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Page 1: Five Ways to Reduce Churn in Telecommunications - SAS · PDF fileFive Ways to Reduce Churn in Telecommunications ... an organization uses to manage customer interactions across the

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Five Ways to Reduce Churn in Telecommunications Customer experience management lessons you can apply now from Harvard Business Review

Right now, customers are experiencing your company. They’re using your products, your network and your services. They’re interacting with your company online, on the phone, by email and in person. The question is: Are those experiences forging a bond … or driving your customer into the arms of another provider?

Churn has long been one of the largest issues facing the commu-nications industry. It’s a multifaceted challenge, but there is one silver bullet solution: Make your existing customers so happy they never want to leave.

How? By managing customer experience. Anyone who’s left a store after rude and careless treatment – or gotten a kind and efficient customer service rep on the other end of the line – knows one thing: Customer experience matters. And the companies investing in customer experience management (the processes an organization uses to manage customer interactions across the enterprise) are far outperforming the ones that don’t, according to a recent report from Harvard Business Review (HBR).

The report, Lessons from the Leading Edge of Customer Experience Management, is an in-depth study of more than 400 customer experience management executives worldwide. The results show a distinct divide between the leading companies and the laggards in profitability, revenue, market share and customer retention (see Figure 1).

But what does this mean for you? How does the communications industry rate in terms of customer experience initiatives? What are the barriers to effective customer experience management, and how is the communications industry faring? How does the industry compare in terms of customer experience infrastructure and the use of data and analytics? And, most importantly, what lessons can you learn and apply now?

How does the industry rate in terms of customer experience management initiatives?The good news? Communications companies are more advanced in customer experience management than other industries. Half of the communications organizations surveyed feel customer experi-ence provides a competitive advantage and place high strategic value on customer experience (compared to 45 percent in all other industries).

The not-so-good news is that there’s plenty of room for improve-ment in all industries. Across the board, respondents from all industries are still split on funding customer experience programs, and it appears that no industry feels it does well on customer retention.

What are the barriers to effective customer experience management and how is the communications industry faring?Across all industries, the big barriers to effective customer experience management are:

• Systemsintegration.

• Organizationstructure.

• Multichannelcomplexity.

• Dataissues.

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How does the communications industry rank in terms of using data and analytics for customer experience management?Technology use and analytics methods are well established in the communications industry. Maybe it’s not surprising that the research showed that communications organizations use the widest variety of data sources for customer experience, including: mobile, social, phone transcripts, surveys, focus groups and sales feedback.

The research also confirmed that the communications industry is ahead of all other industries in analytics use, specifically: predictive analytics, content management systems and marketing operations management.

So, which best practices will help communications services providers keep customers happy and reduce churn?1. Create a customer-centric cultureAnd the best way to do that is to pay for it. Though only one in four respondents say they connect compensation to customer experi-ence performance, this tactic was rated more effective than any other customer experience management strategy.

The majority of respondents also view cultivating a customer focusedcultureandmaximizingcustomerexperienceROIaschallenges, and more than half lack the processes to support customer experience programs.

But in the communications industry, executives generally rate these obstacles as less daunting than other industries – and that indicates more mature, more successful programs.

How does the communications industry compare in terms of customer experience infrastructure?All organizations have reported an increase in the number and variety of data sources used in customer experience management, but communications organizations are further along in estab-lishing effective practices and metrics.

Specifically,thesefiveadvancedpracticeswereindicatedasbeingmore common in communications than any other industry:

• Developingaformalcustomerexperiencestrategy.

• Sharingcustomerexperiencemetricsamongemployees.

• Creatingaconsistentsetofcustomerexperiencestandardsacross the organization.

• Factoringthecustomerexperienceintohigh-levelbusinessdecisions.

• Emphasizingcollaborationbetweencustomerserviceandmarketing.

54% 20%54% 29%60% 28%

LEADING LAGGARD

60%

Customer Experience Management: Leading Edge Companies Outperform Laggards

“Lessons from the Leading Edge of Customer Experience Management,” a report by Harvard Business Review Analytic Services, 2014.

Differences are revealed in key business outcomes.

Sponsored by

Percentage of respondents receiving benefits:

PROFITABILITY

35%

LEADING LAGGARD

66%

CUSTOMER QUALITY

27%

LEADING LAGGARD

REVENUE

LEADING LAGGARD

MARKET SHARE

LEADING LAGGARD

CUSTOMER RETENTION

* Leading-edge companies give their organization a top box (8, 9, or 10) rating when asked to rate how forward-looking their organization is in its approach to customer experience management on a 10-point scale, where 1 = not at all forward-looking and 10 = very forward looking. Laggard companies give their organization lowest box (1–4) ratings when asked to rate how forward-looking their organization is in its approach to customer experience management on a 10-point scale, where 1 = not at all forward-looking and 10 = very forward-looking.

