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

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

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    Notes Version: Multichannel Retention Strategies A Steady Diet of Low-Hanging Fruit Notes Version: Multichannel Retention Strategies A Steady Diet of Low-Hanging Fruit Document Transcript

    • 9/30/2011 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 or donor • Real World example of an effective Multi-Channel Retention campaign utilizing Analytics and Cost- Progressive Channel Strategy $ $ $ $ $ Acquisition $ $ $ $ $ $ $$ $ $ Current Customers $ $ $ $ Farmer Retention Farmer Acquisition 1
    • 9/30/2011 What is Customer Churn? $ $ $ Simply stated: $ $ $ It’s the act of losing $ your customers $ $ $ due to competitive $ $ pressure, $$ $ unhealthy relationships, $ financial $ $ $ constraints, etc. REACTIVE! How do most of us deal with customer churn? Customer Churn Costs • 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 $ $ $ • 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 $ digital customers just to keep $ one$ $ $ • Hundreds of studies have proven that most companies $ spend $10 to acquire a new $ donor for $1 spent in retention $ $ strategies! Knowing this, why don’t we invest more in our current customers? 2
    • 9/30/2011 Customer Acquisition $ $ $ $ $ $ $ $ $ $ $ $$ $ $ $ $ Incentives $ $ Modeling/Profiling Technology Target Marketing Advertising 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 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 3
    • 9/30/2011 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 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 $30mm in additional revenue Case Study: Education Client• The Solution • A multi-channel approach to following up on leads based on lead quality • Use a combination of phone, email and direct mail to contact high potential consumers • Use a lower cost contact method for lower potential leads 4
    • 9/30/2011 Case Study: Education Client• Example: • High potential customers receive premium DVD, personalized direct mail piece directing consumer to personalized URL, email and phone contacts on a set schedule over 2 weeks • Low potential customers receive postcard only Case Study: Education Client• The Result • Compared to a control group, the test group utilizing a tiered, multi-channel approach saw a 41% increase in initial enrollments within the targeted groups • An overall 8% increase in conversion overall • A 360% ROI Are all Customers created equal?$ $ Customer A Customer B 5
    • 9/30/2011 First…Who do you WANT to keep?$ $ Formula for CLV Present Value = Future Value/(1+i)n(1+i) = Interests N = No of Years 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? • Am I using the right data? • When looking at how to keep my customers—am I recording (properly) why they left?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 real value for providers• Develop a customer contact strategy. Some companies have a policy of six touches per year, remembering that a bill is not a touch• Don’t rely on statement stuffers to communicate• Use analytics to predict defection. A modern 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 6
    • 9/30/2011 Customers are Different How you doin’? $ $ • Customer A • Customer B • High usage • Low usage • Infrequent complaints • Frequent complaints • High end equipment • Low end equipment • No threats of leaving • Frequent threats of leaving 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 $ Multi-Channel Campaign • Client Profile: • National Wireless provider with “tens of millions” of customers • Regional competition driving variable offers that are hard to manage • Brick and Mortar stores carry significantly higher cost structure 7
    • 9/30/2011 Challenge• Shrinking retention budgets• Increasing mail costs• Diminishing response rate to static Direct Mail offers• Basic segmentation strategy did not accurately reflect “churn” 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 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 8
    • 9/30/2011 Multi-Channel Campaign Control Campaign Results (Direct Mail Sent to Every Customer) Customers Units Cost SavedCustomer Base 30,000,000Identification Filter 0Customer Sent Direct Mail 30,000,000 $21,600,000Inbound Calls from Direct Mail 750,000 $4,125,000 202,500Total Cost of Direct Mail Campaign $25,725,000Direct Marketing Cost per Customer Saved $127.04 Multi-Channel Campaign Multi-Channel Customer Retention Strategy IDENTIFICATION TEXT MESSAGING DIRECT MAIL OUTBOUND PHONE CALL 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 9
    • 9/30/2011 Multi-Channel Campaign Propensity to churnIDENTIFICATIONIDENTIFICATION Over-utilization Filter outTEXT MESSAGING Contract expiration Old equipment Payment issues DIRECT MAIL Low usage Certain geographies OUTBOUND PHONE CALL Do not contact 2.225 mcustomers 2.25M customers to be targeted Multi-Channel Campaign Personalized E-Verification Inbound Filter Text E-Contract Call 2.0MIDENTIFICATION Keep Do not text Offer Based Non- on customer responders BI Model away from retail outletTEXT MESSAGINGTEXT MESSAGING Old equip/ Offer Based No text on capability plan type 160K Calls @ 8% RR DIRECT MAIL Phone 225k exclusive removed offer OUTBOUND PHONE CALL Multi-Channel Campaign Personalized Inbound E-Verification Filter Mail Piece 1.38M Call E-ContractIDENTIFICATION Keep Do Not Mail Personalized customer away from retail Non- Offer Based outlet Responsive On BI ModelTEXT MESSAGING to Mail 55K Offer Based Calls @ ROI Filter: On Plan Type 4% RR Usage/ DIRECT MAIL DIRECT MAIL Profitability Geography 461K Removed OUTBOUND Demographic PHONE CALL Psychographic Drivers Phone Exclusive Offer 10
    • 9/30/2011 Multi-Channel Campaign Outbound Inbound E-Verification Filter Call 675K Call E-Contract IDENTIFICATION Keep Do Not Call Offer Based On BI Model customer away from retail Non- outlet Responsive Offer Based TEXT MESSAGING On Plan Type to Phone 74K Calls Respondents Phone to Text or Exclusive DIRECT MAIL Direct Mail Offer Billing 405K OUTBOUND Cycle Contacts PHONE CALL Made More More Stringent Stringent ROI Filters ROI Filters 649K Removed 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 Telemarketing Direct Mail Texting/Email Multi-Channel Campaign Multi-Channel Campaign Results Customers Metric Cost 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 11
    • 9/30/2011 Multi-Channel Campaign Multi-Channel Campaign Summary Control Multi-ChannelCustomers Saved 202,500 340,912Direct Marketing Campaign Cost $25,725,000 $4,994,261Cost per Customer Saved $127.04 $14.65Sales Revenue of Saved Customers $96,130,800 $161,837,687Percent of Saved Revenue Spent on Direct 26.76% 3.09%Marketing Efforts 12