RP Final

A RESEARCH PROJECT REPORT ON
CHURN MANAGEMENT POST MNP
TOWARDS PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF MASTER OF BUSINESS ADMINISTRATION IN TELECOM MANAGEMENT (MBA -TM)
SUBMITTED BY
ABHISHEK KUMAR SHARMA ADITYA SOUMAVA AMBER MISHRA HITENDRA KISHANCHANDANI RUCHI TIWARI
Symbiosis Institute of Telecom Management Constituent of Symbiosis International (Deemed University) Pune-411 042 MBA-TM Batch 2010-12
SITM, LAVALE, PUNE-411024
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CERTIFICATE
This is to certify that project titled
CHURN MANAGEMENT POST MNP

Is a bonafide work carried out by
Syndicate-08 ABHISHEK KUMAR SHARMA ADITYA SOUMAVA AMBER MISHRA HITENDRA KISHANCHANDANI RUCHI TIWARI
Towards the partial fulfillment of Master of Business Administration in Telecom Management (MBA TM)
__________________
Mr. Sunil Patil Director-SITM Pune
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Table of Contents
1.0 Objective of the Research ...................................................................................................... 4 2.0 Executive Summary ............................................................................................................... 5 3.0 Scope of our Project .............................................................................................................. 6 4.0 Churn Management................................................................................................................ 7 4.1 Churn Taxonomy ....................................................................................................... 8 4. 2 Churn Classification ................................................................................................. .9 4.3 Telco churn management techniques ....................................................................... 14 5.0 Motivations for conducting the research............................................................................... 18 6.0 Review of the literature ........................................................................................................ 23 7.0 International case studies on churn management ................................................................. 27 8.0 Impact of MNP on churn ....................................................................................................... 33 9.0 TNS research on customer classification ............................................................................... 35 10.0 Customer experience ......................................................................................................... 39 10.1 Difference between Customer Experience and Customer Satisfaction..................... 39 10.2 Customer experience management ........................................................................ 41 10.3 Overall customer experience leading to satisfaction ................................................ 45 10.4 Models studied for customer experience and lasting loyalty ................................... 52 11.0 Churn management systems and software........................................................................... 55 11.1 SAS Institute's CRM Knowledge Solution Series (CKSS) ............................................ 55 11.2 HP OneView ........................................................................................................... 58 12.0 Dynamic Subscriber Fingerprinting ...................................................................................... 61 12.1 Introduction.................................................................................. 63 12.2 Paradigm Shift ........................................................................................................ 64 13.0 Methodology of data analysis ............................................................................................. 67 13.1 Regression analysis ................................................................................................. 71 13.2 Factor Analysis ....................................................................................................... 77 13.3 Cluster Analysis ....................................................................................................... 77 1 4.0 Customer Experience - Driving factor...............................................................................85 15.0 Appendix and References .................................................................................................. 100
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Table of Figures
Figure 1: Scope of the project .................................................................................................... 6 Figure 2: Global Churn Rates (2010-11) ...................................................................................... 7 Figure 3: Understanding customer churn . 8 Figure 4: Involuntary churn ....................................................................................................... 10 Figure 5: Voluntary churn .......................................................................................................... 12 Figure 6: Motivations of the research......................................................................................... 19 Figure 7: Revenue and profit concentration in subscriber base .................................................. 20 Figure 8: Key reasons for MNP churn (Nielsen)............................................................................ 34 Figure 9: TNS TRI*M customer typology ..................................................................................... 36 Figure 10: TNS Market Resistance Ratio (MRR) ........................................................................... 36 Figure 11: Experience matters..................................................................................................... 40 Figure 12: Factors that affect customer satisfaction .................................................................... 45 Figure 13: Customer company interactions (BCG Analysis) .......................................................... 47 Figure 14: Increasing customer stickiness .................................................................................... 53 Figure 15: Emotional signature of value ...................................................................................... 55 Figure 16: Attention cluster of emotions ..................................................................................... 57 Figure 17: Advocacy cluster of emotions ..................................................................................... 57 Figure 18: Consolidating how a customer feels ........................................................................... 58 Figure 19: Consolidated view of human emotions ....................................................................... 59 Figure 20: Understanding the customer states ............................................................................ 60 Figure 21: Time to reinvent experience ....................................................................................... 61 Figure 22: Emotional stages of a product .................................................................................... 61 Figure 23: HP Oneview churn management solution ................................................................... 70 Figure 24: Telecom Operators from monopoly to competitive environment ............................... 72 Figure 25: DSF .............................................................................................................................. 74
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1.0 Objective Of Research

Our objective, from the outset, is to address the real problems faced by cellular service providers dealing with the issues of churn and to provide these companies with a guide to: Analyze the factors contributing to subscriber churn by identifying the factors, using network audit reports by TRAI and customer satisfaction survey for each operator in each circle and there by interpreting primary and secondry data by using statistical tools Performing regression analysis ,cluster analysis ,factor analysis and micro segmentation to find out the factors important for churn Analyzing the data and arriving at the key findings Parameters which are critical to quality for consumer experience and how they play an important role in churn management For proactive churn analysis we have used the model of dynamic subscriber fingerprinting to tap the customer behaviour from various customer touch points Overview of the importance of Customer Experience and its positive impact on managing churn
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2.0 Executive Summary

The Indian telecommunication market is one of the most competitive and price sensitive in the world. With a slew of operators providing both GSM and CDMA services on their networks, the user is flooded with options of virtually unlimited plans and offers to choose from. Indian telecom companies have traditionally looked to tap the urban consumer base which has proven to be the major revenue earner for these companies. In the bid to cover the cities, especially the metros, the companies are going all out for acquiring and retaining the urban consumers. To survive in such competition and to make business viable, operators have to understand the customer completely. The overall lifetime value of each customer is different and thus, having a churn management strategy is becoming vital for winning over the customer, developing products and services for complete customer satisfaction and segmenting customer for better one-to-one target marketing. In this study we have tried to come up with various factors due to which customer churn from one provider to another and have finally tried to arrive at recommendations for reducing churn for the operators based on the data and its analysis. For achieving the desired objective we initially studied about churn, types of churn and churn management in general. We undertook secondary research to figure out various factors of from TRAI report that have been carried out in the same domain. From the factors derived from secondary research network audit reports by TRAI and customer satisfaction survey for each operator in each circle we conducted the primary analysis using data analysis and statistical tools. This research focuses on determining the major reasons why mobile phone users leave a particular service provider. This research tries to study the users to better understand their buying influences and customer life cycle on the service providers network and their VAS revenue. This research also aims to highlight key issues that may help in better recommendations to the telecommunication service providers in India. This research aims to mark key indicators for the companies to see business sense in this opportunity to retain their existing customers and to cash in on the brand loyalty of their user base for higher, more profitable and sustainable future growth.
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3.0 Scope of our Project

Our objective, from the outset, is to address the real problems faced by cellular service providers dealing with the issues of churn and to provide these companies with a guide for insight. The scope of this project is to analyze the factors contributing to subscriber churn by identifying the factors, using network audit reports by TRAI and customer satisfaction survey for each operator in each circle and there by interpreting primary and secondry data by using statistical tools. Then the project performs regression analysis ,cluster analysis ,factor analysis and micro segmentation to find out the factors important for churn, analyzing the data and arriving at the key findings, parameters which are critical to quality for consumer experience and how they play an important role in churn management For proactive churn analysis we have used the model of dynamic subscriber fingerprinting to tap the customer behaviour from various customer touch points and thus provide an overview of the importance of Customer Experience and its positive impact on managing churn.
The following stakeholders in the Indian telecom ecosystem have been analyzed during the course of this research project : Cellular Service Providers Telecom Regulatory Authority of India (TRAI) Wireless Mobile Subscribers
Figure 1: Scope of the project
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4.0 Churn Management

The Indian Telecom Industry has undergone a revolution in the recent years. According to the Telecom Regulatory Authority of India (TRAI), the number of telephone subscriber base in the country has already reached 914.59 million at the end of October, 2011, an increase of 43.34 per cent from 638.05 million in April 2010. User satisfaction and enhanced user experience is emerging as the major focus point for the service providers, wherein preventing customer attrition, called churn and acquiring new customers are the biggest challenges being faced currently by them. According to Gartner, Indian cellular operators face the highest churn rates compared to their counterpart in Asia pacific Region (APAC).The monthly churn rates for India range from 3.5 per cent to 6 per cent. As per the estimation of researchers, the average churn of telecom industry worldwide is 2.2% per month, i.e. about 27% of given carriers customers are lost every year. Also, the cost of acquiring a new customer is usually much higher than that of retaining an existing one. Thus, it is essential to develop effective methods to retain the existing customers for any telecom operator. Figure below is a statistic report of customer churning rate as of 2010-11.
Figure 2: Global Churn Rates (2010-11) The service providers are providing competitive offers to attract new customers and thereby penetrating deep into the growing segment, which essentially means how to maintain good relationship with existing customers and remain competitive in such a tough campaign is equally an important task for these operators. In today's competitive telecom environment, knowledge about the customer is the key to customer retention. The telcos data assets are converted into effective customer retention solutions using Data Mining. The system can use segmentation and data mining to probe customer information, discovering Profiles of loyal customers and customers who are likely to churn. These profiles usually reflect various combinations of usage, customer data, and socio-demographic factors.
SITM, LAVALE, PUNE-411024 Page 8
High value customers can be classified by parameters such as number of phone lines, average usage, revenue, and usage trends. The data thus analyzed for Churn Management can be integrated with any customer care and billing system so as to give real time data to Customer Service Representative to handle any potential churning subscriber, or churner effectively. Hence looking at the high subscriber base and equally high churn rate, it can be concluded that effective churn management can prevent a lot of revenue loss for telcos and when used with proper data mining techniques, it, in fact can result in increased revenue for telcos.
4.1 Churn Taxonomy

According to Cambridge Dictionary, churn can be defined as the number of customers who decide to stop using a service offered by one company and to use another company, usually because it offers a better service or price.
Figure 3: Understanding customer churn
4.2 Churn Classification

In order to address the churn management strategy, we need a comprehensive understanding of exactly what the different kinds of churn might be. There are many ways to categorize customer churn. One can group it by the time it happens (people who churn within one month of signing up, after one year, or when their contracts expire), by the way the customers do it (phone churners, in-person churners, and missing person churners), or by the reasons they give for churning. The most useful approach is to categorize by the reasons for the churn.
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1. Involuntary Churn The easiest types of churners to identify are the involuntary churners. They are the customers that the telco decides should be removed from the subscribers list. Involuntary churn has turned out to be the biggest kind of churn problem for some providers and an almost non-existent category for others. This category includes people that are churned for fraud, non-payment, and under-utilization.
2. Voluntary Churn Although the involuntary churn category defines a large part of the customer attrition problems, when people think about telco churn it is usually the voluntary kind that comes to mind. Voluntary churn occurs when the customer initiates termination of the service contract. Each of the above categories can be further sub divided according to the following:-
Figure 4: Involuntary Churn

Non-payment churn (customers with credit problems)

A problem that is growing in importance for many carriers is non-payment, or credit churn. This situation occurs when subscribers fail to pay their bills, usually for several months in a row. Credit churn is a particularly interesting form of churn. It is completely up to the carrier if or when to cut off the customer and terminate the contract. There are customers who will continue to use the phone for as long as they possibly can, with no intention ever to pay. Then again, there are also customers who intend to, or will at least try to, pay when offered some assistance. This makes credit churn a challenge for the provider. If you are too abrupt or offensive with the customers, you run the risk of angering them and encouraging them to go to a competitor (who might get paid on time every month). On the other hand, if you are not firm enough you run the risk of donating a lot of airtime to a customer who will never be any good.
Underutilization churn (customers who do not use the phone)

Another new category of involuntary churn that some telcos are beginning to pay attention to is underutilization. For some telcos the fact that customers have a phone and a number but are not making good use of it is reason enough to disconnect them. These telcos keep track of how much a phone is being used and cancel subscribers after a certain period of time. (Underutilization is only an issue for the prepaid customers or those who pay no fixed monthly fees.)
Managing involuntary churn