Figure 1: Customer Experience Management: Leading Edge Companies Outperform Laggards. Differences are revealed in key business outcomes.

Percentage of respondents receiving benefits:

Leading-edge companies give their organization a top box (8, 9 or 10) rating when asked to rate how forward-looking their organization is in its approach to customer experience management on a 10-point scale, where 1 = not at all forward-looking and 10 = very forward-looking. Laggard companies give their organization lowest box (1–4) ratings when asked to rate how forward-looking their organization is in its approach to customer experience management on a 10-point scale, where 1 = not at all forward-looking and 10 = very forward-looking.

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interviewed by HBR. “We had to make it clear that it’s not another initiative. It’s part of what we do. We achieve our sales goals via solid customer experience.”

3. Tame channels and dataSystemsintegration,channelcomplexity,organizationalstructureand data issues all make providing a consistent customer experi-ence challenging for any company. However, leading-edge companies recognize multichannel management as a strategic imperative.

More than half of leading-edge companies say that multichannel management is extremely important, versus one in five of lagging companies. In addition, leading-edge companies are more likely to embrace new channels such as social media, mobile and video.

4. Apply analyticsLeading-edge companies are embracing new technologies and processes (see Figure 3), and are more effectively applying analytics to:

• Createorganizationwidecustomerexperiencestandards.

• Analyzecross-organizationalcustomerinsights.

• Mapcustomerinteractionswithintheorganization.

The leaders also recognize the importance of emerging analytics technologies, including systems that analyze online behavior, social media sentiment and text, as well as tools that can deliver real-time analysis of large data sets.

“Tying compensation to customer experience metrics creates a customer focus from top management down. The results are shared with everyone, and it’s top of mind for everyone,” said one technology company executive.

Othercustomerexperiencepracticesthatwererated“mosteffec-tive” include: sharing customer experience metrics and models with all employees; reviewing customer experience projects and metrics regularly to monitor progress toward business goals; and screening candidates for customer-centric attitudes during the hiring and selection process.

Despitebeinghighlyrated,thesepracticesarenotalwayscommonly used (see Figure 2).

2. Give the business control of customer experienceA coordinated approach to customer experience management – one that is built from the ground up – is more likely to take root. “You don’t want customer experience to sound like just another corporate initiative,” said one customer experience director

Figure 2: The Most Effective Customer Experience Practices Are Not Necessarily the Most Common

8 | A HARVARD BUSINESS REVIEW ANALYTIC SERVICES REPORT

one of the biggest opportunities relates to reward structures. Only one in four (27%) respondents say that they connect formal reward structures to customer experience performance, despite the fact that doing so was rated more effective than any other single customer experience management tactic.

As with most things, with customer experience management you get what you incentivize. At one tech-nology company, all executive- and corporate- (VP) level pay plans include a portion of variable compen-sation tied to customer satisfaction. “It sets the tone,” says a company executive. “We’re all going to be measured on customer success. You can’t work in a silo.” That’s the case at many leading-edge companies.

Figure 8

The Most Effective Customer Experience Practices Are Not Necessarily the Most Common

Connect corporate rewards to customer experience metrics

Communicate customer experience’s importance to all stakeholders

Develop customer experience strategy to align with corporate strategy

Share customer experience metrics with all staff

Respond to individual customer‘s feedback

Train new and existing staff in customer experience skills

53%

27%

47%

69%

46%

45%

52%

62%

49%

39%

52%

44%

Please rate the effectiveness of the practices your organization currently employs to manage the customer experience on a scale from 1 to 10, with 1 meaning not at all effective and 10 meaning extremely effective. [ALL SAYING “EXTREMELY EFFECTIVE.” TOP BOX SCORES OF 8-10; AMONG THOSE WHO

ROUTINELY EMPLOY THE RELEVANT CUSTOMER EXPERIENCE PRACTICES]

● PERCENTAGE “EXTREMELY EFFECTIVE” ● PERCENTAGE IN USE

8 | A HARVARD BUSINESS REVIEW ANALYTIC SERVICES REPORT

one of the biggest opportunities relates to reward structures. Only one in four (27%) respondents say that they connect formal reward structures to customer experience performance, despite the fact that doing so was rated more effective than any other single customer experience management tactic.

As with most things, with customer experience management you get what you incentivize. At one tech-nology company, all executive- and corporate- (VP) level pay plans include a portion of variable compen-sation tied to customer satisfaction. “It sets the tone,” says a company executive. “We’re all going to be measured on customer success. You can’t work in a silo.” That’s the case at many leading-edge companies.

