Automate Channel Incentives to Cut Telecom Customer Churn

Customer churn is a serious and persistent challenge for telecom companies as competition in the $2 trillion-plus industry heats up. The reasons for churn are varied, but the bottom-line impact is significant. According to analysis from Bain & Company, telecom company churn rates are typically around 2-2.5 percent per month, which for a telecom company with 5 million customers, over the course of a full year, would represent 1.32 million customers and about $2 billion in lost revenue.

When seeking to build a strong customer base and improve loyalty in any fiercely competitive market, businesses that successfully address customer churn can gain a major advantage. However, in the telecom sector, it’s not enough to equip in-house sales teams with best practices and tools; telecom sales typically rely heavily on channel partners, and a serious effort to move the needle on customer churn must involve new strategies for handling customers at the channel level.

The first step in reducing churn is to determine the reasons customer leave. That involves listening to customers and finding out what they value. Surveys are a great way to gather this information. It’s a good idea to use an automated survey solution that is triggered by the sale to gather feedback. It can be as simple as a text survey that asks a customer to respond with one of two emoticons (happy or sad) to indicate their satisfaction, or the telecom can trigger a slightly more complex survey that asks customers to rate their experiences.

In addition to surveys, consider gathering and analyzing other types of data, including customer comments. Mining information from a variety of internal and external sources will yield insights into the reasons some customers stay on board and others bail.

The keys at this stage are to clearly identify why customers come and go and rank groups of customers to target for retention efforts.

Once you’ve gained insight into the root causes of churn, the next step is to focus churn-reduction efforts on the customer groups most likely to deliver the highest lifetime value. It’s important to realize that it doesn’t pay to pursue every group of customers. Some are purely price-driven, so aside from reducing prices, there’s not much a sales team and its channel partners can do to attract and retain these customers.

However, for customers who value a great experience, your service is a key differentiator. To achieve this marketplace advantage, the telecom team needs a way to drive greater levels of customer satisfaction at the channel partner level, where sales are often made. But how?

Pay For Quality

The most effective way to boost customer satisfaction with channel partners is to incentivize the desired behavior through an automated commission system.

Typically, channel-partner commissions are built around sales, with partners receiving a commission upon device activation. Telecoms also frequently provide incentives for successful upsells, but it’s unusual to find customer experience-focused commissions. Telecom companies that implement such a program can therefore gain a clear marketplace advantage.

Operationally, this initiative might involve an automatically triggered survey at some point after device activation that asks customers to rate their sales reps and provide other feedback on their experience. The channel sales rep’s rating would then trigger a commission multiplier, effectively linking the quality of the customer experience with the rep’s monetary reward. Ideally, the telecom could also mine and analyze the data to continuously improve channel partner service and identify location trends and other relevant information.

The telecom industry is unique in that successful companies develop new products and services frequently while aggressively pursuing new business initiatives, heavily leaning on channel partners to drive revenue. That model has delivered unprecedented benefits to consumers in the form of innovative new products and a wide variety of service choices. But it has also increased the complexity of the telecom/customer relationship, making it a challenge to identify priorities and improve satisfaction.

Telecoms that want to gain a competitive edge need to get serious about analysis, and about rewarding channel partners who deliver an excellent customer experience.

Giles House is the senior vice president of Marketing & Alliances, and chief marketing officer of CallidusCloud. He is responsible for the company’s global marketing activities, communications, brand and sales enablement programs. He has served a variety of channel, sales and marketing roles at CallidusCloud in EMEA. Prior to joining CallidusCloud, Giles has worked at international software and SaaS companies including SAP.