The nice thing about involuntary customer churn is that you, the company, have a great degree of latitude in how this kind of churn is managed. You also have a great deal of control over the amount of involuntary churn risk exposure that you take. Fraud, credit, and underutilization are all problems that can be anticipated ahead of time. By tightening up your customer screening efforts, you can prevent many of these situations. On the other hand, you can loosen up the criteria, allowing more customers into the firm, thereby increasing your potential revenues but also increasing your risk of having to deal with these kinds of churn more often. Ultimately, it is simply a trade-off decision based on a number of factors. Some companies need to have a high headcount (for reasons of investor confidence or marketplace image). In these cases, allowing the obviously higher risk customers to sign up can be one of the best ways to address the issue. The downside, of course, is that you will have to deal with these people at a later time.
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Figure 5: Voluntary Churn
Deliberate churn
For the most part, incidental churn occurs only in a very small number of cases and is usually nothing more than a natural part of any business. More important are the many kinds of churn that happen when customers deliberately leave your company. Deliberate churn happens for reasons of technology (customers wanting newer or better technology), economics (price sensitivity), quality factors, social or psychological factors, and/or convenience reasons. Technology based churn In our technology-based society and with the ever changing technology, new and improved profile that wireless telephones offer, it should come as no surprise that wireless customers are sensitive to technology issues and will switch carriers in response. Technology-based churn can be divided into three major categories: handset churn, feature/function churn, and network churn.
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Economic churn The most easily understood of the churn types is the churn for economic reasons. Despite the best efforts of service providers to make their companies and products unique and interesting, the resounding number-one reason for churn mentioned by consumers generally is the price that they pay for using the telecom services. Since customers are sensitive to price, the telcos must respond to price pressure from their competitors.
Quality Although price is the generic, number-one reason people churn; quality is the second most common reason. This is not a surprise either. The wireless industry is, after all, a service industry, and the quality of the service is what people are paying for.
Social / psychological So far we have discussed technology, price, and quality. Although these are by far the biggest reasons for churn, some other more subtle factors, which by themselves will probably not cause churn to happen, can contribute individually or combined to the consumers churn decision. People are social animals, and friends, family, and many other social influences sway them. Social pressures can even cause a person to drop a carrier and switch to one that is more socially acceptable.
Convenience As with many of the churn reasons we have considered, the types of churn events that occur as a result of convenience are probably not so much reasons as a contributing factors. The category of convenience churn includes all those types of activities that make it very easy for the customer to make a churn decision. Customers often name these convenience events as their churn reasons.
Incidental Churn
Incidental churn occurs, not because the customers planned on it but because something happened in their lives, and the termination of the service is a side effect of that very incident. Change in financial condition churn Change in financial condition churn is attributed to the customer losing a job, going bankrupt, ending up with large bills, or any other kind of financial calamity. Obviously, under such conditions the customer will be forced to discontinue service.
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Change in Location Churn The other incidental churn occurs when the customer moves outside of your service area. This happens more often in countries such as the U.S. or China where people can easily move between carrier boundaries without leaving the country. In countries that are less geographically dispersed, change in location churn is much less likely to occur.
Change in Life Situation Churn Finally, the change in life situation churn covers most other reasons that might cause customers to terminate service when it isnt their idea. Customers die; their parents take away their phones, or any other of a variety of causes.
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4.3 Telco churn management techniques

We can separate how a telco responds to churn into two major categories.
1. Pre-emptive churn management This category includes all of the churn management actions that attempt to prevent the churn through proactive satisfaction of customer churn reasons. From the providers perspective, there are two ways that the rate of churn can be affected. The first way is to eliminate or minimize customers dissatisfaction. If the customers are already receiving the best price, the best service, the desired call quality and coverage, and these customers are associated with a firm whose brand image is appealing to them, then churn will not occur. A companys attempts to prevent churn through the proactive satisfaction of customer churn reasons is the pre-emptive churn management technique. Pre-emptive churn management will cost the firm money. There are expenditures for improving customer service, call quality, and coverage. 2. Reactive churn management This category includes all those actions that attempt to correct or compensate for the churn that has begun to occur, or churn events that are already underway. While it should certainly be the goal of every company to develop as much pro-active and pre-emptive churn management activity as it can, this is not always possible. There are several reasons a company might find itself in a position where large numbers of its customers begin leaving with little or no advance warning. When this occurs, the companys only alternative is to react and to try to stop or slow the churn.
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5.0 Motivations for conducting the research

As the estimation of market researchers, the average churn of wireless telecom industry is 2.2% per month. That is, about 27% of given carriers customers are lost each year. Thus, it is more essential to develop effective methods to retain the existing customers for these companies, because the cost of acquiring a new customer is usually much higher than that of retaining an existing one. Churn is the problem for all telecommunication providers around the world. The problem confronting wireless telecommunications management is that it is very difficult to determine which subscribers leave the company and why. It is therefore even more difficult to predict which customers are likely to leave the company, and more difficult still to devise cost-effective incentives that will convince likely churners to stay. Therefore, from the above description, we know the churn management is most critical issue in any telecom firm. Specifically, when CRM (customer relationship management) have been discussing more and more popularly in service industries, then how to manage customer churn is relatively important for telecom industry. Based on above-mentioned, this research tries to use market research techniques to assist the telecom churn management of telcos, particularly using data analysis to further promote their competitive advantage. The major motivation for this study was to understand how better customer experience by the telecom operators will result in effectively managing the churn for that operator amidst the hyper competition in the Indian telecom market. Churn rate is considered to be a challenge for the company, it decides whether the customers are happy with the services being provided by telecommunication company. Churn rate implements the customer satisfaction index and can help the company to find out the weak points and to make it better. Churn rate also plays an important role for the investors of the telecom companies. Investors get the information of churn rate from the financial results of the company and on that basis, the share price of how the company performs. As the market competition becomes intense, and the value which can be derived from each customer varying, constructing a churn management framework is coming to the forefront of the company for winning over the customer, developing services and products for customer satisfaction and segmentation of the market for better customization and one-to-one marketing and relationship building.
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Figure 6: Motivations for the Research Operators in the fast-growing emerging markets are under constant pressure to balance market share expansion with profitability, making service relevance and integration critical to driving incremental revenue growth and improving customer retention.
Figure 7: Revenue and Profit Concentration in Subscriber Base
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Therefore, critical issues for operators in such emerging markets include: Retaining high-end subscribers, especially following the introduction of changes such as mobile number portability. Increasing revenue from mid-end subscribers by up-selling and cross-selling services, and optimising tariff plans.
On the revenue growth front, operators have long searched for a killer application to drive non-voice revenues. However, with the exception of a few markets, such applications and services have been elusive. As a result, operators are now focusing on increasing the penetration of simple non- voice services, such as caller tunes or CRBTs, by offering flexible billing options and improved service discovery. Stickiness remains a challenge though, with customer churn rates on some value-added services reported to be as high as 30% per month. For combating the high cost of churn and towards improving the customers relationship, increasingly sophisticated techniques can be employed to analyze why customers churn and which customers are more likely to churn in the future than others. Such information can be utilized by marketing departments of the telcos to better target their campaigns and by active monitoring of customer call base to highlight customers who may, by the signature in their usage pattern, be thinking of migrating to another provider can utilize. As churn is such a massive problem that it affects other aspects of customer relationship management (CRM), such as customer acquisition. Wireless telecom operators have to think the following questions: 1. Are we recruiting the right people or are they likely to churn before we have made a return on our investment? 2. How is churn affecting the lifetime value of our customer base? 3. Can we get a complete view of our customer information, so that we can profile likely churners? Based on these questions, telecom operators also need to find a solution to reduce the churn rates, and to prevent the profitable customers switching to other competitors. But in the real world, it is a real difficult problem to all mobile operators, how to find the right customers to acquire? And how to retain the profitable customers to stay? All of these questions are the critical issues that are bothering these mobile operators. IT departments of telecom always tend to focus on meeting day-to-day operational goals, such as providing and maintaining the switching system needed to allow calls to take place, and the billing systems to charge for calls made. In many cases the technology is not in place to support the complex requests for information from the sales and marketing departments, who must address the issue of churn. Also, the organization may lack the expertise to support complex data mining and analytical tasks, which are essential in combating churn as well as in many other aspects of CRM. The volumes of data that are needed to undertake such tasks are huge and sometimes difficult or impossible to access and consolidate using conventional operational-system tools.
Because of these, marketing departments can only provide existing customers with a general promotion to retain them. But, in fact, this way also costs as much money as acquiring new customers. Even as we have noted, most of wireless companies have built their data warehouses, allowing the relevant operational data to be stored separately from the transactional systems themselves, and organized according to units that make sense to marketing analysts (such as contract and customer). Moreover, with the deregulation of the telecommunication industry in many countries and development of new computer and communication technologies, the telecommunication market is rapidly expanding and highly competitive. This creates a great demand for data mining in order to understand the business involved, identify telecommunication patterns, make better use of resources, and improve the quality of service. In order to analyze the customer attributions to manage the customers churn, this study will intend to base on the cause/reason/characters that were collected and hope it could identify the patterns that can precede customer churn, allowing businesses to pinpoint customers who are most likely to leave and take appropriate action in advance.
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6.0 Review of the literature

Customer churn is a basic unit of the telecommunication industry, which is used to describe customer loss, more precisely defined as the gross rate of customer attrition during a given period. It assesses a service providers customer retention efforts and provides an insight into the growth or decline of the subscriber base as well as the average length of participation in the service. In the Indian telecommunication industry, customers are able to choose among multiple service providers, thus actively exercising their right to switch from one operator to another. There is a significant relationship between customer loyalty, customer satisfaction, trust and switching costs in the mobile phone market. In this fiercely competitive arena, with around 14-15 players in telecom market, subscribers demand tailored products and better services at lower prices, while service providers focus on customer acquisition as their prime business goal. Customer retention has become the key business issue for telecom companies. A report on Best Practice Churn Management Strategies for pre- and post-paid customers identified the strategies that best practice operators use to combat churn for both prepaid and post-paid customers. It provided an assessment of the impact versus cost/complexity of the full range of churn management strategies employed by the operators and benchmarks achieved. It showed that operators could achieve quick wins in the battle against churn by obtaining comprehensive customer information and applying this information to churn prediction. It also identified various ways to manage churn in the future as the market becomes saturated and customers tend to become extremely selective. Operators have to invest in CRM and database management in order to understand clients needs and anticipate churn before it happens, putting in place actions to generate fidelity. As SAS institute investigated, churn costs European and U.S. telecom close to US$4 billion each year, and the global cost of customer defection may well approach a staggering US$10 billion each year. Annual churn rates of 25 to 30 percent are the norm, and carriers at the upper end of this spectrum will get no return on investment on new subscribers. Why? Because it typically takes three years to recover the cost (approximately US$400 in the United States and US$700 in Europe) of replacing each lost customer with a new one (customer acquisition). Particularly, in the European and Asian markets, the number of new market entrants is adding to the churn phenomenon. The proper customer management presupposes the ability to forecast the customers decision to move from one provider to another and the reception of proper measures in order to avoid the movement and retain their customers. In Europe, 30 new telecom companies entered the market in 1998, seeking the 15 percent marketing share that analysts say they will need to survive. The growth in the number of subscribers has eased this situation in the past, but as market growth slows and average revenue-per-user declines, increased competition is likely. How serious of churn problem in telecom?
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In recent years, CRM has been discussed extensively, especially in customer-oriented industries. They emphasize CRM more than other aspects. Hence, from the above references, churn management seems much important to telecoms CRM, especially in the case of wireless market is getting saturated in Taiwan. Therefore, meanwhile, how to keep existing customers is quite important for these wireless providers. After finding out the churns predictive model, marketing department further needs to segment their customers, score customers, and to identify the profitable customers, retain the profitable ones who will likely to leave that has been predicted by using the predictive model. For all churn predictive models, customer segmentation and scoring can also be completed to use the data mining techniques. Data mining techniques can be applied to discover the customers information for other service industries. Consequently, this study is referring to these researches as a benchmark to develop similar approach to support telecom churn management. Customer experience is defined as the sum of all experiences that a customer has at every touch-point of the customer-company relationship. It is an intentional effort on the part of the company to develop and maintain good experience which is differentiated from the competition, consistent at every touch point and most importantly valued by the customer. Customer experience is the internal and subjective response customers have to any direct or indirect contact with a company. Direct contact generally occurs in the course of purchase, use, and service and is usually initiated by the customer. Indirect contact most often involves unplanned encounters with representations of a companys products, services, or brands and takes the form of word-of-mouth recommendations or criticisms, advertising, news reports, reviews, and so forth.
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7.0 International case studies on churn management

