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Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit
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Multichannel Retention Strategies: A Steady Diet of Low-Hanging Fruit

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InfoCision Chief Marketing Officer Ken Dawson presented at the DMA 2010 Conference & Exhibition. He shared how to effectively measure churn rates in order to retain customers; how to utilize Business …

InfoCision Chief Marketing Officer Ken Dawson presented at the DMA 2010 Conference & Exhibition. He shared how to effectively measure churn rates in order to retain customers; how to utilize Business Intelligence to identify which channel is most effective for each customer/donor; and how to execute a life time value analysis to better understand which customers/donors are worth keeping vs. those who are not profitable.

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  • 1. Agenda • Identifying Churn and measuring Life Time Value • Cost of Acquisition vs. Retention • Utilization of Business Intelligence and Analytics to identify optimal channel(s) for your customer • Real World example of an effective Multi-Channel Retention campaign utilizing Analytics and Cost- Progressive Channel Strategy
  • 2. $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Acquisition Current Customers Farmer Retention Farmer Acquisition
  • 3. $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $$ Simply stated: It’s the act of losing your customers due to competitive pressure, unhealthy relationships, financial constraints, etc. What is Customer Churn? How do most of us deal with customer churn? REACTIVE!
  • 4. • The average consumer service company experiences between 30% and 70% customer churn annually • The average company has between a 60% and 70% probability of success selling more services to a current customer. These figures drop to a 20% to 40% probability, and then to a 5% to 20% probability, when selling to former customers or prospects, respectively. • Last year, customer churn collectively cost wireless operators an estimated $10 billion. And that’s just the costs of activating and deactivating services. Customer Churn Costs
  • 5. $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $$ • As little as a 5% reduction in customer churn can boost net profits by as much as 20%. • A 5% monthly churn rate for a services industry means a company has to acquire 1.7 new customers just to keep one. • Hundreds of studies have proven that most companies spend $10 to acquire a new customer for every $1 spent in retention strategies! Customer Churn Costs Knowing this, why don’t we invest more in our current customers?
  • 6. $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Advertising Target Marketing Technology Modeling/Profiling Incentives Customer Acquisition
  • 7. Case Study: AccuQuote • A leading provider of term life insurance • The Challenge • Inbound leads needed to be better prioritized for the sales team • “We knew that 20% of our leads were unlikely to move through to paid status – the problem was that we didn’t know which leads were which.” • Sean Cheyney, Vice President of Marketing and Business Development
  • 8. Case Study: AccuQuote • The Solution: • Score leads based on their likelihood to convert to policies • Leads are ranked on a scale of 1 to 10 with 1 being most likely to convert and 10 being least likely • The most likely-to-purchase prospects are then moved to the top of the queue for the outbound dialer and handled by live agents • Leads that are judged to be less likely to convert are contacted through email or passed to trainees
  • 9. Case Study: AccuQuote • The Result • 4-5% increase in sales conversion overall • Increase in conversion plus decrease in expense leads to lower cost of acquisition • A boost to sales team productivity — agents gained an extra hour to spend on cross-sell and needs analysis • No loss of sales in the segment that received email only
  • 10. Case Study: Education Client • A leading provider of educational support services to consumer households • The Challenge • Thousands of leads coming in and being distributed to franchise owners • Dissatisfaction from franchise owners over quality of leads • Need to prioritize efforts to maximize revenue • 3% lift in conversion equates to over $30mm in additional revenue
  • 11. Case Study: Education Client • The Solution • A multi-channel approach to following up on leads based on lead quality • Use a combination of phone, email and direct mail to contact high potential consumers • Use a lower cost contact method for lower potential leads
  • 12. Case Study: Education Client • Example: • High potential customers receive premium DVD, personalized direct mail piece directing consumer to personalized URL, email and phone contacts on a set schedule over 2 weeks • Low potential customers receive postcard only
  • 13. Case Study: Education Client • The Result • Compared to a control group, the test group utilizing a tiered, multi-channel approach saw a 41% increase in initial enrollments within the targeted groups • An overall 8% increase in conversion overall • A 360% ROI
  • 14. $ $ Customer A Customer B Are all Customers created equal?
