Customer churn: Telcos must turn big data into smart data

• ‘Churn rates among telcos have reached staggering heights and are climbing’
• Big data analytics can support a wide range of business initiatives

UTILISING big data analytics to personalise the customer experience will be crucial for telcos to manage customer churn and improve loyalty, according to UK-based research and analyst firm Ovum.
 
It takes, on average, at least 3.5 years for telcos to break even on SAC (subscriber acquisition cost). However, the average customer lifetime for telcos is currently only two years.
 
To offset this, telcos must look to monetise their big data analytics investments and launch initiatives that will deliver value to their customers, reduce churn propensity, and reduce the overall telco SAC, Ovum said in a statement.
 
As a part of its Using Big Data Analytics To Manage Customer Churn and Loyalty KPIs report, Ovum explores the KPIs (key performance indicators) that telcos must use to improve customer loyalty, and highlights practical uses of big data analytics across the business.
 
“Churn rates among telcos have reached staggering heights and are climbing,” said Ovum analyst Chantel Cary.
 
“Across all regions, telcos are seeing customers churn at rates as disparate as 1.5% to nearly 6% per quarter. Telcos recognise the importance of customer retention and understand that big data analytics will help to differentiate the customer experience.
 
“Many, however, have hesitated to launch big data analytics initiatives that will drive personalised offers and encourage the cross-sell of products that will lead to greater loyalty,” she added.
 
Cary said this was confirmed further in Ovum’s survey results which showed that while more than 70% of telcos that have invested in big data have planned to apply big data analytics across the business, less than 20% of these telcos have been able to fully deploy analytics to support customer-focused initiatives.
 
“Poor management of customer-centric KPIs such as Average Revenue Per User (ARPU), SAC and customer satisfaction scores have resulted in a vicious cycle of customer churn for telcos,” she said.
 
“When leveraged properly, however, big data analytics can be used monitor customer sentiment, anticipate their activities and provide actionable insights to trigger proactive measures; it supports a wide range of business initiatives, and can be used to improve churn and loyalty metrics, as well as ARPU and customer satisfaction,” she added.
 
The Using Big Data Analytics To Manage Customer Churn and Loyalty KPIs report includes regional benchmarking data for customer-centric KPIs for telcos, survey data from telcos and telco customers.
 
It highlights which KPIs telcos should be paying attention to and looks at the greater impact that they have on the business. The report also includes practical implementations of big data analytics and includes an industry use case.
 
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