Retention Case Study

We've decided to start this week off by sharing a case study. We're pretty proud of this one--RRW helped a leading telecommunications client retain more customers and sell those customers more services.

Hopefully, this success story will spark some good direct marketing ideas for you. And, it might give you a feeling for what RRW is all about :)

Situation Overview

Our client, one of the Regional Bell Operating Companies (RBOCs) was faced with the following two marketing challenges:

1. They needed to increase cross-sell and up-sell revenues from their large customer portfolio. Their strategy was to develop a “best product path” approach. They knew that if they could predict what was the next logical (and the most profitable) product to offer to each customer, they could improve cross-sell and up-sell results. Just a small increase in performance meant millions of dollars to this communications giant.
2. The Wireless division was faced with increased churn, especially among their most profitable customer segments. Competition was fierce as wireless carriers fought to grow their market share. They knew that they needed to improve retention efforts and – quickly – implement customer “save” programs.

Solution Review
RRW Consulting recommended a data-centric, analytical approach to help solve both of these challenges. The idea was to effectively mine existing customer data assets, and augment these efforts through the use of external demographic and behavioral data. Accurate and relevant data, combined with effective predictive modeling and customer profiling allowed the communications company to understand:

• What were the common traits of existing customers, considered “gold” customers—those who had at least 3 products (i.e.: caller ID, call waiting and voice mail)?
• What were the migration habits of customers who had become “gold”? How did they migrate from basic local service to become a gold customer? Which products did they buy first, second and third, or did they sign up for all services when they were acquired?

Answers to the above helped us to understand the product migration and allowed us to build the “best product path” approach.

Similarly for the Wireless Division, we examined attributes of profitable customers who had recently defected. We searched for reasons why an individual customer churned and developed a series of predictive models to predict who among active customers was likely to defect, and for what reason.

We then periodically scored the active customer portfolio with these churn models and fed the communications firm files of customers likely to defect. Using this data, the communications firm was able to devise and implement appropriate save strategies that allowed them to communicate with their customers with the right message and offer.

Following is a sampling of the data we analyzed to solve these challenges:

Internal
Data included: Products held, Price Plan, Payment behavior, Activation date, Calls to Customer Service and Handset type.

External
Data indluded: Individual-level data such as age and gender, Telecommunications-specific segmentation tools, Business vs. Personal use of service, Likely switching behavior and Neighborhood-level data (credit/census)

Results

• Retention of wireless customers was improved by 20%.
• Cross-sell and up-sell efforts improved dramatically (actual $ results are confidential).

House of Blues -- Using Mobile Marketing to Effectively Target the Youth Market

The House of Blues really hit it this time! Not only are they an excellent nightlife and music venue, but they are forward-thinking, leading-edge direct marketers. Recently, a case study was published by Mobile Marketing in the News outlining what the House of Blues (in partnership with Motorola) accomplished with the help of Soapbox Anywhere.

Here's what they did: "House of Blues, presently using the Web for consumer interactivity in addition to other more traditional means of marketing, decided to leverage the mobile channel to deepen its relationship with its existing and new customers. Recognizing mobile as a personal, one-to-one mass market medium that is 'always on', House of Blues tapped Soapbox Mobile to create its mobile campaigns. The Soapbox Anywhere platform provided personalized mobile interaction in addition to a valuable database of mobile users. The House of Blues mobile trivia campaign placed a 'call-to-action' across in-house TV screens and person-to-person street team interaction by means of unique short codes assigned to House of Blues venues across the U.S. The Soapbox Mobile solution empowered House of Blues to track and report, in real-time, the effectiveness of its mobile campaigns for each of its nationwide locations."

So, here's a case where a company, i.e., House of Blues, used emerging technology to accomplish a lot of things. First, they have built a unique way to acquire new customers and build loyalty (and stronger relationships) with their existing customers. Second, they have definitely figured out a nifty way to build brand awareness. Third, they were able to use their creativity to bring value to their partner, Motorola, in a way that most certainly makes their hearts sing: new revenue streams. Finally, and near and dear to us, they were able to create a program that was easily trackable so that they could see the effectiveness of the campaign in real-time. That's smart direct marketing for sure!

We are advocates of using technology in creative ways to effectively build profitable customer relationships. Kudos to House of Blues, Motorola and Soapbox Mobile for leading the way!

Customer Data Management -- Avoiding the Walking Dead

There are many schools of thought on how to most effectively direct market to your existing customers. This is especially true when you are looking at cross-sell, up-sell campaigns. How do you make sure that you are making the best-next-product offer to your clients at a time when they will be most open to it?

Well, there's some new, recently-completed research on this very subject that was conducted by the Wharton School of the University of Pennsylvania. Marketing Professor, Peter Fader is the co-author of the study and comments on his research in a very interesting article. In the research, three general states were identified that define a customer's relationship with a company. The research was conducted on a telecommunications firm.

"In State 1, customers are close to certain key services, such as basic cable. 'In this introductory state, you're just dipping your toes in the water and trying out one or two services to see if they meet your needs and if you like working with the company,' Fader said.

In State 2, 'you broaden your relationship, often acquiring additional services, like premium channels,' Fader noted. But that's not always a good thing. 'A customer who moves rapidly into State 2 is likely to reconsider his portfolio more quickly and possibly acquire additional services. However, while such customers may appear tempting, these same customers are also likely to transition into State 3 quickly and reconsider their portfolios (i.e., drop all services) without much delay,' the researchers write.

State 3 customers, the walking dead, are just one move away from severing their ties with the company. 'However, customers' transition to this state may not be immediately observable; they may maintain their current portfolio for several months (or longer) due to inertia. Having plateaued in their level of service, their next change almost certainly will be to drop all services,' the researchers state.

Fader adds an important caveat: 'While we see a relatively sudden drop in this particular dataset, there could be additional states in other settings. Customers might gradually shed their services as they slowly sever their relationship with the firm. It would be interesting to compare these evolutionary processes across different types of multi-service providers.' "

Understanding which customers are in each of these defined states can allow your company to better identify the next-best-product path for each customer segment, thus enabling you to market products and services appropriately to each specific customer state. We've conducted several studies that have helped our clients better determine which customers they should spend their time marketing to and which customers should be "pruned" because further marketing efforts and customer service efforts will be wasted -- or at the very least, not very profitable. In fact, we've created a case study on Building Customer Profitability.

So, as the Summer Solstice approaches, perhaps it's time to take a look at your customer database and determine which of your customers resemble the walking dead -- and which of your customers you can treat more like the living by continuing to build solid, profitable customer relationships.