Multichannel Retention Strategies: A Steady Diet of Low Hanging Fruit

AgendaAgenda

• Identifying Churn and measuring Life Time ValueIdentifying Churn and measuring Life Time Value• Cost of Acquisition vs. RetentionCost of Acquisition vs. Retention• Utilization of Business Intelligence and Analytics to Utilization of Business Intelligence and Analytics to

identify optimal channel(s) for your customer or donoridentify optimal channel(s) for your customer or donor• Real World example of an effective Multi-Channel Real World example of an effective Multi-Channel

Retention campaign utilizing Analytics and Cost-Retention campaign utilizing Analytics and Cost-Progressive Channel StrategyProgressive Channel Strategy

AcquisitionAcquisition

Current CustomersCurrent Customers

Farmer Retention Farmer Acquisition

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What is Customer Churn?What is Customer Churn?Simply stated:Simply stated:It’s the act of losing It’s the act of losing

your customers your customers due to competitive due to competitive pressure, pressure, unhealthy unhealthy relationships, relationships, financial financial constraints, etc.constraints, etc.

How do most of us How do most of us deal with customer deal with customer churn?churn?

REACTIVE!

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Customer Churn CostsCustomer Churn Costs• The average consumer service The average consumer service

company experiences between company experiences between 30% and 70% customer churn 30% and 70% customer churn annuallyannually

• The average company has The average company has between a 60% and 70% between a 60% and 70% probability of success selling probability of success selling more services to a current more services to a current customer. These figures drop to customer. These figures drop to a 20% to 40% probability, and a 20% to 40% probability, and then to a 5% to 20% probability, then to a 5% to 20% probability, when selling to former when selling to former customers or prospects, customers or prospects, respectivelyrespectively

• Last year, customer churn Last year, customer churn collectively cost wireless collectively cost wireless operators an estimated $10 operators an estimated $10 billion. And that’s just the costs billion. And that’s just the costs of activating and deactivating of activating and deactivating servicesservices

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Customer Churn CostsCustomer Churn Costs• As little as a 5% reduction in As little as a 5% reduction in

customer churn can boost net customer churn can boost net profits by as much as 20%profits by as much as 20%

• A 5% monthly churn rate for a A 5% monthly churn rate for a services industry means a services industry means a company has to acquire 1.7 company has to acquire 1.7 digital customers just to keep digital customers just to keep oneone

• Hundreds of studies have Hundreds of studies have proven that most companies proven that most companies spend $10 to acquire a new spend $10 to acquire a new donor for $1 spent in retention donor for $1 spent in retention strategies!strategies!

Knowing this, why Knowing this, why don’t we invest don’t we invest more in our current more in our current customers?customers?

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Advertising

Target Marketing

Technology

Modeling/Profiling

Incentives

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Customer AcquisitionCustomer Acquisition

Case Study: AccuQuoteCase Study: AccuQuote

• A leading provider of term life insuranceA leading provider of term life insurance• The ChallengeThe Challenge

• Inbound leads needed to be better prioritized for Inbound leads needed to be better prioritized for the sales teamthe sales team

• ““We knew that 20% of our leads were unlikely to We knew that 20% of our leads were unlikely to move through to paid status – the problem was move through to paid status – the problem was that we didn’t know which leads were which.” that we didn’t know which leads were which.”

• Sean Cheyney, Vice President of Marketing and Business Sean Cheyney, Vice President of Marketing and Business Development Development


• The Solution: The Solution: • Score leads based on their likelihood to convert Score leads based on their likelihood to convert

to policiesto policies• Leads are ranked on a scale of 1 to 10 with 1 Leads are ranked on a scale of 1 to 10 with 1

being most likely to convert and 10 being least being most likely to convert and 10 being least likelylikely

• The most likely-to-purchase prospects are then The most likely-to-purchase prospects are then moved to the top of the queue for the outbound moved to the top of the queue for the outbound dialer and handled by live agentsdialer and handled by live agents