Cellular industry of Pakistan is growing at a high annual growth rate. This tremendous growth has attracted many national and international cellular services providers to invest in Pakistan. Cellular companies battling for supremacy and profits have started to focus on consumer retention than on acquisition. The growth rate shows that number of subscribers have increased from 68,000 in 1996 to 3.3 million by the end of 2003; since then the subscriber base has heaved to reach 80 million in early 2007 and exceeded 95 million in 2009 that accounts for almost 60% penetration. There are five telecom players present, Mobilink, Ufone, Telenor, Warid and Zong. There is a virtual hyper competition between these companies especially between Mobilink and Telenor, which are the main players in the cellular industry of Pakistan. As of November 2009, Mobilink captured 31.5% of the entire market with highest number of subscribers followed by Telenor having 23% of the market share. ARPU level is around $ 2.66 for 2009-2010. For the purpose of understanding customer churn in the telecom industry, the research report that was studied by the group focused on two major players, Ufone and Telenor. A primary survey method was adopted by the researchers of this report to determine the factors that give rise to customer churn and which operator accounts for less customer churn. It was found out that the major reason for customers switching over from the previous service to the current one is fairness of price, poor voice quality followed by network problems, as depicted by the choice of both Ufone and Telenor customers. As far as the satisfaction level of customers is concerned, more than half of Ufone customers were satisfied with its prices and cellular coverage, but dissatisfied with the billing system. A majority of the customers of Telenor were satisfied with its cellular coverage and billing, but dissatisfied with the voice quality. Overall result was that Ufone was using major churn management techniques thus churn in case of Ufone was low as compared to Telenor. Taiwan case study Taiwan has undoubtedly one of the most advanced telecommunications networks in Asia. Increasing land and labour costs have forced Taiwan to concentrate on technology, and it is now a leading high-tech centre in Asia Pacific. Headed by what had been a runaway mobile sector which passed 100% penetration in early 2002, and a strong but declining fixed-line telephone sector with a penetration of over 55%, the market continues to find new ways to grow. Taiwan has been very progressive in its efforts to liberalise the telecommunications industry and to create a positive regulatory regime. First there was the strong push for competition to Chunghwa Telecom. The focus then moved to privatising the incumbent operator. Taiwans telecommunication infrastructure has been upgraded significantly, undergoing a series of network modernisation projects over the last decade or so. The report that was studied provided statistics on the Taiwan telecom market including broadcasting and submarine infrastructure. It also considered key areas of regulation in the Taiwan telecommunications industry.
Customer demographic analysis The customer whose age was between 45 and 48, their probability of churn was found higher than the overall population churn rate and the customers whose tenure was between 25 and 30 months were found highly possible to churn. The possible reason for this result was the contract expiry, since most subscribers were required to sign a two-year contract with their mobile operators. On the gender side, co-operators churn was higher than others. The customers who subscribed as corporate accounts were the employees of some certain companies. Hence, when this group of churner quit these companies, they deactivated their mobile service. Bill and payment analysis The customer whose monthly fee was less than 100 or between 520 and 550, the churn probability was reported higher. It seems that the subscribers who paid low monthly fee were easily to churn. If they subscribed this service mainly for free handset, after contract expired, the likelihood for them to deactivate this service was high. The customer whose average billing amount of six months was not over 190 NT, the probability of churn was higher. The same as high monthly fee, low revenue subscribers aimed for free handset at the beginning. Therefore, they probably did not use mobile services quite often. Customer care service analysis The customers who ever changed their phone numbers or the number of changed count was greater than two, their churn probability was high. It seemed that this kind of subscribers did not feel satisfied with the mobile operators. Hence, they decided to churn after they had changed their phone number many times. In general, customers who had ever been barred of suspended, the subscribers will be bared or suspended by the mobile operators due to their over-due payment.
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8.0 Impact of MNP on churn

MNP (Mobile Number Portability) in the Indian context is the service that allows a subscriber to shift from one service provider to another without changing his/her mobile number at a very nominal charge i.e. Rs. 19. It requires a period of 4 days for completion of porting of mobile number except in J&K Assam and North East where it will be 12 days. Considering different perspective of present Indian telecom sector, it shows that there will be partial impact of MNP in the market. Indian telecom market comprises of more than 91% prepaid customers and rest postpaid customers. But as per some studies these postpaid customers accounts for more than 20% revenue chunk. Prepaid segment is already experiencing a churn of around 50% whereas postpaid churn is in range of 12-24%. MNP will have major impact on this very segment. If these high end customers are not happy by the services of current service provider they are most likely to churn. So MNP will force service providers to increase the quality of service in order to retain high end customers and in order to grab more market share of high spending customer base. According to syndicated study done by IMRB, Portability will hit the relatively loyal and stable market of postpaid consumers harder. It was estimated that for most players, the maximum movement of inflow and outflow (nearly 65 per cent) would occur in the first two months because those who have waited for portability will try do so immediately. It also underlines the importance to brace for churn in a brief span of time. It would trigger the need to pull customers as it would then need to retain existing customers. CDMA operators are expected to be hit the hardest, market leaders stand to gain the most because of their strong brand equity. Players in the middle rungs, who dont lead yet, could be in the eye of the churn too. Players who are neither leaders nor newcomers will gain subscribers because of less congested networks and stronger customer service and infrastructure than new players, so they can handle the traffic better. Brand pull and customer service will decide the drift for the operators. High-end customers will be more sensitive to branding and customer experience. Branding power in telecom becomes clear when users are ready to forgive their operator for its errors because the brand resonates with them.
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Figure 8 : Key reasons for MNP churn (Nielsen)
MNP effect at initial stage

The initial reaction of the introduction of MNP in Haryana indicates minimal churn in early days but Haryana circle represents only 1% of the total subscriber base and may not give a right indication. Less than 2% prepaid subscribers and 4%5% postpaid subscribers in Haryana circle are expected to opt for MNP noting the current porting requests within the first 14 days. Tata Teleservices have got about 21% of the customers who have opted for MNP while for RCom out of the total movement on postpaid, 80% are port in (those who want to join RCom). In value terms, this is 73% of the total value of portins and portouts (those who wish to leave RCom) put together. RCom has been concentrating on getting only high paying postpaid customers as ARPU in this category is equivalent to 10 prepaid subscribers while Vodafone is assertive on retaining existing customers and attracting fresh high end customers. Post panIndia MNP launch we might get a better view of its effects on different service providers and 3G launch at the same time would also play important role in MNP.
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9.0 TNS research on customer classification

TNS, a leading market research firm has classified telecom subscribers according to the following: 1. Apostles satisfied and retained customers and who massively support business sales by making positive recommendations in the market. These customers are generally quality oriented customers. 2. Mercenaries- satisfied but low on retention. While selecting an operator, they are more concerned with the tariffs and are always prepared to switch if they obtain a favorable offer. Mercenary group can be easily won over, but this means offering better prices than competitors. 3. Hostages- dissatisfied but loyal to the operator and fear switching costs and other difficulty. 4. Terrorists- neither satisfied nor retained and virtually lost. They are a major risk as they spread their word without being prompted and thus contribute to a dip in the market share.
Figure 9: TNS TRI*M customer typology
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The TNS research provides information about the resistance to be faced in the market with regard to word-of-mouth recommendations.
Figure 10: TNS Market Resistance Ratio (MRR)
The index thus computed is called Market Resistance ratio (MRR). For a company with a low number of Apostles and high proportion of Terrorists means they need to have a higher sales figure to sell just as many products as a company with low number of Terrorists and a high number of Apostles. This ratio is one of the reasons why Customer Retention has such a strong influence on profitability. Highlights of the Survey 11 Service Providers (Idea and ten competitors) Sample size spread across Headquarter City, and Rest of Cities in circle (Includes Small Towns) HQ: Split as 75 Pre Paid & 30 Post Paid per service provider Rest of Circle: Split as 100 Pre Paid & 60 Post Paid per service provider Small Towns : Split as 25 Pre Paid per service provider
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10.0 Customer experience

Customer experience is defined as the sum of all experiences that a customer has at each and every touch-point of the customer-company relationship. It is an intentional effort on the part of the company to develop and maintain good experience which is differentiated from the competition, consistent at every touch point and most importantly valued by the customer. In their book Understanding Customer Experience, Christopher Meyer and Andre Schwager say that Customer experience is the subjective response customers have to direct or indirect contact with a company. It encompasses every aspect of an offering: customer care, advertising, packaging, features, ease of use, reliability. Customer experience is shaped by customers' expectations, which largely reflect previous experiences. Customer experience is the internal and subjective response customers have to any direct or indirect contact with a company. Direct contact generally occurs in the course of purchase, use, and service and is usually initiated by the customer. Indirect contact most often involves unplanned encounters with representations of a companys products, services, or brands and takes the form of word-of-mouth recommendations or criticisms, advertising, news reports, reviews, and so forth.
10.1 Difference between Customer Experience and Customer Satisfaction

Customer experience is much more that customer satisfaction Satisfaction of customers is what every company tries to achieve but satisfaction is achieved through meeting the expectations of the customers. But these expectations keep on shifting hence the satisfaction levels will also keep on shifting. If companies try to focus on delighting the customers and providing them with great experience rather than satisfying them each time, then organizations will build a much better and an ever-lasting relationship with the customer. Customer satisfaction is how the products and services supplied by the company meet or surpass the expectation of the customer, whereas experience is the perception and the feel of the company and its brand as a whole. Delivering Total Customer Experience (TCE) goes beyond mere customer satisfaction and is a relatively new concept since satisfied customers could still shift to competitive brands. In the past, companies have primarily focused on the physical aspects of the product, while totally neglecting the emotional and value aspects and hence, losing many customers in the long run. We say that customer experience encompasses the satisfaction parameters and much more. Satisfaction is only adherence to the promised quality of service where as customer experience considers customer loyalty, brand perception, tendency to advocate the brand further, emotional attachment, building relationships, constant delivery of performance.
However we cannot completely segregate customer satisfaction from customer experience. A Good customer experience will necessarily have a satisfied customer but the reverse is not true. (A satisfied customer may not necessary have had a good experience). The level of satisfaction determines the customer loyalty and thus is also a measure of customer experience. We can safely say that customer satisfaction is a subset of Customer Experience.
Figure 11: Experience matters Also customer satisfaction and customer loyalty are highly co-related. A highly satisfied customer is very likely to be loyal to the organization. As shown in the above figure, as the experience levels increase the customer becomes satisfied with certain degree of experience level. This can be called as the point where his expectations have been just met. At the highest degree of experience the customer becomes an advocator of the brand. Why conduct an experience survey rather than a satisfaction survey? After understanding the difference between customer satisfaction and customer experience it was decided to conduct an experience survey rather than a satisfaction survey. Customers satisfaction-surveys only tend provide a superficial measure of the behaviours that drive profitability and growth. The problem with customer satisfaction surveys is that they don't tell you much about the perceived differentiated customer experience that drives loyalty in terms of intentions to repurchase, or advocacy in terms of willingness to actually refer you to friends, family and colleagues. Dr Ken Blanchard says that A satisfied customer isnt going to tell everyone what a great experience they had with your company. Your customers are only satisfied because their expectations are so low and because no one else is doing better. Just having satisfied customers isn't good enough anymore. If you really want a booming business, you have to create Raving Fans.
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A satisfaction survey will only be able to measure the customer feedback on the products, pricing and services of the company whereas the experience survey will measure the emotional bonding towards to the company, along with the loyalty and the advocacy rates of the customer. A customer having good customer experience is more likely to stick to the company and it is always much profitable for the company to retain customers rather than attain new. Customer Experience in Indian Telecom refers to all the contacts with the service provider, Pre Sales/ Sales person before buying the service or Customer Care or Billing during the usage of service, the Service or product itself, its usage, should bring in a extreme positive outcome in the mind of the customer, which would lead to not only continuation of service but also recommendation of the service providers to others.
10.2 Customer experience management

