Multichannel Retention Strategies: A Steady Diet of Low Hanging Fruit

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Multichannel Retention Strategies: A Steady Diet of Low Hanging Fruit

  1. 2. Agenda <ul><li>Identifying Churn and measuring Life Time Value </li></ul><ul><li>Cost of Acquisition vs. Retention </li></ul><ul><li>Utilization of Business Intelligence and Analytics to identify optimal channel(s) for your customer or donor </li></ul><ul><li>Real World example of an effective Multi-Channel Retention campaign utilizing Analytics and Cost-Progressive Channel Strategy </li></ul>
  2. 3. Acquisition Current Customers Farmer Retention Farmer Acquisition $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
  3. 4. What is Customer Churn? Simply stated: It’s the act of losing your customers due to competitive pressure, unhealthy relationships, financial constraints, etc. How do most of us deal with customer churn? REACTIVE! $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
  4. 5. Customer Churn Costs <ul><li>The average consumer service company experiences between 30% and 70% customer churn annually </li></ul><ul><li>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 </li></ul><ul><li>Last year, customer churn collectively cost wireless operators an estimated $10 billion. And that’s just the costs of activating and deactivating services </li></ul>
  5. 6. Customer Churn Costs <ul><li>As little as a 5% reduction in customer churn can boost net profits by as much as 20% </li></ul><ul><li>A 5% monthly churn rate for a services industry means a company has to acquire 1.7 digital customers just to keep one </li></ul><ul><li>Hundreds of studies have proven that most companies spend $10 to acquire a new donor for $1 spent in retention strategies! </li></ul>Knowing this, why don’t we invest more in our current customers? $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
  6. 7. Advertising Target Marketing Technology Modeling/Profiling Incentives Customer Acquisition $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
  7. 8. Case Study: AccuQuote <ul><li>A leading provider of term life insurance </li></ul><ul><li>The Challenge </li></ul><ul><ul><li>Inbound leads needed to be better prioritized for the sales team </li></ul></ul><ul><ul><li>“ 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.” </li></ul></ul><ul><ul><ul><li>Sean Cheyney, Vice President of Marketing and Business Development </li></ul></ul></ul>
  8. 9. Case Study: AccuQuote <ul><li>The Solution: </li></ul><ul><ul><li>Score leads based on their likelihood to convert to policies </li></ul></ul><ul><ul><li>Leads are ranked on a scale of 1 to 10 with 1 being most likely to convert and 10 being least likely </li></ul></ul><ul><ul><li>The most likely-to-purchase prospects are then moved to the top of the queue for the outbound dialer and handled by live agents </li></ul></ul><ul><ul><li>Leads that are judged to be less likely to convert are contacted through email or passed to trainees </li></ul></ul>
  9. 10. Case Study: AccuQuote <ul><li>The Result </li></ul><ul><ul><li>4-5% increase in sales conversion overall </li></ul></ul><ul><ul><li>Increase in conversion plus decrease in expense leads to lower cost of acquisition </li></ul></ul><ul><ul><li>A boost to sales team productivity — agents gained an extra hour to spend on cross-sell and needs analysis </li></ul></ul><ul><ul><li>No loss of sales in the segment that received email only </li></ul></ul>