• Leads that are judged to be less likely to convert Leads that are judged to be less likely to convert are contacted through email or passed to are contacted through email or passed to traineestrainees


• The ResultThe Result• 4-5% increase in sales conversion overall4-5% increase in sales conversion overall• Increase in conversion plus decrease in Increase in conversion plus decrease in

expense leads to lower cost of acquisitionexpense leads to lower cost of acquisition• A boost to sales team productivity — agents A boost to sales team productivity — agents

gained an extra hour to spend on cross-sell and gained an extra hour to spend on cross-sell and needs analysisneeds analysis

• No loss of sales in the segment that received No loss of sales in the segment that received email onlyemail only

Case Study: Education ClientCase Study: Education Client

• A leading provider of educational support A leading provider of educational support services to consumer householdsservices to consumer households

• The ChallengeThe Challenge• Thousands of leads coming in and being Thousands of leads coming in and being

distributed to franchise ownersdistributed to franchise owners• Dissatisfaction from franchise owners over Dissatisfaction from franchise owners over

quality of leadsquality of leads• Need to prioritize efforts to maximize revenueNeed to prioritize efforts to maximize revenue• 3% lift in conversion equates to over $30mm in 3% lift in conversion equates to over $30mm in

additional revenueadditional revenue


• The SolutionThe Solution• A multi-channel approach to following up on A multi-channel approach to following up on

leads based on lead qualityleads based on lead quality• Use a combination of phone, email and direct Use a combination of phone, email and direct

mail to contact high potential consumersmail to contact high potential consumers• Use a lower cost contact method for lower Use a lower cost contact method for lower

potential leadspotential leads


• Example:Example:• High potential customers receive premium DVD, High potential customers receive premium DVD,

personalized direct mail piece directing personalized direct mail piece directing consumer to personalized URL, email and consumer to personalized URL, email and phone contacts on a set schedule over 2 weeksphone contacts on a set schedule over 2 weeks

• Low potential customers receive postcard onlyLow potential customers receive postcard only


• The ResultThe Result• Compared to a control group, the test group Compared to a control group, the test group

utilizing a tiered, multi-channel approach saw a utilizing a tiered, multi-channel approach saw a 41% increase in initial enrollments within the 41% increase in initial enrollments within the targeted groups targeted groups

• An overall 8% increase in conversion overallAn overall 8% increase in conversion overall• A 360% ROIA 360% ROI

Are all Customers created equal?Are all Customers created equal?

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Customer A Customer B

First…Who do you WANT to keep?First…Who do you WANT to keep?

$ $Formula for CLV

Present Value = Future Value/(1+i)n

(1+i) = Interests N = No of Years

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First…Who do you WANT to keep?First…Who do you WANT to keep?

• The customer lifetime value can be used to drive decisions The customer lifetime value can be used to drive decisions such as which customers to target, how much to spend on such as which customers to target, how much to spend on saving them, what is the most effective media to use to saving them, what is the most effective media to use to communicate with them, and how best to serve them to communicate with them, and how best to serve them to ensure that they remain loyal for years to comeensure that they remain loyal for years to come

• Common questions that service providers should be asking Common questions that service providers should be asking to be used in analytics:to be used in analytics:

• Am I accurately capturing, on a per-subscriber basis, all relevant revenue and Am I accurately capturing, on a per-subscriber basis, all relevant revenue and cost events?cost events?

• Am I capturing information necessary to identify different types of churn; e.g. Am I capturing information necessary to identify different types of churn; e.g. structural, voluntary, and non-payment churn?structural, voluntary, and non-payment churn?

• What can the data tell me that I can act upon?What can the data tell me that I can act upon?

• Can I tell if my business is changing based on my data?Can I tell if my business is changing based on my data?

• Am I using the right data?Am I using the right data?

• When looking at how to keep my customers—am I recording (properly) why When looking at how to keep my customers—am I recording (properly) why they left?they left?