Challenge in modern telecom industry - Customer retention In the modern day telecom industry, which has attained high penetration level, acquiring a customer is getting even costlier. Industry analysis states that only 25% of the acquired customers stay with the company after a year's time and on an average only 20 -30% of the entire customer base is revenue earning/profitable customers. This dugs a deep hole in the balance sheet of the telecom service providers. Due to the churning effect of the customers, there is a huge imbalance created in gross additions of the customers and net addition. Forward path: Way to customer retention - Customer experience management Therefore, the major challenge for the telecom operators around the world is managing customer churn. It affects profitability of the company if a customer churns before the company can earn back the investment it incurred in acquiring the customer. Therefore, it is very critical to indentify the profitable customers and retain them. Retaining the profitable customers includes the following two steps: 1. Identifying the revenue earning customers from the entire customer base. 2. Managing the customer experience and customer value for the revenue earning customers. Identifying the Revenue earning customers The telecom service providers need to define their business logic for identification of the revenue earning customers. Depending on the business rules the entire customer base needs to be segmented into revenue earning customers and non-revenue earning customers. Managing customers ARPU (average revenue per customer) and the customers data in scale of hundreds of millions is a challenge. This can be achieved with the help of various business analysis tools (e.g. SAS, SPSS, Teradata, Minitab, etc.). After the identification of the valued/revenue earning customers, managing those identified group of customers is of utmost importance.
Focusing on customers instead of products Over the past years, the telecom service providers have concentrated on introduction of new products. They have originated new products/services and then sought to find or create a market for them. But increased competition among the existing service providers and lower barrier to entry for new players has resulted in the growth in predatory activities in the telecom industry. Moreover, the cost of acquisition of new customers has increased considerably. Hence, in the modern times, there is a gradual shift in focus from introduction of new products for acquiring new customers to customers' experience management is observed. Currently, the telco's need to concentrate on retaining the existing valued customers and targeting more wallet share of each customer by creating more value and improved customer experience.
Customer led customization model There is an underlying assumption that the service providers will dictate the future of telecommunication products and services. But with the growing bargaining power of the customers, there is a shift in paradigm and the service providers need to customize their model based on individual customer preferences. Now the business will follow the lead of the customers in designing and promoting services intended to meet specific needs of the customers. Under this circumstance, the service providers need to identify the unique needs of the individual customers, and then attempt to develop services which satisfy those multifaceted needs. With this model, the mass marketing will give way to the customized market research and the survival of the service providers will depend on the company's ability to meet customer's demand on an ongoing basis. In other words, customers will dictate the terms of service they intend to receive.
Developing multiple channels The service providers need to develop multiple channels for sales and support to enhance the customer experience. Increasing the footprint by adding on retail outlets is one of the options which the telecom service providers have practiced since ages. Traditional channels like call centres also had been in focus. With the increase in competition and economic slowdown, the operators are looking for economical ways to serve their customers while keeping the service quality intact. Over the web channels, a customer can perform a host of activities like: Bill viewing and online payment Online register of a complaint for support Altering price plan and subscriptions Viewing the product catalogue and buy products/services online
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Telecom operators have been talking a lot about delivering a consistent and branded experience to their target customers, at multiple touch-points and channels, across the entire customer lifecycle. But until they can manage the Total Customer Experience (TCE) with an integrated and quantifiable mechanism, delivering a consistent and branded experience will be lip service rather than real action.
10.3 Overall customer experience leading to satisfaction

According to UCTI, Asia Pacific University College of Technology and Innovation, the importance of customer satisfaction is critical in relation to customer loyalty and customer retention. We can gain a quick overview of the overall customer satisfaction with the help of the following figure:
Figure 12: Factors that affect customer satisfaction Also according to a report by Price Water House Coopers, the customer experience includes the following five factors: 1. Brand 2. Environment 3. Culture 4. Communications 5. Offerings Developing a Life Cycle Map of the customer can guide us to understand the various factors that could affect the customer experience.
Figure 13: Customer company interactions (BCG Analysis) Note: The above set has been prepared by BCG (Boston Consulting Group) and we have referred to this while formulating few of the questions for our questionnaire for this research
A Brand Touch point Wheel can be depicted as follows:
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The pricing scheme or the cost to the customer India being a price sensitive market makes this factor very important. Also when we refer to other surveys conducted, such as the one conducted in Pakistan to study the customer churn in the telecom industry, it indicated the fairness of price to be the most important factor followed by voice quality and network problems. Regular updates and information provided to the customer by the service provider While talking to the various retailers on why the customers churn, one of the factors that came out was that many a times companies come out with new schemes and offers. The information about such schemes and offers dont reach even the retailers well in time let alone the customers. In such a scenario, both the retailers and customers fail to avail the benefits which otherwise might have helped retain the customers as well as retailers to reap the benefits in terms of various incentives offered. The role of retailers According to MCE (Management Centre Europe) the largest provider of International Management Development Services in Europe and the Middle East, The Telecom Retail Store is still one of the first and main customer touch point for the Telecom Service industry. As some channels are managed directly and some are being managed indirectly, motivating the staff, get the right look and feel, selling to the retailers and make sure that the products attributes are making it to the end customer are difficult challenges. There is nothing worse than having retails stores that are not reflecting what the websites or the adverts have promised in the whole customer experience. There are a lot of factors that make the role of retailers very crucial for every service provider like depending upon the commissions offered by the different service providers, the retailer might push one particular brand and how the retailer manages various posters, danglers etc displaying various schemes offered by the service providers. The quickness of services, efficiency and other facilities like recharging, registering complaints According to a major market research firm in USA, in the marketing of services involving high end technologies, along with the Ps of marketing there are 3 Qs which play very important role: 1. Quality 2. Quantity 3. Quickness Accordingly, in telecom industry, it plays a very significant role in determining the customers experience as how fast his or her complaints, queries or requests or the new service orders for that matter are resolved and fulfilled respectively. In order to provide the
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desired experience to the customers, the service operators ought to have the excellent business processes and operational processes at the back end. Retail and distribution network of the service provider The Indian telecom industry is going through the phase of hyper-competition with almost 12 to 14 players in most of the circles. In such a case every player tries to eat upon the others market share. Ensuring the availability of your product such as LAPU, SIM cards etc with all the retailers all the time is very important to gain new customers as well as retain customers. The distribution network and the expansion of the network in new territories become very critical in such a scenario. Products and services offered by the service provider The 3 Ds of the customer experience are majorly quoted as: 1. Design: Designing the right offers and experiences for the right customers. A company can't turn its customers into satisfied, loyal advocates unless it takes their experiences at all these touch points into account 2. Deliver: They deliver these propositions by focusing the entire company on them with an emphasis on cross-functional collaboration. 3. Develop: They develop their capabilities to please customers again and again According to a paper published in College of Business Administration, University of Detroit Mercy, Detroit, Michigan, USA, anticipating and fulfilling customer needs and wants better than the competitor is one of the most important factors in gaining the loyalty of the customer. Network Service Performance According to a report published by Ernst and Young, network and service quality plays a major role in managing customer experience and churn. In this report, E&Y have given a number of reference questions to be used such as: 1. Do I have service availability where I need? 2. Is the service provided with good quality? 3. Is the service easy to use? 4. Are my services secure and fast enough? Network performance and service quality usually affect customers only when their experience is negative. It has a strong impact on overall customer behaviour because customers tend to share their experiences especially the bad ones. If the customer demands: I want to access services wherever I am; the service must work well everywhere, even abroad. The services I use must be secure; applications must be easy to use.
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Cost and Billing According to Ernst and Young, cost and billing is one of the most visible influences on the customer experience, offering you an important opportunity to differentiate from your competitors. Cost is not always about the cheapest price the amount a customer spends is usually less important than the value they perceive they are getting. If the customer demands: I want value for money. Pricing plans must be relevant, simple and transparent; I want online visibility on how much I have spent, bills must be accurate and easy to understand. Service portfolio There is a direct correlation between the strength of your service and device portfolio and your market position, as well as your customers perception of the value of your offering. Achieving the right mix of innovative devices, services that are easy to find, purchase and use, and converged service bundles including those created by your customers goes a long way towards creating real customer satisfaction, improving your acquisition, loyalty and customer lifetime value. If the customer demands: Services must be easy to find, easy to subscribe to and easy to use; I want services that match my needs and preferences; I want a particular device; services must be cool and work well; I want to combine my own service packages. VAS (Value Added Services) According to Hutchison 3 Global Services (H3GS), the value added services provided by an operator improves the overall customer experience. According to them, if the customer profile and usage patterns are studied and analyzed with the help of analytics (available as a module in CRM these days) and the results used to design the customized services for the customers, then this leads to give rise to a stickiness factor which helps in retaining the customers. Creating exit barriers for customer retention Customer retention can be enabled by ethical exit barriers, which not only helps retain the customer but also add to the customer satisfaction. These include understanding customer domain, his or her needs and providing value added services etc. Exit barriers help retain customers, as customer see an expense in moving away from you or switching to competition. According to Accenture Consulting, as the Indian market matures, including the advent of MNP (Mobile Number Portability), churn will become an increasing problem. Experience in other countries indicates that the more services a customer uses, the lower their propensity to churn. Hence VAS (Value Added Services) can be used to increase customer loyalty, particularly if services are priced to encourage usage and if they involve some time investment from the customer such as backing up personal data or creating personalized content.
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Figure 14: Increasing customer stickiness Get sticky VAS can provide the opportunity and means for differentiation. Sticky services help to lock in customers by helping them manage their lives through services such as address book storage, SMS back up, and a range of personalized content and social networking tools. Operators can mine customer data to generate insight about the types of service bundles that would suit specific customer segments and use these to help drive retention.
Integrate the ingredients First of all we must understand the 4Ps of Digital Mix: 1. The Pipe (network) 2. The Pod (device) 3. The Panel (user interface) 4. The Programs (content and applications) The customer experience is essential for the success of any new service, and the mobile VAS experience is dictated by how well you integrate the 4Ps of Digital Mix. It is the blend of all of these ingredients that makes a successful experience. Often heavy investment in a cool UI is let down by another part of the mix leading to a poor end customer experience. According to a research carried out by Ciuci Consulting, value added services provide a range of opportunities to the customers and the operators. Telecom operators stand to benefit immensely from the provision of value added services to customers. Two major benefits to them include: Increase in revenue Customer retention
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Value added services can be grouped into two categories: Stand alone VAS: Services that can be offered alone as core services Bundled VAS: Services that must be bundled with core services
Personal Information The main reason for asking detailed personal information is to: 1. Form the segments 2. Analyze the different segments 3. Come out with the recommendations specific to these segments Emotional Signature of Value
Figure 15: Emotional signature of value The Destroying Cluster of emotions is the first place you need to focus on when looking to improve your customer experience. This cluster not only destroys value but it also costs you money, for example dealing with customer complaints, returns etc. Hence this makes the customer care centres and the services provided by the customer care executives very crucial in satisfying the customers. (The dissatisfied customers not only have the high propensity to switch to the competition but they also contribute in creating a negative impression of your brand).
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Destroying Cluster of emotions
Besides these, there are three clusters that drive value: 1. The Attention Cluster: contains the emotions that have a proven link to increased customer spend. If you evoke the emotions in this cluster, your customers will spend more money with you in the short term. 2. The Recommendation Cluster: about gaining customers who will recommend you. Therefore, evoking these emotions will create loyal customers and will improve your NPS (Net Promoter Score). 3. The Advocacy Cluster: If a customer is an advocate, they proactively tell people about your organization without prompting. These, then, are the ultimate drivers of customer loyalty and your NPS apart from being the cheapest source of marketing.
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Attention Cluster of emotions
Figure 16: Attention cluster of emotions Advocacy Cluster of emotions
Figure 17: Advocacy cluster of emotions

According to Buck Rodgers of IBM, people buy emotionally and then justify with logic. Emotional state is driven by three factors traits, moods and emotions. A trait is something that is inbuilt within you, it is part of your makeup; a mood is a sustained feeling; and an emotion is a feeling which takes place over a short period of time. All these factors play a role in defining the customers actions during the full customer life cycle. The consolidation of how a customer feels can be shown as below.
Figure 18: Consolidating how a customer feels Experience (good or bad) increases exponentially every time you come across such an experience at any point in time during your whole stay with the operator IBM says that be careful what you look for, because you will find it. If you look for things to confirm that you are unlucky, youll find them. If you look for things to confirm your positive outlook on life, youll find them too. Therefore if customers feel they are being treated fairly, they will look for other signs that reinforce this. If customers think they are getting bad service, again they look for other signs to confirm this.
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Figure 19: Consolidated view of human emotions
A customer in a hurry if not treated properly will eventually be hurried to switch to competition This is very important for a customer care service to understand. The customer care executives must understand the stage and the state of the customer according a figure shown below and hence prioritize and act according to prevent the likelihood of a churn.
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Figure 20: Understanding the customer states Stop the emotional burnout to turn the customers into the advocates of your services There always comes a time when the customer becomes used to the delight provided earlier to the customer of your services. Reasons could be many, like the time factor, the unique features or services have become as the basic industry standards. You must continuously reinvent yourself and provide the customers with more enriched experience at this point in time so that the customer feels that you are the best and hence is carried to a level where he becomes the advocate of your services.
Figure 21: Time to reinvent experience

A more elaborate example is given below
Figure 22: Emotional stages of a product
10.4 Models studied for customer experience and lasting loyalty:

