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Customer churn in the telecom industry

I keep hearing how customer churn is the most pressing issue for telecommunications service providers today. If...

you could give them your best advice what would it be? And in your opinion, are there any existing CRM solutions that effectively address the issues of customer retention in similar industries?

This is an issue of enormous proportions, not only in telecom on a universal level, but for many industries and businesses as well. We see customer churn as an international epidemic, wrecking companies and lives along the way. Since telecom was identified in the question, let's look at some of the relevant stats before moving on to solutions. One study has found that, on a worldwide basis, 34 million wireless telecom customers will churn from supplier to supplier as they look for better value; and, by 2004, that number will have grown to 77 million. In the United States, the average telecom loses 2.5% of its customers each month, or 30% a year.

There's no magic CRM bullet to make this go away, but there are orderly, disciplined CRM and customer loyalty approaches to address these issues, in telecom and in most other industries. In our new customer win-back book, my colleague Jill Griffin and I have identified the processes which successful companies are using. Also, from our own experience, we recommend quite a few others. The details could go on many pages, but I'll try to provide a brief summary of the things we consider important.

One of the first key approaches is to adopt a life-cycle understanding and perspective regarding customers, seeing the continuum and interdependence from prospecting and acqusition, through retention and loyalty, and finally loss and win-back. There are relationship, segmentation, and communication insights to be gathered and learned at each stage. Along with this is a lifetime value consideration, which moves well beyond purchase data and manages customers for optimum return.

There are two principal CRM and customer loyalty process sets any company will want to have in place: 1) Saving customers on the brink of defection/winning back lost customers and 2) making your company as defection-proof as possible in the first place. Certainly, with regard to saving/winning back customers, there are several protocols: customer segmentation and grading and the use of churn models; understanding the reasons for churn, researching the customer's present needs, and knowing the types of defectors: development of a recovery plan (short-term and longer-term) to re-establish trust and value perception; measure, evaluate, and refine the plan.

We've developed kind of a CPR approach for identifying, and responding to, customers on the brink of defection. Use of trust is a critical element in these CRM efforts. After all, value perception has broken down, and rebuilding trust will play a major role. One of the techniques we recommend is temporary or permanent win-back teams to help execute the CRM program.

Making a company defection-proof is a strategic issue for both management and staff. First, met and unmet needs must be understood. An appreciation that perceived value is about much more than money is paramount: using the right kind of customer research (loyalty, not satisfaction); a proactive approach to complaint gathering, inventorying, and action; the real leveraging worth of service; turning repeat customers into advocates. We've developed a proven protocol, called the Customer Loyalty Compass, for helping companies do that. Next, we recommend building, and applying, a customer information system that drives loyalty, targeting prospects with strong loyalty potential, utilizing the power of customer-focused teams and teamwork throughout the company; and we have also identified nine best practices for building a loyal staff base, essential for customer loyalty.

Again, having a holistic life-cycle approach to customers, rather than fragmented efforts, concentrating only on acquisition and passive CRM with current customers, is the very best advice I can provide on beginning to think about, and utilize, proactive CRM solutions.  

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