In the first post in this series, I looked under the hood of the indirect automobile lending experience, reviewing the sophisticated software and prescriptive analytics that are necessary to transform it. In today’s post I will be exploring customer acquisition and retention in the telecommunications space.
Because telecommunications is an extremely competitive market, dominated by a few large providers, the pressure to acquire and retain profitable customers (and profitable households) is extremely high. Driving down voluntary churn is the name of the game.
The good news is that telecommunication providers have access to massive amounts of customer data, which can be leveraged by analytics to drive smarter, more personal customer decisions and offers. As Dan Bieler, principal analyst at Forrester Research notes, “Telecoms will have to adopt new business models based around data…The data they will have access to is enormous as more devices become connected. Telecoms are in a very good position to leverage this data for the benefit of their customers.”
FICO has been working with leading telecommunications providers to do just that, as shown in the video below.
The key challenge — as illustrated by the very different offers made by the mom’s wireless provider and the daughter’s wireless provider – is accurately structuring and pricing a device upgrade offer in order to either retain or acquire the mom’s business. A lot of questions need to be answered in order to do this well. How profitable is the mom’s business? What kind of credit risk does she pose? How likely is she to switch wireless providers if she gets a compelling offer? What factors would make an offer compelling to her? Price? Product? Service coverage? How will either winning or keeping the mom’s business influence the likelihood of winning or keeping her household’s business?
And once you have those questions answered, you need to be able to execute a decision (based on all of those data points) and present a personalized offer to that customer in real time, at that moment of truth.
In FICO’s experience, telecommunications providers need to excel in a few different areas in order to consistently make excellent retention and acquisition decisions. First, organizations need the ability to manage massive troves of customer and household data and efficiently derive insight into customers’ and prospects’ profitability and credit worthiness. Second, organizations need the analytic sophistication to model customers’ and prospects’ likely responses to retention and acquisition offers respectively. This enables organizations to segment their targets into very granular subsets and design and test (via simulation) different potential marketing offers in order to find the best ones for each. Finally, organizations need the capability to deliver those offers, at the right times and through the right channels, at scale.
FICO’s suite of interconnected Acquisition, Origination, and Growth capabilities for Telecommunications helps organizations do exactly that. If you’re interested in making smarter, faster acquisition and retention decisions, we’d love to talk with you.
In the final installment in this blog series, I’ll dive into the complex and often frustrating world of debt collection.