Model 1: Creating raving fans In an organization, it needs to be considered that everybody has a customer. The Personnel department may not deal with anyone outside an organization but they still have customers. Now, the primary focus should lie into converting these customers into Raving Fan Customers. However the way we treat our colleagues or internal customers has a huge impact on how an organization treats its external customers. When people are treated badly internally, ripples spread through the chains of command and poison the whole organization. Dr. Ken Blanchard insists that you can only be guaranteed to beat the competition if you create Raving Fan Customers. So who are they and how do you get them? Dr Ken Blanchard says that A satisfied customer isnt going to tell everyone what a great experience they had with your company. Your customers are only satisfied because their expectations are so low and because no one else is doing better. Just having satisfied customers isn't good enough anymore. If you really want a booming business, you have to create raving fans. Satisfaction may be all the rage, but heres the stark truth. If your
customers say they are satisfied with the service you offer then your service isnt good enough. A satisfied customer isnt going to tell everyone what a great experience they had with your company. They wont make sure they dont do business with anyone else but you ever again. A satisfied customer may not complain and may not quibble about payment but you can bet your bottom dollar they will try and get a better deal at a better price somewhere else next time. So forget about satisfying customers because satisfying them wont help make it in the increasingly competitive business world. To do that you need to create Raving Fan Customers; customers who are so devoted to your products and services that they wouldnt dream of taking their business elsewhere. If organizational culture and vision isnt intrinsically customer-focused and if customer service systems work against rather than in favour of the customer, no amount of talk or money put into a one-off customer service initiative is going to change anything, thus requiring a clear, customer focused vision. The second secret of creating raving fans is discovering what the customer wants. By listening to their suggestions, increased revenue and provided a better service. But there are two parts to listening. The first is to understand what the customer is saying; the second to decide whether or not you want to do what they suggest. Complying with requests isnt compulsory. If their request doesnt tie in with your vision, you dont have to meet it Thus we derive from the concept of raving fans how Customer Experience in Indian Telecom refers to all the contacts with the service provider, Pre Sales/ Sales person before buying the service or Customer Care or Billing during the usage of service, the Service or product itself, its usage, should bring in a extreme positive outcome in the mind of the customer, which would lead to not only continuation of service but also recommendation of the service providers to others.
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bring in a extreme positive outcome in the mind of the customer, which would lead to not only continuation of service but also recommendation of the service providers to others. Model 2: Total Customer Experience (TCE) The Three Ds of Customer Experience. These three Ds try and define the customer experience by taking into consideration the prospect of design, deliver and develop. So defining the Ds of customer experience 1. Design the right offers and experiences for the right customers. A company can't turn its customers into satisfied, loyal advocates unless it takes their experiences at all these touch points into account. 2. They deliver these propositions by focusing the entire company on them with an emphasis on cross-functional collaboration. Customer Experience is response that customers have to any direct or indirect contact with the company Direct contact generally occurs in the course of purchase, use, and service and is usually initiated by the customer. Indirect contact most often involves unplanned encounters with representations of a companys products, services, or brands and takes the form of word-of-mouth recommendations or criticisms, advertising, news reports, reviews, and so 3. They develop their capabilities to please customers again and again. However we do not get a wholesome account of the customer experience by any of the models studied above. Hence with the inputs from various review models and pooling them together to navigate all the gaps incurred a more comprehensive approach was established for this project which will be discussed in the coming sections of this report.
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11.0 Churn management systems and software

11.1 SAS Institute's CRM Knowledge Solution Series (CKSS) SAS Institute announced a solution that will help telecommunications companies reduce customer defection, known in the telecommunications industry as "churn." The Churn Management Solution for Telecommunications, announced at the National Centre for Database Marketing Conference & Exhibition, is the first offering from SAS Institute's CRM Knowledge Solution Series (CKSS). The series will consist of industry and application-specific solutions that offer marketing professionals results on some of their most pressing customer relationship management issues. The series will be expanded to include solutions for fraud detection and cross selling. The Churn Management Solution for Telecommunications helps companies predict which customers are likely to leave so that they can take early appropriate action to retain valuable customers. SAS Institute is the first software vendor to offer an integrated churn management solution that supports the whole process of managing churn: from gathering and warehousing data, to predictive churn modelling, to distributing the results via a range of media, including corporate intranets and portals. At the core of the Churn Management Solution will be SAS Institute's technologies for data warehousing and Enterprise Miner software for data mining. Data warehousing is used to gather data relating to churn from an organization's operational systems, such as networking and billing, and organize it into a form suitable for analysis. Data mining helps organizations identify their profitable customers and the kinds of products and services they want to buy. The solution includes a template that is based on SAS Institute's data-mining methodology (a step-by-step approach to structuring a data mining project), but adapted specifically for managing churn, allowing marketing professionals to achieve a very rapid return on the application of data mining techniques to churn. The solution will also include a Rapid Result Service, through which SAS Institute, together with the customer, work on a focused project to access customer data, and predict who is likely to churn, assess their value to the organization, and give insights into what is driving their decisions. This service is designed to deliver actionable results within two to six weeks. The Rapid Results service includes a Best Practice Paper on churn that provides a step-by-step guide to managing churn based on SAS Institute's extensive experience with telecommunications companies. SAS software is used by virtually all of the top 20 international telecommunications companies worldwide, including AT&T, Sprint, and U S WEST in the United States; France Telecom, Telecom Italia, and Belgacom in Europe; and Hong Kong Telecom and China Telecom in Asia.
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SAS APPROACH SAS approaches the problem by delivering software and services to help: Understand the customer experience across services and business units with data management capabilities that let you integrate the customer view by including households, third-party data, trouble tickets, CDRs and more, as well as remove duplicate trouble tickets and records. Prioritize, predict and pre-empt customer issues leading to dissatisfaction and churn by applying data/text mining and forecasting to CDR, trouble ticket and performance data uncovering issue trends, root causes and their impacts. Target social influencers and create more comprehensive yet granular churn models by using advanced analytics specific to the communications industry. Measure the profitability of customers, products and services with cost and revenue analysis. Implement retention campaigns with campaign automation and optimization tools that lets in reduced cost per save and creates the optimal mix of offer, customer and channel given various constraints (e.g., contact policies, channel and budget). 11.2 HP OneView The HP Oneview Churn Management solution, powered by HP Oneview predictive CRM (PCRM) software, is a leading churn reduction and customer retention application designed specifically for the telecommunications industry. The solution delivers automated, predictive churn modelling by analyzing customer billing details, revenue, call usage, customer care, and demographics information to create individualized customer profiles in nearreal time. HP Oneview Churn Management scores and ranks customers according to more than 200 factors. Most important are their propensity to churn, their usage patterns, their payment patterns, and their potential lifetime value. Churn predictionwith revenue forecasting, churn behaviours, and lifetime value assessment tightly integratedis used to retard customer churn rates and support multiple reporting environments. Companies can then design predictive customer relationship programs to identify and target potential churners with focused, proactive campaigns aimed at retaining their business. The solution also provides the data storage and application frameworkwhich includes the full infrastructure and back-end support systemsto offer these services in an optimal and cost-effective way.
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HPs comprehensive Oneview solution suite also includes the HP Oneview Campaign Management solution and HP Oneview Customer Analytics solution, offering service providers the kind of in-depth customer knowledge that leads to greater customer retention. They can even target their highly valued customers with timely offers designed to discourage them from churning and maximize their lifetime value. With the right timing and messaging, carriers marketing campaigns yield higher response rates and increased customer loyalty, which can be measured by increased usage and higher rates of offer acceptance. Additional HP Oneview solutions areas include IP usage analysis and 3G content delivery analysis. These enable telecommunications companies and ISPs to analyze Internet usage as part of their customer churn profiling efforts.
Benefits 1. Reduced customer churn Experience shows that, by tracking the behaviour of their customers, companies can anticipate the factors that would ultimately lead them to churn. HP Oneview Churn Management leverages automated, predictive modelling technology in nearreal time to identify these factors to reduce the likelihood of churn by targeting at-risk customers with promotions and campaigns aimed at building their lifetime loyalty. 2. Higher profits The HP Oneview Churn Management solution takes a quantum leap forward in the speed and accuracy of behaviour analysis and prediction by automating the once painful process of customer profiling, segmentation, and modelling. Using state-of-the-art statistical intelligence and machine learning algorithms, the solution quickly analyzes customer behaviour information, allowing carriers to identify and target their high-value customers with timely cross-sell and up-sell offers that meet their customers communications needs and satisfy their appetite for new services. The result is higher profits and happier customers. As customer retention rates rise and customer-acquisition costs drop and profits continue to increase. 3. Greater market share By leveraging automated behaviour analysis and modelling to deal with customer churn, companies will know which customers are likely to leave before the thought ever occurs to the customer. HP Oneview Churn Management enables rapid dissemination of this churn data to key decision makers and customer contact points within the corporation, to give companies a powerful edge in retaining their valued customer basein spite of competitive
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efforts to entice those customers away. Decreased churn and higher customer retention translates to significant gains in market share. 4. Improved return on investment HP Oneview Churn Management offers the lowest cost per model with fixed-cost implementation for a single, integrated solution deployed as a ready-to-go customer profiling system on HP mission-critical platforms. This means companies incur lower upfront costs to obtain the tools necessary to gather, analyze, and store the data they need for customer churn assessment. As they leverage this data to create effective customer retention programs, companies can measure improved return on
Figure 23: HP Oneview churn management solution
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12.0 Dynamic Subscriber Finger Printing

