to create a list of contracts which are likely to be cancelled in the near future. The customers holding these contracts are then targeted with special incentives designed to deter cancellation. Also, at a more sophisticated level, the telecom companies attempt to detect the reasons for an expected cancellation because this information may help customise the offer.
In a marketplace where the cost of attracting a new customer is at least five times greater than the cost of retaining an existing one, the ability to retain and attract loyal customers as well as maximise their lifetime value is a crucial competitive advantage.