  10. 11. Case Study: Education Client <ul><li>A leading provider of educational support services to consumer households </li></ul><ul><li>The Challenge </li></ul><ul><ul><li>Thousands of leads coming in and being distributed to franchise owners </li></ul></ul><ul><ul><li>Dissatisfaction from franchise owners over quality of leads </li></ul></ul><ul><ul><li>Need to prioritize efforts to maximize revenue </li></ul></ul><ul><ul><li>3% lift in conversion equates to over $30mm in additional revenue </li></ul></ul>
  11. 12. Case Study: Education Client <ul><li>The Solution </li></ul><ul><ul><li>A multi-channel approach to following up on leads based on lead quality </li></ul></ul><ul><ul><li>Use a combination of phone, email and direct mail to contact high potential consumers </li></ul></ul><ul><ul><li>Use a lower cost contact method for lower potential leads </li></ul></ul>
  12. 13. Case Study: Education Client <ul><li>Example: </li></ul><ul><ul><li>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 </li></ul></ul><ul><ul><li>Low potential customers receive postcard only </li></ul></ul>
  13. 14. Case Study: Education Client <ul><li>The Result </li></ul><ul><ul><li>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 </li></ul></ul><ul><ul><li>An overall 8% increase in conversion overall </li></ul></ul><ul><ul><li>A 360% ROI </li></ul></ul>
  14. 15. Are all Customers created equal? Customer A Customer B $ $
  15. 16. First…Who do you WANT to keep? Formula for CLV Present Value = Future Value/(1+i) n (1+i) = Interests N = No of Years $ $
  16. 17. First…Who do you WANT to keep? <ul><li>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 </li></ul><ul><li>Common questions that service providers should be asking to be used in analytics: </li></ul><ul><ul><li>Am I accurately capturing, on a per-subscriber basis, all relevant revenue and cost events? </li></ul></ul><ul><ul><li>Am I capturing information necessary to identify different types of churn; e.g. structural, voluntary, and non-payment churn? </li></ul></ul><ul><ul><li>What can the data tell me that I can act upon? </li></ul></ul><ul><ul><li>Can I tell if my business is changing based on my data? </li></ul></ul><ul><ul><li>Am I using the right data? </li></ul></ul><ul><ul><li>When looking at how to keep my customers—am I recording (properly) why they left? </li></ul></ul>$ $
  17. 18. Utilizing Business Intelligence in Retention <ul><li>First, you have to decide who you WANT to save </li></ul><ul><li>Analytic data models and human analysis combine to return recommendations on upselling and retaining individual customers drives real value for providers </li></ul><ul><li>Develop a customer contact strategy. Some companies have a policy of six touches per year, remembering that a bill is not a touch </li></ul><ul><li>Don’t rely on statement stuffers to communicate </li></ul><ul><li>Use analytics to predict defection. A modern database can identify potential churners with an accuracy of better than 90% </li></ul><ul><li>Understand the causes of churn and use this information in your analytics </li></ul><ul><li>Develop Lifetime Value ROI’s for your customers </li></ul>$ $
  18. 19. Customers are Different <ul><li>Customer A </li></ul><ul><ul><li>High usage </li></ul></ul><ul><ul><li>Infrequent complaints </li></ul></ul><ul><ul><li>High end equipment </li></ul></ul><ul><ul><li>No threats of leaving </li></ul></ul><ul><li>Customer B </li></ul><ul><ul><li>Low usage </li></ul></ul><ul><ul><li>Frequent complaints </li></ul></ul><ul><ul><li>Low end equipment </li></ul></ul><ul><ul><li>Frequent threats of leaving </li></ul></ul>$ $ How you doin’?