Figure 8

The Most Effective Customer Experience Practices Are Not Necessarily the Most Common

Connect corporate rewards to customer experience metrics

Communicate customer experience’s importance to all stakeholders

Develop customer experience strategy to align with corporate strategy

Share customer experience metrics with all staff

Respond to individual customer‘s feedback

Train new and existing staff in customer experience skills

53%

27%

47%

69%

46%

45%

52%

62%

49%

39%

52%

44%

Please rate the effectiveness of the practices your organization currently employs to manage the customer experience on a scale from 1 to 10, with 1 meaning not at all effective and 10 meaning extremely effective. [ALL SAYING “EXTREMELY EFFECTIVE.” TOP BOX SCORES OF 8-10; AMONG THOSE WHO

ROUTINELY EMPLOY THE RELEVANT CUSTOMER EXPERIENCE PRACTICES]

● PERCENTAGE “EXTREMELY EFFECTIVE” ● PERCENTAGE IN USE

Please rate the effectiveness of the practices your organization currently employs to manage the customer experience on a scale from 1 to 10, with 1 meaning not at all effective and 10 meaning extremely effective.

Figure 3: Leading-Edge Companies Are More Effective in Using AnalyticsPlease rate the effectiveness of the practices your organization currently employs to manage the customer experience on a scale from 1 to 10, with 1 meaning not at all effective and 10 meaning extremely effective.

“It’s critical that we have data at our fingertips,” says another senior vice president. “That requires a prop-erly staffed, centralized data decision support function.”

Leading-edge companies also place more importance on a number of technologies for customer expe-rience management, including online surveys, marketing operations management, real-time decision-making tools, social media monitoring software, and content management systems. They recognize the importance of emerging analytics technologies, including systems that analyze online behavior, social media sentiment, and text as well as tools that can deliver real-time analysis of large data sets. Figure 11

Integrating all the necessary tools is a challenge, but leading-edge companies devote the resources to create a cohesive customer experience ecosystem. One customer experience executive is integrating a number of new tools, including social media sentiment, web monitoring, and analytics, with his company’s CRM system to create a complete view of customer experience.

While there are plenty of tools available to support a solid customer experience management platform, there is no technology panacea. “There’s no single system that will give you magical outcomes,” says the sales and marketing consultant. “It’s a matter of taking the time and going the distance building processes with good technology behind them—really understanding the business, really understanding processes and metrics, really understanding the customer.”

That approach is enabling leading-edge companies to overcome the data challenges that can hamper cus-tomer experience management—29% said they’ve been extremely successful in overcoming data chal-lenges, while another 58% percent said they’ve had moderate success.

Figure 10

Leading-Edge Companies Are More Effective in Using AnalyticsPlease rate the effectiveness of the practices your organization currently employs to manage the customer experience on a scale from 1 to 10, with 1 meaning not at all effective and 10 meaning extremely effective. [TOP BOX 8–10, WHERE 10 = EXTREMELY EFFECTIVE]

COMPARE DIFFERENCES IN EXPERIENCE

QUALITY AMONG SEGMENTS

48%

17%

ANALYZE CROSS- ORGANIZATIONAL

CUSTOMER INSIGHTS

51%

12%

55%

20%

CREATE ORGANIZATION-WIDE

CUSTOMER EXPERIENCE STANDARDS

● LEADING-EDGE COMPANIES ● LAGGING COMPANIES

49%

MAP CUSTOMER INTERACTIONS

WITHIN ORGANIZATION

0%

“It’s critical that we have data at our fingertips,” says another senior vice president. “That requires a prop-erly staffed, centralized data decision support function.”

Leading-edge companies also place more importance on a number of technologies for customer expe-rience management, including online surveys, marketing operations management, real-time decision-making tools, social media monitoring software, and content management systems. They recognize the importance of emerging analytics technologies, including systems that analyze online behavior, social media sentiment, and text as well as tools that can deliver real-time analysis of large data sets. Figure 11

Integrating all the necessary tools is a challenge, but leading-edge companies devote the resources to create a cohesive customer experience ecosystem. One customer experience executive is integrating a number of new tools, including social media sentiment, web monitoring, and analytics, with his company’s CRM system to create a complete view of customer experience.

While there are plenty of tools available to support a solid customer experience management platform, there is no technology panacea. “There’s no single system that will give you magical outcomes,” says the sales and marketing consultant. “It’s a matter of taking the time and going the distance building processes with good technology behind them—really understanding the business, really understanding processes and metrics, really understanding the customer.”

That approach is enabling leading-edge companies to overcome the data challenges that can hamper cus-tomer experience management—29% said they’ve been extremely successful in overcoming data chal-lenges, while another 58% percent said they’ve had moderate success.