  • 15. $ $ Calculate the Customer Lifetime Value Formula for CLV Present Value = Future Value/(1+i)n where (1+i) = Interests and n = No of Years
  • 16. $ $ First…Who do you WANT to keep? • The customer lifetime value can be used to drive decisions such as which customers to target, how much to spend on saving them, what is the most effective media to use to communicate with them, and how best to serve them to ensure that they remain loyal for years to come • Common questions that service providers should be asking to be used in analytics: • Am I accurately capturing, on a per-subscriber basis, all relevant revenue and cost events? • Am I capturing information necessary to identify different types of churn; e.g. structural, voluntary, and non-payment churn? • What can the data tell me that I can act upon? • Can I tell if my business is changing based on my data? • When looking at how to keep my customers—am I recording (properly) why they left?
  • 17. $ $ Utilizing Business Intelligence in Retention • First, you have to decide who you WANT to save • Analytic data models and human analysis combine to return recommendations on upselling and retaining individual customers drives ROI • Develop a customer contact strategy. Some companies have a policy of six touches per year, remembering that a bill is not a touch • Use analytics to predict defection. An updated database can identify potential churners with an accuracy of better than 90% • Understand the causes of churn and use this information in your analytics • Develop Lifetime Value ROI’s for your customers
  • 18. $ $ Customers are Different • Customer A • High usage • Infrequent complaints • High end equipment • No threats of leaving • Customer B • Low usage • Frequent complaints • Low end equipment • Frequent threats of leaving How you doin’?
  • 19. $ $ $ $ $ $ $ $ $ $ $ $ $ $$ $ $ $ BI Analytics for Filtering • Data modeled to provide which customers deliver the best ROI for targeting • Second, channel segmentation utilized to maintain impression count while reducing costs • Channel options can include: • Email • Mobile • Social • PURL’s • Targeted Mail • Telemarketing • Pay attention to how your customer WANTS to interact with you…NOT how it’s convenient for you to contact them.
  • 20. Multi-Channel Campaign • Client Profile: • National Wireless provider with “tens of millions” of customers • Regional competition driving variable offers that were hard to manage • Brick and Mortar stores carry significantly higher cost structure
  • 21. Challenge • Shrinking retention budgets • Increasing mail costs • Diminishing response rate to static Direct Mail offers • Basic RFM segmentation strategy did not accurately reflect “churn”
  • 22. Solution • Utilize Business Intelligence to identify likely to churn customers • Utilize variable print and screen technology to unlock variable offers and segmentation • Propose a multi-channel and cost-progressive strategy to increase ROI and marketing effectiveness • Employ multiple call center strategies to reduce talk time and expense
  • 23. Multi-Channel Campaign • Control Retention Program: • Basic segmentation strategy based on contract expiration • Direct Mail offers driven by current plan and usage only • Timing starts at 90 days to expiration and continues through 60 days after contract expiration • Drive customer to inbound phone call for contract signing
  • 24. Multi-Channel Campaign Control Campaign Results (Direct Mail Sent to Every Customer) Units Cost Customers Saved Customer Base 30,000,000 Identification Filter 0 Customer Sent Direct Mail 30,000,000 $21,600,000 Inbound Calls from Direct Mail 750,000 $4,125,000 202,500 Total Cost of Direct Mail Campaign $25,725,000 Direct Marketing Cost per Customer Saved $127.04
