Telcorum Case Study 1
Predicting Pre-Paid Customer Churn
The growth in prepaid mobile subscribers is increasing dramatically. However, for most mobile operators so are the related turnover in customers as they cease mobile services or switch to a competitor. This migration is commonly referred to as churn in the mobile telephony industry. To decrease churn, operators are starting to rethink their prepaid strategies. Loyalty and customer care programmes specially tailored for prepaid customers will be critical in the maturing prepaid mobile market. With up to half or more of prepaid customers likely to change carriers in a 12 month period the ability to identify potential churn in advance and target these valuable customers with specific loyalty and customer care programmes is an important business requirement for all mobile telecommunication carriers.
By 2003 churn levels in Europe and the USA will reach 30% and will exceed 50% in many countries in Asia and South America. When this is added to the fact that operators suffer from low average revenue per user (ARPU) for pre-paid, it is easy to understand why strategies to reduce prepaid subscriber churn are vitally important.
Predictive churn analysis is the most effective way to detect likely pre-paid churn prior to the customer migrating to another carrier. This detection is only available through the employment of scientific predictors put together from a thorough analysis of the constantly updated information taken from network elements like switches, pre-paid platforms and VAS systems.
This analysis uses existing customer data to identify which customers are likely to churn. The 'early warning indicators' provided by the data analysis gives carriers an opportunity to resolve customer issues and implement satisfaction and loyalty retention strategies before the customer churns.
The Telcorum Churn Manager solution was developed following a recent successful pilot churn analysis conducted by Whitesmiths for a large European mobile carrier using its pre-paid subscriber base of more than four million.
The mobile handset proved to be a self-reporting product, providing valuable information that indicated when a customer is likely to leave, and giving the carrier a means through which to contact them with retention strategies. Using pre-paid customersÕ mobile network traffic information, Whitesmiths was able to identify and analyse customer demographics and call/usage patterns.
"By correlating churn indicators with derived postcode data, it was possible to identify regions where customers where more 'unhappy' than others. This identification of where pre-paid customer value was being lost due to mobile coverage issues allows carriers to make decisions about network correction or improvement, and corresponding customer one-on-one management, on a value-retention basis," Whitesmiths Managing Director John O'Brien said.
The analysis found that churn is highest amongst high value and low value subscribers. By monitoring usage patterns, carriers can identify patterns to predict churn and target those high volume customers that generate a significant part of their prepaid revenue.
The Churn Manager data analysis overcomes a key barrier in implementing customer retention strategies among pre-paid users: the carriers know very little, if anything about their pre-paid customers. It is estimated that it costs 5 times as much to acquire a new customer as it does to retain existing customers with a well managed loyalty system. The difficulty is determining which subscribers need to have a specific programme targeted to them. By utilising Telcorum Churn Manager, carriers are provided with a very useful customer profile from which they can develop specific loyalty programs.