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Utilizing Business Intelligence in RetentionUtilizing Business Intelligence in Retention

• First, you have to decide who you WANT to saveFirst, you have to decide who you WANT to save

• Analytic data models and human analysis combine to return Analytic data models and human analysis combine to return recommendations on upselling and retaining individual recommendations on upselling and retaining individual customers drives real value for providerscustomers drives real value for providers

• Develop a customer contact strategy. Some companies have Develop a customer contact strategy. Some companies have a policy of six touches per year, remembering that a bill is not a policy of six touches per year, remembering that a bill is not a toucha touch

• Don’t rely on statement stuffers to communicate Don’t rely on statement stuffers to communicate

• Use analytics to predict defection. A modern database can Use analytics to predict defection. A modern database can identify potential churners with an accuracy of better than identify potential churners with an accuracy of better than 90% 90%

• Understand the causes of churn and use this information in Understand the causes of churn and use this information in your analyticsyour analytics

• Develop Lifetime Value ROI’s for your customersDevelop Lifetime Value ROI’s for your customers

Customers are DifferentCustomers are Different

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• Customer A

• High usage

• Infrequent complaints

• High end equipment

• No threats of leaving

• Customer B

• Low usage

• Frequent complaints

• Low end equipment

• Frequent threats of leaving

How you doin’?

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BI Analytics for Filtering BI Analytics for Filtering • Data modeled to provide which Data modeled to provide which

customers deliver the best ROI customers deliver the best ROI for targetingfor targeting

• Second, channel segmentation Second, channel segmentation utilized to maintain impression utilized to maintain impression count while reducing costscount while reducing costs

• Channel options can include:Channel options can include:• EmailEmail• MobileMobile• SocialSocial• PURL’sPURL’s• Targeted MailTargeted Mail• TelemarketingTelemarketing

Multi-Channel CampaignMulti-Channel Campaign

• Client Profile: Client Profile: • National Wireless provider with “tens of millions” National Wireless provider with “tens of millions”

of customersof customers• Regional competition driving variable offers that Regional competition driving variable offers that

are hard to manageare hard to manage• Brick and Mortar stores carry significantly higher Brick and Mortar stores carry significantly higher

cost structurecost structure

ChallengeChallenge

• Shrinking retention budgetsShrinking retention budgets• Increasing mail costsIncreasing mail costs• Diminishing response rate to static Direct Mail Diminishing response rate to static Direct Mail

offersoffers• Basic segmentation strategy did not accurately Basic segmentation strategy did not accurately

reflect “churn”reflect “churn”

SolutionSolution

• Utilize Business Intelligence to identify likely to Utilize Business Intelligence to identify likely to churn customerschurn customers

• Utilize variable print and screen technology to Utilize variable print and screen technology to unlock variable offers and segmentationunlock variable offers and segmentation

• Propose a multi-channel and cost-progressive Propose a multi-channel and cost-progressive strategy to increase ROI and marketing strategy to increase ROI and marketing effectivenesseffectiveness

• Employ multiple call center strategies to reduce Employ multiple call center strategies to reduce talk time and expensetalk time and expense


• Control Retention Program:Control Retention Program:• Basic segmentation strategy based on contract Basic segmentation strategy based on contract

expirationexpiration• Direct Mail offers driven by current plan and Direct Mail offers driven by current plan and

usage onlyusage only• Timing starts at 90 days to expiration and Timing starts at 90 days to expiration and

continues through 60 days after contract continues through 60 days after contract expirationexpiration

• Drive customer to inbound phone call for Drive customer to inbound phone call for contract signingcontract signing


Control Campaign Results Control Campaign Results (Direct Mail Sent to Every Customer)(Direct Mail Sent to Every Customer)

Units CostCustomers

Saved

Customer 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 Customer Retention StrategyMulti-Channel Customer Retention Strategy

Strategies EmployedStrategies Employed

• Business Intelligence Group and Analytical Business Intelligence Group and Analytical ModelingModeling