  • 25. IDENTIFICATION TEXT MESSAGING DIRECT MAIL OUTBOUND PHONE CALL Multi-Channel Campaign Multi-Channel Customer Retention Strategy IDENTIFICATION TEXT MESSAGING DIRECT MAIL OUTBOUND PHONE CALL
  • 26. Strategies Employed • Business Intelligence Group and Analytical Modeling • Variable Scripting and Offers • One-to-one Direct Mail/Digital Printing • Target Routing/Skill Based Routing • IVR Verification • Best Time To Call/Bucket Calling Efficiency Based Dialing Strategies • Front-end (Starter) / Back-end (Closer) Based Dialing Strategies
  • 27. Multi-Channel Campaign Payment issues 2.225 m customers to be targeted Certain geographies Do not contact 2.25M customers to be targeted Filter out Propensity to churn Over-utilization Contract expiration Old equipment Low usage IDENTIFICATION TEXT MESSAGING DIRECT MAIL OUTBOUND PHONE CALL IDENTIFICATION
  • 28. Multi-Channel Campaign IDENTIFICATION TEXT MESSAGING DIRECT MAIL OUTBOUND PHONE CALL Keep customer away from retail outlet 160k calls 8 % RR Do not text Non- responders E-Verification E-Contract Offer Based on BI Model Offer Based on plan type Phone exclusive offer Inbound Call Personalized Text 2.0M Filter 225k removed Old equip/ No text capability 160K Calls @ 8% RR TEXT MESSAGING Offer Based on BI Model
  • 29. Multi-Channel Campaign IDENTIFICATION TEXT MESSAGING DIRECT MAIL OUTBOUND PHONE CALL Do Not Mail E-Verification E-Contract Inbound Call Personalized Mail Piece 1.38M Filter ROI Filter: Usage/ Profitability Non- Responsive to Mail Keep customer away from retail outlet DIRECT MAIL 461K Removed Phone Exclusive Offer Personalized Geography Offer Based On BI Model Offer Based On Plan Type Demographic Psychographic Drivers 55K Calls @ 4% RRROI Filter: Usage/ Profitability Offer Based On BI Model Demographic Psychographic Drivers
  • 30. Multi-Channel Campaign IDENTIFICATION TEXT MESSAGING DIRECT MAIL OUTBOUND PHONE CALL Do Not Call E-Verification E-Contract Inbound Call Outbound Call 675K Filter Respondents to Text or Direct Mail Non- Responsive to Phone Keep customer away from retail outlet Billing Cycle 405K Contacts Made Offer Based On BI Model Offer Based On Plan Type Phone Exclusive Offer 74K Calls OUTBOUND PHONE CALL More Stringent ROI Filters 649K Removed Offer Based On BI Model More Stringent ROI Filters
  • 31. $ $ $ $ $ $ $ $ $ $ $ $ $ $$ $ $ $ Texting/Email Direct Mail Telemarketing Multi-Channel Campaign • Filtered out undesirable customers in order to curb further investment • Used modeling and analytics to filter through contact channels as well as crafting offers • Utilized variable print and screen technology to ensure a customizable experience • Focused on efficiency and maximizing ROI
  • 32. Multi-Channel Campaign Multi-Channel Campaign Results Metric Cost Customers Saved Customer Base 30,000,000 Identification Filter (27,775,000) Text Filter (225,000) Customer Sent Text 2,000,000 $80,000 Inbound Calls from Text 160,000 $880,000 83,200 Direct Mail Filter (460,920) Customer Sent Direct Mail 1,379,080 $992,938 Inbound Calls from Direct Mail 55,163 $303,398 28,685 Outbound Telemarketing Filter (648,719) Outbound Telemarketing Universe 675,198 Outbound Telemarketing Contacts 405,119 $2,329,432 190,406 Inbound Calls from Outbound TM 74,272 $408,495 38,621 Total Cost of Direct Marketing Campaign $4,994,261 340,912 Direct Marketing Cost per Customer Saved $14.65
  • 33. Multi-Channel Campaign Multi-Channel Campaign Summary Control Multi-Channel Customers Saved 202,500 340,912 Direct Marketing Campaign Cost $25,725,000 $4,994,261 Cost per Customer Saved $127.04 $14.65 Sales Revenue of Saved Customers $96,130,800 $161,837,687 Percent of Saved Revenue Spent on Direct Marketing Efforts 26.76% 3.09%

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