  19. 20. BI Analytics for Filtering <ul><li>Data modeled to provide which customers deliver the best ROI for targeting </li></ul><ul><li>Second, channel segmentation utilized to maintain impression count while reducing costs </li></ul><ul><li>Channel options can include: </li></ul><ul><ul><li>Email </li></ul></ul><ul><ul><li>Mobile </li></ul></ul><ul><ul><li>Social </li></ul></ul><ul><ul><li>PURL’s </li></ul></ul><ul><ul><li>Targeted Mail </li></ul></ul><ul><ul><li>Telemarketing </li></ul></ul>$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
  20. 21. Multi-Channel Campaign <ul><li>Client Profile: </li></ul><ul><ul><li>National Wireless provider with “tens of millions” of customers </li></ul></ul><ul><ul><li>Regional competition driving variable offers that are hard to manage </li></ul></ul><ul><ul><li>Brick and Mortar stores carry significantly higher cost structure </li></ul></ul>
  21. 22. Challenge <ul><li>Shrinking retention budgets </li></ul><ul><li>Increasing mail costs </li></ul><ul><li>Diminishing response rate to static Direct Mail offers </li></ul><ul><li>Basic segmentation strategy did not accurately reflect “churn” </li></ul>
  22. 23. Solution <ul><li>Utilize Business Intelligence to identify likely to churn customers </li></ul><ul><li>Utilize variable print and screen technology to unlock variable offers and segmentation </li></ul><ul><li>Propose a multi-channel and cost-progressive strategy to increase ROI and marketing effectiveness </li></ul><ul><li>Employ multiple call center strategies to reduce talk time and expense </li></ul>
  23. 24. Multi-Channel Campaign <ul><li>Control Retention Program: </li></ul><ul><ul><li>Basic segmentation strategy based on contract expiration </li></ul></ul><ul><ul><li>Direct Mail offers driven by current plan and usage only </li></ul></ul><ul><ul><li>Timing starts at 90 days to expiration and continues through 60 days after contract expiration </li></ul></ul><ul><ul><li>Drive customer to inbound phone call for contract signing </li></ul></ul>
  24. 25. Multi-Channel Campaign Control Campaign Results (Direct Mail Sent to Every Customer)
  25. 26. Multi-Channel Campaign Multi-Channel Customer Retention Strategy
  26. 27. Strategies Employed <ul><li>Business Intelligence Group and Analytical Modeling </li></ul><ul><li>Variable Scripting and Offers </li></ul><ul><li>One-to-one Direct Mail/Digital Printing </li></ul><ul><li>Target Routing/Skill Based Routing </li></ul><ul><li>IVR Verification </li></ul><ul><li>Best Time To Call/Bucket Calling Efficiency Based Dialing Strategies </li></ul><ul><li>Front-end (Starter) / Back-end (Closer) Based Dialing Strategies </li></ul>
  27. 28. Multi-Channel Campaign Propensity to churn Over-utilization Contract expiration Old equipment Low usage Filter out Payment issues 2.225 m customers to be targeted Certain geographies Do not contact 2.25M customers to be targeted
  28. 29. Multi-Channel Campaign Filter Do not text Non- responders Old equip/ No text capability 225k removed Personalized Text 2.0M Offer Based on BI Model Offer Based on plan type Phone exclusive offer Inbound Call Keep customer away from retail outlet 160K Calls @ 8% RR E-Verification E-Contract Offer Based on BI Model
  29. 30. Multi-Channel Campaign Filter Do Not Mail Non- Responsive to Mail ROI Filter: Usage/ Profitability 461K Removed Personalized Mail Piece 1.38M Personalized Offer Based On BI Model Offer Based On Plan Type Geography Demographic Psychographic Drivers Phone Exclusive Offer Inbound Call Keep customer away from retail outlet 55K Calls @ 4% RR E-Verification E-Contract ROI Filter: Usage/ Profitability Offer Based On BI Model Demographic Psychographic Drivers
  30. 31. Multi-Channel Campaign Filter Do Not Call Non- Responsive to Phone Respondents to Text or Direct Mail Billing Cycle More Stringent ROI Filters 649K Removed Outbound Call 675K Offer Based On BI Model Offer Based On Plan Type Phone Exclusive Offer 405K Contacts Made Inbound Call Keep customer away from retail outlet 74K Calls E-Verification E-Contract More Stringent ROI Filters Offer Based On BI Model
  31. 32. Multi-Channel Campaign <ul><li>Filtered out undesirable customers in order to curb further investment </li></ul><ul><li>Used modeling and analytics to filter through contact channels as well as crafting offers </li></ul><ul><li>Utilized variable print and screen technology to ensure a customizable experience </li></ul><ul><li>Focused on efficiency and maximizing ROI </li></ul>Texting/Email Direct Mail Telemarketing $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
  32. 33. Multi-Channel Campaign Multi-Channel Campaign Results
  33. 34. Multi-Channel Campaign Multi-Channel Campaign Summary

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