Figure 10

Leading-Edge Companies Are More Effective in Using AnalyticsPlease rate the effectiveness of the practices your organization currently employs to manage the customer experience on a scale from 1 to 10, with 1 meaning not at all effective and 10 meaning extremely effective. [TOP BOX 8–10, WHERE 10 = EXTREMELY EFFECTIVE]

COMPARE DIFFERENCES IN EXPERIENCE

QUALITY AMONG SEGMENTS

48%

17%

ANALYZE CROSS- ORGANIZATIONAL

CUSTOMER INSIGHTS

51%

12%

55%

20%

CREATE ORGANIZATION-WIDE

CUSTOMER EXPERIENCE STANDARDS

● LEADING-EDGE COMPANIES ● LAGGING COMPANIES

49%

MAP CUSTOMER INTERACTIONS

WITHIN ORGANIZATION

0%

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5. Expand the definition of customer experience successMeasuring the impact of customer experience efforts is difficult. Most respondents struggle to tie customer experience invest-ments to the bottom line.

The more traditional measure of customer success – customer satisfaction scores – are widely used, yet a variety of other metrics rated highly important (such as Net Promoter and customer-effort scores) are not as widely established.

Leading-edge companies use a wider range of metrics to report their customer experience management progress, including measures such as customer lifetime value, indirect traffic, social media sentiment and up-sell rates (see Figure 4).

ConclusionCustomer experience efforts need enterprisewide visibility and focus to last. “You have to be clear about what you’re trying to accomplish and take it a step at a time,” says one customer experi-ence director, “from marketing the program to employees to developing new processes to rewarding people for customer experiencebehaviortoreportingonresults.”Ultimately,however,when customer experience becomes a strategic agenda item for the whole company, it results in improved business outcomes across the enterprise.

Read More:DownloadthefullreportLessons from the Leading Edge of Customer Experience Management.

Find out how Globe Telecom reduced churn from double digits to 1.65 percent.

Learn about SAS® solutions for the communications industry.

Figure 4: Leading-Edge Firms See Greater Promise in Emerging ToolsIn your opinion, how promising are the following emerging technologies for improving your organization’s ability to manage the customer experience?

LESSONS FROM THE LEADING EDGE OF CUSTOMER EXPERIENCE MANAGEMENT | 13

LESSON SIX: EXPAND THE DEFINITION OF CUSTOMER EXPERIENCE SUCCESSMeasuring the impact of customer experience efforts is difficult—as evidenced by the trouble most companies have tying customer experience investments to business outcomes.

The more traditional measure of customer success—customer satisfaction scores—are widely used in all companies. Yet a variety of other metrics rated highly important by those that use them, such as Net Promoter and customer effort scores, are not as widely established.

Leading-edge companies use a wider range of metrics, often more effectively, to report on their customer experience management progress, including measures such as customer lifetime value, indirect traffic, social media sentiment, and upsell rates. Figure 12

It can be difficult to settle on a set of metrics that matter to both the customer and the company, says the sales and marketing consultant. “Like everything else,” he says, “we’re often data rich but information poor.” But the best customer experience measures tell a financial story.

Figure 11

Leading-Edge Firms See Greater Promise in Emerging Tools�

Customer experience/online behavior analytics

Real-time decision making

Social media analytics

Location-based applications

Text analytics

61%

49%

35%

14%

54%

37%

41%

30%

56%

31%

In your opinion, how promising are the following emerging technologies for improving your organization’s ability to manage the customer experience? [TOP FIVE EMERGING TECHNOLOGIES]

● LEADING-EDGE COMPANIES ● LAGGING COMPANIES

LESSONS FROM THE LEADING EDGE OF CUSTOMER EXPERIENCE MANAGEMENT | 13

LESSON SIX: EXPAND THE DEFINITION OF CUSTOMER EXPERIENCE SUCCESSMeasuring the impact of customer experience efforts is difficult—as evidenced by the trouble most companies have tying customer experience investments to business outcomes.

The more traditional measure of customer success—customer satisfaction scores—are widely used in all companies. Yet a variety of other metrics rated highly important by those that use them, such as Net Promoter and customer effort scores, are not as widely established.

Leading-edge companies use a wider range of metrics, often more effectively, to report on their customer experience management progress, including measures such as customer lifetime value, indirect traffic, social media sentiment, and upsell rates. Figure 12

It can be difficult to settle on a set of metrics that matter to both the customer and the company, says the sales and marketing consultant. “Like everything else,” he says, “we’re often data rich but information poor.” But the best customer experience measures tell a financial story.

Figure 11

Leading-Edge Firms See Greater Promise in Emerging Tools�

Customer experience/online behavior analytics

Real-time decision making

Social media analytics

Location-based applications

Text analytics

61%

49%

35%

14%

54%

37%

41%

30%

56%

31%

In your opinion, how promising are the following emerging technologies for improving your organization’s ability to manage the customer experience? [TOP FIVE EMERGING TECHNOLOGIES]

● LEADING-EDGE COMPANIES ● LAGGING COMPANIES


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