12.1 Introduction of Dynamic Subscriber Finger Printing The telecom landscape has shifted dramatically in the last 3 years with the emergence of high-speed wireless networks, the ubiquity of broadband and the rapid adoption of overthe-top content and applications. With the commoditization of connectivity and vast proliferation of channels and devices, operators need to evolve innovative strategies to manage churn, increase ARPU and generate new revenue streams through multi-party business models. Customer data is at the very heart of the next generation telecom and the ability to leverage it effectively holds the key to survival, growth and profitability. The Dynamic Subscriber Fingerprinting solution integrates with key OSS/BSS systems and processes information pertaining to service consumption (Voice, Video, SMS, MMS, VAS, mobile applications, mobile internet, etc.) and subscriber behavior across different interaction channels (Call Center, Retail, Web, Mobile). The solution applies data correlation techniques to create subscriber fingerprints, which succinctly describe the subscriber behavior and experience on the network. These fingerprints are made available on-demand and in real time across all touch-points and services. The solution also creates subscriber micro-segments, based on demographics, interests, behavioral patterns and churn propensities. Business analysts can quickly identify subscriber groups with similar characteristics and identify under-served customers (or) niche opportunities that are yet to be exploited. Operators can also devise relevant and contextual campaigns for the identified subscriber micro-segments with customized offers that increase offer uplift and also maximize margins for the provider. Analysts can also leverage the solution to predict customer satisfaction by correlating data points across varied channels to construct an end-to-end view of the subscriber experience. The catalyst showcases how customer data, if properly harvested and leveraged can result in improving the experience, increasing offer acceptance, and generate new revenue streams from two-sided business models. 12.2 Paradigm Shift from Traditional Business Intelligence When a company generates huge amounts of data, as a result of its core activity, there is a need to think how that data can be turned into a competitive advantage. Enterprises should not try to retain all of their current customers, because they are probably investing in unprofitable customers and, in this way, they are destroying value. Thus there is a need of determining the right customers as well as on whom to spend retention and loyalty resources.
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Figure24 : Telecom Operator from Monopoly to Competitive Environment
Benefits of Dynamic Subscriber Finger Printing Provides operators with an automated environment for identifying potential churners and retaining them Reduce customer attrition and understand the strengths and weaknesses Build up on-demand retention campaigns based on customer profiles and eventtriggered operations Delivers a true cross-sell and up-sell environment and boost customer value Generate new Revenue Streams through multi-party business models
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12.3 Telecom Marketing Telecommunication companies maintain an enormous amount of information about their customers and, due to an extremely competitive environment, have great motivation for exploiting this information. For these reasons the telecommunications industry has been a leader in the use of data mining to identify customers, retain customers, and maximize the profit obtained from each customer. A traditional approach involves generating customer profiles (i.e., signatures) from call detail records and then mining these profiles for marketing purposes. This approach has been used to identify whether a phone line is being used for voice or data and to classify a phone line as belonging to a either business or residential customer. Over the past few years, the emphasis of marketing applications in the telecommunications industry has shifted from identifying new customers to measuring customer value and then taking steps to retain the most profitable customers. This shift has occurred because it is much more expensive to acquire new telecommunication customers than retain existing ones. Thus it is useful to know the total lifetime value of a customer, which is the total net income a company can expect from that customer over time. A key component of modeling a telecommunication customers value is estimating how long they will remain with their current carrier. This problem is of interest in its own right since if a company can predict when a customer is likely to leave, it can take proactive steps to retain the customer. The process of a customer leaving a company is referred to as churn, and churn analysis involves building a model of customer attrition. Customer churn is a huge issue in the telecommunication industry where, until recently, telecommunication companies routinely offered large cash incentives for customers to switch carriers. Numerous systems and methods have been developed to predict customer churn. These systems almost always utilize call detail and contract data, but also often use other data about the customer (credit score, complaint history, etc.) in order to improve performance. Churn prediction is fundamentally a very difficult problem and, consequently, systems for predicting churn have been only moderately effectiveonly demonstrating the ability to identify some of the customers most likely to churn. The Six stages of telecom marketing Stage 1: Selection of key target market segments Stage 2: Classify potential customers as per the market segment Stage 3: To ensure that the information collected is accurate, and to get any supplementary information.
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Stage 4: To eliminate any inappropriate prospects and to convert in manageable microsegments. Stage 5: Managing campaign focused on the needs of the identified micro-segments Stage 6: Measuring and monitoring the Campaign so that you know what has worked, what has not, what actions you need to take next? 12.4 Dynamic Customer Profiles Dynamic Customer Profile modeling aid understanding customer behaviour, designing customized tariff plans, and preventing churn activities. Profile data are often generated real time depending on the customer transactions pattern over time. A five-step procedure to profile customer behaviour in order to identify and capture churn activity patterns: Standardizing profiles, Screening out uninteresting profiles, Projecting profiles onto a feature space represented by a set of basis functions, Applying clustering algorithms to the resultant coefficients in the feature space, and Identifying interesting profiles.
The above framework is effective for detecting churn activities in the telecommunication industry.
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12.5 Customer Segmentation
Customer Segmentation is the process of splitting a customer database into distinct, meaningful, homogenous groups based on a specific methodology. The main objective of customer segmentation is to understand the customer base, and achieve sufficient customer insight that will enable the right treatment on the right set of customers at the right time through the right channel.
Efficient use of customer segmentation infrastructure & techniques results in: Competitive advantages through flexible, targeted marketing actions & campaigns Customer Satisfaction & Loyalty (Churn management) Efficient Consumer Risk Management Process Automation & Optimization Effective Performance Monitoring, Executive information & Decision support
Customer Segmentation can be further divided in the following groups: Structural: natural segments that are very basic and result from the nature of the business. Geographical, product or commercial based segments (consumer or large accounts) Categorical: Based on physical customer characteristics such as gender or age Behavioral: Based on indexes or scores that capture customer behavior in several dimensions
The goals for segmenting the customer base can be either strategic, decision supportive in nature (executive information) or pure marketing-oriented for specific campaigns or promotional activities At a macro level, the main objective is to understand the customer base, be able to present its synthesis using meaningful groups of customers, monitor and understand change over
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time, to support critical strategies and functions such as CRM, Loyalty programs, product development. At a micro level, to support specific campaigns, commercial policies, cross-selling & upselling activities, analyze and manage churn & Loyalty.
# 1. 2.
Description Highly profitable, New comers Highly profitable, Loyal Customers
3. 4.
Non profitable, New comers Non or Low Customers profitable, Loyal
5. 6.
Highly profitable, Customers Highly profitable, Customers
Low-Risk High-Risk
7. 8.
Low profitable, Low-Risk Customers Low profitable, Customers High-Risk
Action Plan Good Customers that must be retained: Add to Loyalty program The best set of customers. Must be treated differently through all available customer touch points Attempt usage stimulation campaign, using further micro segmentation schemes Poor performing customers. Must be analyzed for promising sub groups (age or demographic profile along with variances in usage) Best Customers - must be retained: Add to Loyalty program High revenue generation but bad-payers. Must be treated accordingly e.g require credit card as payment method Attempt usage stimulation campaign, use further micro segmentation schemes Poor performing, High Risk customers: analyze for understanding and modeling behaviors
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Input Description The input should be sufficient in order to describe Overall customer picture, based on summary figures (using weighting techniques): tenure, average revenue, aggregated AMOU, account analysis, activation requests applications, total Revenue Ranking, Risk Assessment Utilization - how the subscriber uses each service (traffic data), indexes, correlations Spending & Payment behavior, including consumer risk assessment, enabling analysis at several levels Physical Customer Level: demographics, socioeconomic data, aggregates & scores Account & Product Level: listing along with specific properties, Services & usage patterns, processed traffic data, Maintenance behavior & Contact History Seasonal Patterns, trends, time dimension
Customer Segmentation is -by definition- multidimensional: must involve all the important aspects of each customer: risk, tenure, profitability, or Customer value must be combined in order to explain or optimize a set of metrics or specific behaviors
Dimensions & Filters Customer o Risk Class o Revenue Class o Socio -Economic data o Demographics o Location data (GI) o Tenure (CLS) o Traffic Patterns o Contact Patterns o Prior Classifications Product - Services o Accounts, status & types o Services & Tariffs o other properties Measures total revenue Balance by type (source) frequencies recent statistics lifetime statistics AMOU ARPU Specific Traffic metrics (services usage destination analysis, incoming vs outgoing etc) Churn Behavior Campaign Responses Customer Satisfaction metrics Segmentation schemes Macro segmentation for management & decision support and performance evaluation purposes Micro segmentation schemes, campaign specific, for product development, up selling or crossselling program design, for loyalty churn management, marketing actions
Powerful Segmentation schemes can be designed based on combination of market knowledge, concepts, and extensive statistical or data mining modeling. Dimensions and measures such as: Voice usage (Frequency, duration - variance of duration) o Systematic, Normal, Occasional o Service Sensitive, Price Sensitive, Balanced Traffic Destination o Local, long distance, international, competitors
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Incoming/Outgoing Traffic Balance o Passive, Active, Normal VAS usage o Entry Level, Experienced, Power users Traffic Density Analysis (scores of distinct IN/OUT MSISDNS) o MSISDN dependency levels SMS versus Voice Balance (Incoming/Outgoing) o Heavy SMS, Heavy Voice Activation history o New, Returning, Recycling, Multi-Contract Contact Statistics o Systematic, Normal, Occasional
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12.6 Analyzing the Services and Content Ecosystem
Dynamic Subscriber Fingerprinting can be done by analyzing both Service Consumption and Subscriber behavior pattern through Subscriber lifetime.
Figure 25 DSF
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KPI Matrix for Dynamic Subscriber Fingerprinting

Usage Minutes of Usage (MOU)[Segmentation: (Prepaid, Postpaid); (Incoming, Outgoing)] Number of Outgoing SMS per Sub Per Month Minutes Carried Per Month (MON) (50 billion) Percentage Airtime Capacity Utilization Minutes per Site Marketing Effect of promo campaign on subscriptions Trend analysis Segment analysis Call behavior analysis Subscriber Acquisition Cost: Dealer Commission, Terminal Subsidy, Sales, Marketing, Distribution Number of Retail Outlets or Point of Presence Compliance / Service Analysis Service connection Customer Analysis Customer segmentation
Timeframes repairs and installations Reliability New service connections Activations, de-activations, re-activations Misc services Waiting time Waiting period before grant of service Percentage order error rates and reasons
Analysis of subscriptions Top N customers Churn Normal traffic
Number of Calls Number of Calls per Subscriber Average Call Duration Roaming Minutes
Identify deviations from normal traffic patterns Identify phone numbers for customers with high deviation
Call Centre Wait times
Systems and Network Performance Analysis Availability
Revenue Analysis ARPU ( Average Revenue Per User) [Segmentation: (Voice, Data); (Prepaid, Postpaid)] ARPM (Average Revenue Per Minute) [Segmentation: Prepaid , Postpaid ] Percentage of non-voice revenue Average Revenue Per Call Average Revenue Per Cell Site Average revenue per employee (ARPE) Average revenue realization (ARR) Minutes of usage per subscriber Analysis of company overheads Profit and loss Analysis Recovery Analysis Revenue Breakup Percentage [Access, Wireless Voice, Data, Internet, Interconnect, Roaming]
Customer Satisfaction Average score from external surveys Average score from internal surveys Average score from call monitoring Total number of complaints Total number of unresolved issues Number of responses generated
Average speed of answer Call volume Number of complaints received Revenue per call Average quality of calls Number of call transfers Average call length Number of one call resolutions Abandon rates Customer satisfaction Number of calls answered within ten seconds
Grade of service Service life of equipment Bit error ratio (data, bits & elements transfer) Downtime / Time out of service Call completion ratio Cost of support systems Cost of operational systems Average call length Analysis of ASR routes Network traffic, congestion Idle time on network
Agent Efficiency
Dropped calls
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How to convert dump data into valuable assets It is very important to carefully select the variables for Dynamic Subscriber Fingerprinting as it is not based on data collected for that specific purpose but rather on databases designed for mobile service metering, billing and revenue collection purposes. The data captured can be classified as follows: Call detail data: Every time a call is placed on a telecom network, descriptive information about the call is saved as a call detail record. At a minimum, each call detail record will include the originating and terminating phone numbers, the date and time of the call and the duration of the call. Network data: Telecommunication networks are extremely complex configurations of equipment, comprised of interconnected components. Each network element is capable of generating error and status messages, which leads to a tremendous amount of network data. Customer data: Telecommunication companies, like other large businesses, may have millions of customers. By necessity this means maintaining a database of information on these customers. This information will include name, address and may include other information such as service plan, contract information, credit score, family income and payment history. Statistical model used:
Customer Lifetime Value (CLV) model Value Network Analysis Cluster Analysis
Customer Lifetime Value (CLV) model CLV= f(No. of subscribers, Avg. Revenue per subscriber, Relationship period) Specific areas where CLV models can help the campaign management are: Priori knowledge about the probability (risk) of a given customer to cancel the relationship with the firm in the next period and, thus, firms can take preventive measures to avoid the defection of potentially profitable customers, Customer selection to retention programs; Marketing resource allocation across customers.
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Customer Lifecycle
Attract
Acquire
Serve
Extend
Churn
Customer lifecycle describes the progression of steps a customer goes through right from choosing a product or service, using the same and finally deciding to leave the chosen product or service. Using the CLV model we can determine the value added a subscriber of a particular customer profile in his survival period.
Churn Prediction using Dynamic Subscriber Fingerprinting

Parameters for the analysis of Churn Dynamic Subscriber Fingerprinting can be created by using likelihood of abandonment or churn scores for individual customers generated based on the following categorical detail: 1. Customer Demographics: Client demographic information for segmenting the customer base, depending on the application a. Age b. Gender c. Income d. The customer account information e. the life cycle of subscription 2. Billing and Usage: Billing information and use of accessible switches (call data records) used primarily for the detection probability of churn. The following information will be used: a. List price b. Monthly usage (Charged Call calculate, load data volume, Free call & Data amount) c. Monthly profit contribution d. Bounced payment e. Managing channel information f. Recharge channel information g. Network Product information ( Voice, Messaging, Data) 3. Technical Quality: Quality of service is a potential churn driver as call drops or inferior service quality increases the customer dissatisfaction and therefore churn probability. In case of CDMA, as the customer is tightly coupled with the handset equipment, the aging of handset impacts the probability of the customer churn. The following details are used: a. Dropped call counts b. Service quality c. Equipment age (Handset age in case of CDMA)
4. Contract Details: At the end of the contract period or grace period, the probability of the customer leaving the connection is high, therefore it has a high impact in determination of churn. The following details are used: a. Commitment period b. Count of contract renewal c. Current contract and end date 5. Event related: Loyalty scheme or loyalty benefits are key drivers for retention. The Loyalty scheme related data is used for churn scoring. Data flow Architecture After deciding the Churn parameters, next step is to identify the source systems from where the respective data will be extracted. The data needs to be collected from various source systems. CRM system: Customer/Account/Subscription related data Provisioning system: Activation date, equipment (Handset) age Billing System: Billing data Mediation System: Call record details Technical Quality from Exchange & CellSite
The data is collected in the Data Interchange Layer (DIL). The data is then extracted, transformed and loaded into Detailed Data Store (DDS).
Data Management Data management is the foundation for a business analysis. Correct data should be present in correct place. Data Management has three parts: Extraction: Involves extracting of data from source system and loading to data interchange layer Transformation: Involves validation of the extracted data (eg: Validation for unique keys), creation of joining conditions among the tables, cleaning of invalid data etc. Load: Involves loading the data in the Business Intelligence Data Warehouse The data loaded into Detailed Data Store is used for: Dimensional Data Modeling: This is used for query, reporting and OLAP (Online Analytical Processing)
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ABT (Analytical Base Table): This is the solution specific model developed which can be used for a particular analysis. For example: The ABT for churn model. Campaign Data Mart: This data is used for targeting specific customer segments for targeted campaign.
Data Modeling and Churn Score generation
Once the authenticated data is available in the data warehouse, the data modeling is performed. It is an iterative process. The quality of the model is accessed and the model which returns the best business value is considered. This model provides results in the form of churn score of individual customers which can be used for determining campaign targets.
Using the churn scores for Retention Campaigns The data model generates individual customers churn score which ranges from 0 to 1. 0 Signifies least probability of the customer to churn 1 Signifies highest probability of the customer to churn. These scores are weighted components of various parameters, such as Usage information, Balance information, Recharge information, Decrement (Promotional and Core) information, Handset feature, Network coverage, Quality of service, Customer service/complaints, Price plan sensitivity etc. Business decision needs to be taken to determine an upper threshold of the churn score. The customers above this threshold need to be analyzed further (eg: customers with score 0.7 and above). The top two parameters contributing to the churn score to be generated on individual customer level (for customers having churn scores greater than the threshold). Depending on these parameters retention campaign can be carried out. The parameters can be as follows: Usage statistics: The usage behavior can be derived from the combination of decrement (promo and core), balance and recharge information. The customer who has higher score in lesser usage can be targeted with promotional price plan offers to enhance his/her usage and convert that customer from non-revenue earning to revenue earning. Higher Off-net usage: The higher score on off-net usage signifies that the particular customer has called very frequently to other networks. A targeted campaign can be performed with the price plan beneficial to call other networks. A further analysis of the called off-net numbers can result in identifying frequently called off-net numbers which can be targeted by campaigns as a candidate of acquisition.
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Handset Features: The handset used by the customer can be old and be lacking the modern features. In this case, the probability of the customer to change to a newer handset is high and there is a considerable susceptibility of that customer to move to another service provider having bundled handset offer. A retention campaign can be targeted (to this group of customers having high Handset churn score) with new service offer bundled with handset. Customer Service/Complaints: The higher score in Customer service/Complaints signifies that the customer has called the customer care frequently and probability of that customer dissatisfied with the service is higher. Further investigation to the customer call interaction details can reveal the cause of frequently calling to customer service. After the execution of campaigns on the basis of the churn score and churn drivers, the campaign response needs to be captured and fed into the database for analysis of successfulness of campaigns.
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13.0 Methodology of the data analysis:

Here for the purpose of statistical analysis we took data from two sources1) Network audit report of all the operators from all the circles done by TRAI Example:
Customer survey report on various parameter from all the circles Example:
Note: Detailed data about audit report and customer satisfaction survey has been given in appendix- 1.
At the start of the research we came across many parameters which could affect like: - Time Consistent Busy Hour (TCBH) - Network availability . Total no. of BTSs in the licensed service area . Sum of downtime of BTSs in a month in hours i.e total outage time of a BTSs in hours during a month . BTSs Accumulated downtime (not available for service) (%age) . No. of BTSs having accumulated downtime of >24 hours in a month . Worst affected BTSs due to downtime (%age) - Connection establishment (Accessibility) . Call set up success rate (within licensee's own network) . SDCCH/ Paging chl. congestion (%age) . TCH congestion (%age) - Connection Maintenance (Retainability) . Call drop rate (%age) . Total No. of cells exceeding 3% TCH drop (call drop) . Total no. of cells in the network . Worst affected cells having more than 3% TCH drop (call drop) rate(%age) . %age of connection with good voice quality - Point of interconnection . POI congestion (No. of POIs not meeting the benchmark) . Total number of working POI service area wise - Network traffic capacity and utilization . Equipped capacity of network in respect of traffic in erlang . Total traffic handled in TCBH in erlang . Total no. of customers served (as per VLR) on last day of the month - Customer satisfied with provision of service - Customer satisfied with billing performance . Post paid . Pre paid - Customer satisfied with help services including customer grievance readdressal - Customer satisfied with network performance, reliability and availability - Customer satisfied with maintainability - Customer satisfied with supplementary and value added services - Customer satisfied with overall service quality - Total marketing expenditure by company - Subscriber wise total market share of CSP - Number of circle with 3G licence - Marketing expenditure per subscriber
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After statistical analysis we found that some of the parameters did not have significant impact on churn, so we took only that parameter which had significant loading on Factor analysis. We have applied statistical analysis in two ways 1) Circle wise churn analysis across all the operators 2) Operator wise churn analysis across all the circles 13.1 Circle wise churn analysis across all the operators : After entering data in excel it looks like this-
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1) Operator wise churn analysis across all the circles After entering data in excel it looks like this-
Normality test for data: Before applying any statistical tool and its analysis we need to be sure that data we are working is normal and fit to work upon. So first we have applied normality test for the data.
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We have got the results like this-
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Analysis: By analysing the graph we can see that P- Value for Normality test is 0.56 which is greater than .05 so the data is normal and fit for analysis. Regression Analysis: After Normality test we have applied Regression Analysis. Regression Analysis is done to explore the impact of independent variable (Quality Parameter) on dependent variable (Churn Rate). Regression Analysis: churn rate versus Bts Downtime, worst affected, ...
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Partial Regression Analysis:
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Analysis: Here we have done linear regression analysis. The P-Value for this is 0.131 which is greater than .05. So this analysis stands true. We can see the coefficient of each parameter which shows the significance of each parameter on the churn rate. We found that parameters which have significant loading on the churn are BTS down time (Coefficient- 0.9135 ) Call drop rate (Coefficient- 0.5729 ) Accuracy of post paid billing (Coefficient- 1.47068 ) But if we see the value of R squire that is 48.5. It shows that with these variables we can explain only 48.5 % influence on the churn. So we need to consider more parameters for our examination. Analysis with more parameters (Network audit and customer satisfaction survey)
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The regression equation is
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Analysis of Variance
Analysis: Here we have more variables from customer satisfaction survey. These are Customer satisfaction with Provisioning, Pre paid billing, post paid billing, VAS offering and customer care services. We have also considered Share of VAS in operators total revenue, Subscriber wise market share and marketing expenditure per subscriber. With these new parameters we have got the value of R squire equal to 89.3%. This is very significant for any statistical analysis purpose. Now we are in position to explain almost 90% dependency of churn in Indian Telecom sector. Now , we will find out how many factors are there which influence churn in telecom sector. For this purpose we will perform factor analysis with network audit report as well as customer satisfaction survey report.
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Factor Analysis of Network performance:
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Analysis: Here we have Factor analysis report and two graphs, one showing Eigen value and another one showing factor loading. By seeing Eigen graph we can analyse that only three factors are having Eigen value greater than one. It means that with network audit data we can extract only three factors. All individual factor represent unique setoff variables which collectively influence the churn. These are given below Factor 1. Pre paid billing performance . Call drop rate . BTS down time . Worst affected BTSs because of down time Factor 2. Good voice quality . Call setup success rate Factor 3. Accuracy of post paid billing . Performance of customer care services . Accessibility to call centre in case of any problem . Call answered by customer care executive within 60 sec So, by this analysis we can say there are three type of customer segment. First segment are of post paid customers who want good performance of billing, fast resolution of billing related problems and satisfactory performance of customer care centre. Second type of customer are pre paid customers for whom network availability, pre paid billing and network performance is important. Third type of customers are those customer for whom call setup and voice quality are of more importance.
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Factor analysis with customer satisfaction survey and network audit:
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Analysis: Here again after including more variable in the study if we analyse the Eigen value diagram we can see that now number of factors with Eigen value more than one are five. So we have five prime factors affecting the churn in telecom industry. Factor 1: Subscriber wise market share of the operator Share of VAS in total revenue of the operator Factor 2: Customer satisfaction with the network performance Customer satisfaction with the billing Customer satisfaction with the customer care Customer satisfaction with the VAS offering Factor 3: Customer satisfaction with tariff plan/provisioning Customer satisfaction with the BTS availability and down time Factor 4: Call drop rate Factor 5: Marketing expenditure per subscriber by an operator So, by this analysis we can see what are the factors which influence churn in India. Now, we will do Cluster analysis to explore what are the micro segments we need to make to understand the actual need and behaviour of different customer group, and what are their preference level for above factors and parameters.
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Cluster analysis:
Step -1 Hierarchical cluster analysis
Final Partition Cluster 1 BTSs down time Worst affected BTS Customers satisfied with provis Customers satisfied with mainta Customers satisfied with overal Cluster 2 Call setup rate Call drop rate call with good voice qlty VAS revenue share Mktg exp per subs Cluster 3 mktg exp Sub mrkt share Circle with 3G lic Customers satisfied with billin Customers satisfied with bill_1 Customers satisfied with networ Customers satisfied with supple Customers satisfied with help s
Dendrogram
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Step -2 K Mean Cluster Analysis
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Analysis: Here with Cluster analysis we have found three type of customer segments. Customer Segment 1: This type of customer is satisfied with low BTS performance, average call performance, average VAS facilities but need high marketing expenditure and average customer care service to be attracted towards operator. Customer Segment 2: This type of customer is satisfied with good BTS performance, average call performance, high quality VAS facilities and need average marketing expenditure and average customer care service to be attracted towards operator. Customer Segment 3: This type of customer is satisfied with high quality BTS performance, high quality call performance, average VAS facilities and low marketing expenditure and average customer care service to be attracted towards operator. Thus, we have three major customer segmentsSegment 1- represents young customers and college goers who are impulsive buyers. Marketing is crucial for such customers. Segment 2 represents data users. They maybe youth or corporate customers but use extensive data services. Segment 3- represents corporate customers who need high quality voice, data services and superior customer care services.
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14.0 Consumer Experience The driving factor to manage churn