• Variable Scripting and OffersVariable Scripting and Offers• One-to-one Direct Mail/Digital PrintingOne-to-one Direct Mail/Digital Printing• Target Routing/Skill Based RoutingTarget Routing/Skill Based Routing• IVR VerificationIVR Verification• Best Time To Call/Bucket Calling Efficiency Best Time To Call/Bucket Calling Efficiency

Based Dialing Strategies Based Dialing Strategies • Front-end (Starter) / Back-end (Closer) Based Front-end (Starter) / Back-end (Closer) Based

Dialing Strategies Dialing Strategies


Propensity to churn

Over-utilization

Contract expiration

Old equipment

Low usage

Filter out

Payment issues

2.225 m customersto be targeted

Certain geographies

Do not contact

2.25M customersto be targeted


Filter

Do not textNon-

responders

Old equip/No text

capability

225kremoved

PersonalizedText2.0M

Offer Basedon

BI Model

Offer Basedon

plan type

Phoneexclusive

offer

InboundCall

Keepcustomeraway from

retailoutlet

160K Calls@ 8% RR

E-VerificationE-Contract

Offer Basedon

BI Model


Filter

Do Not Mail

Non-Responsive

to Mail

ROI Filter:Usage/

Profitability

461KRemoved

PersonalizedMail Piece

1.38M

Personalized

Offer BasedOn BI Model

Offer BasedOn Plan Type

Geography

DemographicPsychographic

Drivers

PhoneExclusive

Offer

InboundCall


retailoutlet

55KCalls @4% RR


ROI Filter:Usage/

Profitability


DemographicPsychographic

Drivers


Filter

Do Not Call

Non-Responsive

to Phone

Respondentsto Text orDirect Mail

BillingCycle

MoreStringent

ROI Filters

649KRemoved

OutboundCall675K


Offer BasedOn Plan Type

PhoneExclusive

Offer

405KContacts

Made

InboundCall


retailoutlet

74KCalls


MoreStringent

ROI Filters


Multi-Channel Campaign Multi-Channel Campaign • Filtered out undesirable Filtered out undesirable

customers in order to curb customers in order to curb further investmentfurther investment

• Used modeling and Used modeling and analytics to filter through analytics to filter through contact channels as well contact channels as well as crafting offersas crafting offers

• Utilized variable print and Utilized variable print and screen technology to screen technology to ensure a customizable ensure a customizable experienceexperience

• Focused on efficiency and Focused on efficiency and maximizing ROImaximizing ROI

Texting/Email

Direct Mail

Telemarketing

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Multi-Channel Campaign ResultsMulti-Channel Campaign Results

Metric CostCustomers

Saved

Customer Base 30,000,000Identification Filter (27,775,000)Text Filter (225,000)Customer Sent Text 2,000,000 $80,000Inbound Calls from Text 160,000 $880,000 83,200Direct Mail Filter (460,920)Customer Sent Direct Mail 1,379,080 $992,938Inbound Calls from Direct Mail 55,163 $303,398 28,685Outbound Telemarketing Filter (648,719)Outbound Telemarketing Universe 675,198Outbound Telemarketing Contacts 405,119 $2,329,432 190,406Inbound Calls from Outbound TM 74,272 $408,495 38,621Total Cost of Direct Marketing Campaign $4,994,261 340,912Direct Marketing Cost per Customer Saved $14.65


Multi-Channel Campaign SummaryMulti-Channel Campaign Summary

Control Multi-Channel

Customers Saved 202,500 340,912

Direct Marketing Campaign Cost $25,725,000 $4,994,261

Cost per Customer Saved $127.04 $14.65

Sales Revenue of Saved Customers $96,130,800 $161,837,687

Percent of Saved Revenue Spent on Direct Marketing Efforts

26.76% 3.09%

Multichannel Retention Strategies: A Steady Diet of Low Hanging Fruit

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