The bottom line is that churn is costing telco companies billions which is not good news, particularly if net revenue churn is in the red.
We all know that acquiring a new customer can cost as much as five to 25 times more than retaining an existing one. Which means that it is critical for telcos in particular, to understand their customer churn rate in detail, and work towards implementing strategies to reduce it and pay dividends for their bottom line.
We explore telco customer churn in the context of the current industry landscape and share three strategies to help increase your customer retention rate.
The changing telco landscape
There are a few factors causing unprecedented shifts in the way people are using telco services these days. Looking back to pre-pandemic times when research by Pew Institute indicates that 57% said they rarely or never worked from home prior to the Coronavirus outbreak whilst the majority (64%) of workers who are able to these days admit they are now working from home at least some of the time, by choice. The side effect has been a general increase in customer expectations to replicate the quality of enterprise grade connection in their home environments.
This means there's been an uptick in the number of customers choosing to increase their internet speeds and move to unlimited data plans- causing an abundance of new telecom companies emerging to try and meet the rising demand.
The telecom industry is saturated and consumers have a plethora of choice. Fierce competition drives customers to jump providers without hesitation for better deals or superior service quality. In fact, approximately 32% of telco customers plan to leave their provider in the next few months or at the end of their contracted period. According to the same research, 58% of customers perceive telco services to be expensive — the second largest consideration behind network speed.
Technology and communications advancement
The emergence of 5G, IoT (Internet of Things), and faster internet speeds has intensified customer expectations. Consumers seek advanced services and seamless connectivity, making them more likely to switch providers if their current one fails to meet these demands.
The Australian Communications and Media Authority performed some research into the Telco industry in July ‘23 entitled “What consumers want – Consumer expectations for telecommunications safeguards” which identified 6 key customer expectations:
1. Accountable - Telecommunications consumer safeguards are clear, objective and enforceable to enable telcos to be held accountable if they do not comply.
2. Transparent – Telco service providers will ensure consumers have access to clear, accurate and relevant information to choose telecommunications products that suit their needs and budget and enables them to understand their billing arrangements.
3. Accessible and responsive – Telco service providers need to be easy to contact, responsive to customer service requests and provide reasonable and timely assistance to all consumers.
4. Flexible – Consumers have flexibility in making arrangements for payment plans, ‘bill smoothing’ or other options to maintain a service and a choice about how they pay their bills so that payment methods do not unnecessarily add to or cause financial stress.
5. Connected – Effort is made to assist consumers to remain connected; action to disconnect or suspend services due to non-payment is only taken after reasonable efforts are made to discuss resolutions with the consumer and financial hardship assistance is made available but is unsuccessful.
6. Fair – Telecommunications services and devices are being sold responsibly and not to consumers if there are clear signs that the services and devices will be unaffordable or are not appropriate for their circumstances.
All six of these expectations are hinged around communication. Communication that is timely, relevant and accessible, with swift and efficient follow up action.
Having a next-gen customer engagement platform in place that can help automate helpful, dynamic two-way conversations at scale has never been more important for Telco teams managing large customer bases that need to be treated as individuals.
Churn reduction strategies
However the tools used are just the first step. Transforming high churn into high retention in your business takes a strategic approach that must be led from the top down, flowing down into every business line. Here are three areas to look into that will help kick start your own ideas for the churn prevention strategies that will work best for your customers, and your business specifically.
1. Dive into the data first
When you understand why customers churn, you can then implement strategies across the business to improve it. Hopefully, across the varying tools and platforms you have been using already you will have access to a plethora of data. Look for clues, commonalities and trends around the customer behaviour across the varying stages of their journey, network performance and typical usage to identify churn patterns and potential causes.
A frequent problem we see our Telco clients struggling with is consolidating the data they have and being able to identify common patterns because it is spread across multiple different tools and areas of the business making it difficult to make any sense of. Pendula can quickly and easily integrate with over 80 different data systems without the need for any IT or developer resource so that you have the full picture in one central view and accurate predictions can be made leveraging our analytics capabilities.
Reliable data insights can also help Telcos tailor packages and services to individual customer needs which can foster loyalty and reduce churn propensity. Better understanding preferences and behaviour, enables telcos to offer personalised deals and incentives that work better for the business, and the end user too.
Leveraging data to predict potential churn patterns can help telcos proactively address issues before customers decide to switch providers.
2. Customer service, reimagined
Customers want to feel valued and as we’ve explained - expectations are higher than ever. Investing in your customer service, care and experience can help to increase loyalty and decrease churn. This may require a complete overhaul of how you do things. For example, one of the key benefits of two-way communications and automated conversational workflow that feels like 1-1 interactions - is higher engagement rates.
Enhancing the customer service experience is crucial. Implementing chatbots and having multichannel options for quick issue resolution and 24/7 support is a standard expectation from most Telcos these days. Having a robust escalations process for exceptional cases which cannot be automatically resolved is key. Knowledgeable and empathetic customer service representatives with autonomy to act on the spot, can significantly reduce churn rates.
Proactive communication is another critical piece of elevated modern customer service. Keeping customers informed about upgrades, maintenance, or new services can strengthen the relationship. Timely communication about potential disruptions or improvements shows transparency (second in the list of key customer expectations above) and a commitment to customer satisfaction.
Finally, introducing loyalty programs, discounts for long-term customers, or referral rewards can incentivise customers to stay with their Telco provider. Regularly surprising and delighting your ideal customers, offering new retention incentives can make a big impact on reducing customer churn because it keeps them engaged and keeps them inclined to stay with you even when they are tempted away.
3. Innovate
Whether you innovate on price or product, within the competitive telco market, innovation is essential. Bundles, network optimisation and other value-add services not only help to attract new clients, they can also facilitate lower telco customer churn.
Beyond basic connectivity, offering additional services like streaming platforms, cybersecurity solutions, or smart home integrations can really increase customer engagement and loyalty.
Partner with the experts
In the ever-evolving telco landscape, reducing customer churn requires a multi-faceted approach. Understanding customer behaviour, delivering personalised experiences, and providing exceptional service are key elements to retaining customers. By staying attuned to market trends and embracing technological advancements while prioritising customer satisfaction, telcos can navigate the challenges and build lasting relationships with their customers.
At Pendula, we understand Telcos and what churn rates mean for your business. Our next gen Customer Engagement Platform will help you improve your customer relationships, by reducing churn and driving upsells.
Leveraging the power of our sophisticated technology and native AI, you can increase loyalty, boost retention and turn telco churn on its head, no matter how challenging the market.
Discover the power of Pendula
Keep your business up-to-date with the changing landscape of customer experience and engagement with Pendula. Create automated workflows and free up your people to focus on what they do best. Talk to an expert about how we can help you to transform your consumer engagement, boost customer experience and drive retention all on one platform.
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