Seeking to increase profitability, communications service providers (CSPs) are turning more and more to initiatives in customer experience management to retain their customers, differentiate their offerings and lower their servicing costs. These decisions are being driven by factors such as market maturity for traditional services, general economic trends, and the emergence of new technologies and applications. Shifts in customer behaviour, preferences and demands are exerting a big influence too. Leaders in this space learning lessons from the success of companies like Amazon, Apple, Tesco and Wal-Mart are taking an holistic approach from a planning perspective. They are labouring to understand the impact of customer experience management across the customers lifecycle, and focusing on the areas that will provide them with the greatest payback. CSPs are putting considerable effort into figuring out whats important to their customers, and leveraging their substantial assets to improve customer experience and loyalty. These assets include their product and service portfolio, marketing and sales capability, service quality, customer support capability, billing and cost management, and brand equity. CSPs did not always agree as to which aspects of customer experience management were most valuable, but all acknowledged that the effective automation of processes was critical to lowering costs and increasing customer satisfaction. Most also agreed that customers must be involved in the design of customer-facing, self-service tools, as otherwise adoption rates are very low indeed. Several of the CSPs cited the need for industry standards and best practices to support effective process automation and the overall management of the customers experience. Two areas that stood out were the creation of a set of accepted metrics around service management, and the development of interface standards for the systems that link into enterprise customers and the tools made available to them. While CSPs differed sometimes on the priorities and approaches to specific issues, all recognized the importance of customer experience strategy to improve profit and the need for automation of key areas. They also were definite about the need for standards and best practices. Much work remains to be done here, but the industry appears to be poised to move in the right direction. Understanding the value of customer experience and loyalty Challenged by economic difficulties, increased competition and slowing growth, communications service providers (CSPs) are increasingly turning their focus to customer experience as a critical component of their success. C-Level executives from many CSPs publicly expound the virtues of leadership in customer experience, yet their companies frequently fall short of the leadership demonstrated by prominent firms in other industries
which take customer-centric approaches to their bottom line strategies. This is borne out in a number of customer satisfaction surveys, especially in developed economies. Meanwhile, customer loyalty leaders like Apple, Wal-Mart, Google, and Honda continue to do well by focusing on customer experience as an essential driver of profitability. CSPs are increasingly noting this phenomenon and exploring how they might espouse the same principles to increase their own. Ultimately, effective customer experience is all about profitability. Achieving success in managing the large array of touch points across the customer lifecycle is challenging. CSPs must move past their one-size-fits-all approach to customer management. The view of customer service as a form of altruism as it was implemented during the industrys civil service days, when CSPs were often government organizations should be long gone. Instead CSPs need to segment their customer base, then work to understand the needs, expectations and potential profitability of each segment, and service them accordingly. Over the past few years, there has been surge in interest in customer experience by CSPs. Four market-related trends are driving this, as depicted in figure.
Fig: Market trends driving customer experience initiatives
The trends are: Market maturity Certainly, while service providers across the world have benefited from the growth of mobile and broadband communications services, markets for todays core communications products are approaching, or have reached, full maturity. Consequently, in most developed and many emerging economies, it will take more than excellence in core services to drive incremental profitability. The importance of customer experience increases greatly in a mature market. Also, as market penetration increases, so too does the cost of acquiring
customers. Overall prices stabilize (or decline), and new service alternatives or substitutes may arise. Economic trends Fluctuations and changes in economic trends often drive change in the focus of customer experience programs. For example, in difficult economic times, customers discretionary spending is likely to become more conservative. Accordingly, service providers focus may shift to emphasize customer retention, cycle time reduction and cutting costs. In better economic times, the focus may be on the introduction of new products and offers, crossselling, upselling, and greater business agility. Emerging technologies Though the introduction of new technologies can often energizes markets, those technologies can also shift the balance of market power. The enablement and introduction of smart phones in general (and the iPhone in particular), Web 2.0 applications such as social networks, and underlying technologies and frameworks such as service oriented architecture, are all good examples of this phenomenon. For the communications industry, these technologies can underpin new services, but they can also be used to create more efficient or effective delivery of other aspects of customer experience. Customer behaviour, preferences and demands In many respects, customer demand is shaped by the preceding three forces, but also by evolving demographic, socio-political and attitudinal changes. An example would be the predisposition of young people toward instant communications and social networking. While some service providers may think of social networking as simply a new set of services they can offer, savvy companies recognize that they also represent preferred channels of interaction with these customers, as well as channels for customers to publicly criticize their CSPs or recommend them to others. As a result of this realization, several CSPs are taking first steps to leverage such channels.
Seeking to retain and upsell to customers, increase loyalty and attract new subscribers means service providers are turning to customer experience as a differentiator. Their goal is to increase profitability by focusing on customers with higher economic lifetime value,
providing them with superior service. They also hope to raise lifetime value by offering a variety of attractive new services. Better customer service should not only enable CPS to retain and upsell to users of traditional services, it should also aid service providers to secure a powerful position as enabler in the emerging digital services value chain. This in turn supports the development of a two-sided business model for the CSP, securing additional revenues and profits. There are clear steps CSPs must take to create more personalized relationships with their customers, as well as reduce churn and increase profitability all while becoming leaner and more agile. First, they must embrace the concept of a customer lifecycle, and understand the myriad touch points across that lifecycle. Virtually every customer touch point whether directly or indirectly linked to service providers and their partners contributes to customer perception, satisfaction, loyalty, and ultimately profitability. With so many touch points, gaining leadership in customer experience and satisfaction will not be easy, as it is affected by virtually every customerfacing aspect of the service provider. The scope of issues impacting customer experience today is complex and dynamic. As new services, devices and applications extend the basis of customer experience to domains beyond the direct control of the service provider, it is likely to increase in complexity and dynamism in the future. The impact of loyal customers on greater profit Customer experience programs are no longer altruistic exercises, but a strategic means of attaining customers loyalty, plus improving competitiveness and profitability in the short and long term. Loyalty is essential to deriving long term results from customer relationships. The earliest loyalty programs date back to the 1930s, when packaged goods companies offered embedded coupons for rewards to buyers, and eventually retail chains began offering reward programs to frequent shoppers. These programs continued for decades but were leapfrogged in the1980s by more aggressive schemes from airlines, as they realized the value in providing customers with incentives to use a company exclusively and enjoy the benefits of their loyalty. Within a few years, dozens of travel companies launched similar initiatives. Loyalty programs are now achieving near ubiquity in many service industries, especially those where it is more difficult to differentiate by products attributes alone. Again, the goal of these programs is profitability, not altruism. The rationale is that stimulating greater customer loyalty will result in higher profitability because: Churn rate represents the percentage of customers who end their relationship, the lower the amortized cost; Account maintenance costs decline as a percentage of total costs, or as a percentage of revenue, over the lifetime of the relationship;
Long term customers tend to be less inclined to switch supplier and less sensitive to price, which can result in stable unit sales and increases in dollar sales volume; Long term customers may initiate word-of mouth promotions and referrals; Long term customers are more likely to buy ancillary products and higher margin, supplemental offers; Long term customers are less likely to move, making it harder for new market entrants and competitors to increase market share; Regular customers tend to be less expensive to service, as they are familiar with the processes involved, require less education, and are consistent in their order placement Increased customer retention and loyalty makes employees jobs easier and more satisfying. In turn, happy employees feed back into higher customer satisfaction in a virtuous circle.
FIG: Consumer Loyalty Cycle
Figure above represents a high level example of a virtuous circle driven by customer satisfaction and loyalty, depicting how superiority in product and service offerings, as well as strong customer support by competent employees, lead to higher sales and ultimately profitability. This is not a new idea, but implementing it successfully is difficult. Of course, for this circle to indeed be virtuous, the customer relationship(s) must be profitable. It is important that
CSPs can assess the profitability of each customer (or customer segment) in the interests of working out more improvements or terminating relationships that are not profitable. To do this, the cost of each customer to the company must be understood and compared to the revenue they generate. Customer lifetime value: Quantifying the value of customer loyalty Customer lifetime value (CLV) is the most commonly used approach to understanding customer profitability. It is generally accepted as a representation of how much each customer is worth in monetary terms, and a determinant of how much a CSP should be willing to spend to acquire or retain that customer. CLV models make several simplifying assumptions and often involve the following inputs: Churn rate represents the percentage of customers who end their relationship with a company in a given period; Retention rate is calculated by subtracting the churn rate percentage from 100; Period/horizon are the units of time into which a customer relationship can be divided for analysis. A year is most commonly used, but CLV is a multi-period calculation, often projecting three to seven years into the future. In practice, analysis beyond this point is viewed as too speculative to be reliable. The model horizon is the number of periods used in the calculation. Periodic revenue is the amount of revenue collected from a customer in a given period (though this is often extended across multiple periods into the future to understand lifetime value), such as usage revenue, anticipated revenues from cross and upselling, and often some weighting for referrals by a loyal customer to others; Retention cost describes the amount of money the service provider must spend in a given period to retain an existing customer. Again, this is often forecast across multiple periods. Retention costs include customer support, billing, promotional incentives, and so on Discount rate is the cost of capital used to discount future revenue from a customer. Discounting is an advanced method used in more sophisticated CLV calculations; Profit margin is projected profit as a percentage of revenue for the period. This may be reflected as a percentage of gross or net profit. Again, this is generally projected across the models horizon to understand lifetime value. A focus on managing these inputs can help service providers realize better customer relationships and profits, but there are some challenges as well in achieving accurate
calculations. For example, there are many costs involved in serving all customers that must be properly allocated across the base. A simple proportional allocation across the whole base or a segment may not accurately reflect the true cost of serving that customer. It is also likely that customer information may be fragmented across a variety of product or operations groups, and may be difficult to aggregate due to different representations, while complex account structures may not be understood or properly represented. For example, a profitable customer may have a separate account for a second home or another family member, which may appear to be unprofitable. If the service provider cannot relate the two accounts, CLV is not truly representative and the cancellation of the apparently unprofitable account may result in the customer churning from the profitable one. If service providers are to realize strong customer relationships and the attendant profits, they must concentrate on data management, coupled with analytics, to help them offer highly personalized solutions to customers while maintaining profitability. Acquiring new customers is expensive. Advertising costs, campaign management expenses, promotional service pricing and discounting, and equipment subsidies make a serious dent in a new customers profitability. That is especially true given the rising subsidies for smart phone users, which carriers hope will pay off through greater data services profitability in the future. The situation is exacerbated by falling prices and increased competition in mature markets. Acquiring customers through industry consolidation isnt cheap either. A North American service provider spent about $2,000 per subscriber via its acquisition of a smaller company last year. This made the CSP into the largest mobile service provider in the country, but it took a total investment of more than $28 billion (including the assumption of the acquired companys debt). Many synergies in operating costs clearly made this deal attractive to the acquiring company, but it is an expensive way of adding customers. While growth by acquisition certainly increases overall revenues, it often creates tremendous challenges to profitability. Organic growth through increased customer loyalty and retention is generally a more effective driver of profit, as well as a more accurate predictor of future profitability. Service providers, especially those in mature markets, are increasingly recognizing this and taking steps toward creating a more personalized, flexible and satisfying experience for their customers. More and more, business managers are realizing that the clearest path to profitability for companies in almost all industries is through customer retention and maximizing lifetime value. All CSPs need to understand this and put as much effort as it takes to achieve profitable customer relationships.
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Customers needs and service providers differentiators levers for loyalty A comprehensive understanding of customers wants and needs is central to developing an effective customer experience strategy. While management techniques for corporate customers and consumers differ markedly and the real, deep personalization of accounts is increasingly important it is clear that there is a common set of fundamental characteristics of products and processes that transcend industries and market segments. They include: Productivity improvement time is an ever more scarce commodity, and anything that can help save time or make better use of it is attractive to consumers and business customers alike; Simplicity with the explosion of new products, services, and applications during the last decade, simplicity and intuitiveness have become an huge issue for consumers. Successful products must be easy to find, acquire, use, upgrade and maintain, or they are doomed to the scrap heap; Convenience given time constraints and consumers ever shortening attention spans, it is necessary that products and services be readily available; Risk the acquisition and usage of products and services must present a low risk to the customer. Security, safety and reliability are especially important characteristics, as is predictability of costs; Cool factor products that are perceived as innovative, fun, cute or that enhance ones image or status have been shown to increase desirability. Some aspects of personalization (such as skinning) fall into this category; Green while the environmental impact of a product is not usually the first consideration when buying, environmentally friendly products are gaining ground across a broad audience. These characteristics generally apply across the customer lifecycle, as represented by figure below Service providers that can develop strategies addressing these fundamentals across the customer experience lifecycle will have a considerable competitive advantage, which will help them to acquire new customers, upsell to current ones and increase overall profitability.
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FIG: Consumer needs over CLV
Service providers levers components that influence customer experience Applying the scope of customer experience and demand characteristics to the service providers business models, we believe there are six areas in which service providers can differentiate themselves, including: Product and service portfolio is the range of products and services a CSP offers its customers, including devices, connectivity services, content, applications, and so on. This includes pricing, acquisition and fulfillment; Marketing and sales includes pricing, merchandising, offer management, campaign management and initial fulfillment; Service quality is about the perceived quality of services, including availability, usability, sustainability, capacity, performance, stability and security; Customer support refers to availability, accessibility, breadth, speed and effectiveness of support; Billing, charging and cost management involve the range and flexibility of billing and charging options available, plus enabling customers to control costs based on the transparency of billing information Brand includes a CSPs reputation for product excellence, image, responsiveness and trustworthiness. Figure below provides a graphical view of CSP customer experience levers. Finally, there are two additional important investment considerations in developing the customer experience differentiation approach: Which customers (or segments) are most attractive from a customer lifetime value (CLV) perspective, and what investments are most likely to attract and retain them, as well as support maximization of lifetime value?
What is the investment budget and the likely cost of capital during the investment period? Ultimately, the service provider must maintain appropriate levels of cash flow and profitability, balancing the needs of both customers and investors. There may also be variations on funding strategies, such as success-based capital in emerging markets, but with a bottom line emphasis on matching investment capital with initiatives yielding the highest return.
FIG: CSPs customer experience levers
Product and service portfolio Clearly, an important aspect of customer experience is offering an attractive set of products and services. Breadth is certainly important, but the key to success lies in creating a series of compelling offers whether they are individual services, or more likely multi-service bundles that appeal to the target customer base. Bundling is a concept that emerged approximately 15 years ago, yet service providers are still struggling to get it right. In addition, while many converged operators offer a triple play option, few have been able to translate their assets into focused offers that target segments. They instead opt to take a more-is-better approach. While a few segments (like sports fans or movie mavens) are sometimes well served, others are left to slog through large swaths of content, acting as their own packagers. Service providers should look to the web for emerging trends that can be reflected in their services. For example, the trend toward social networking can be leveraged by offering a package that encourages communication among a pre-defined user group. Voice, texting and instant messaging services could all be configured for fast and convenient use among the group.
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Leveraging services through high degrees of integration among the services, or taking an integrated three-screen (handheld, PC, TV) approach to service assets could improve satisfaction, while promoting additional revenues. For example allowing customers to attach video trailers of new pay-per-view titles to messages enables service providers to leverage social networking principles and promote products at the same time. Perhaps an obvious example of a hot product is the iPhone, which has been an acquisition and retention engine for the companies offering it. Some might argue against the profitability angle, since iPhone fans tend to be heavy users of flat-rate data plans, and Apple retains control of its App Store, but the top-line revenues and subscriber gains have been impressive. Notably, the iPhone has many key characteristics, including improved productivity, simplicity (ease of use), low risk, and it certainly possesses the cool factor. Whether or not service providers choose to go the iPhone route, it is obvious that an attractive device portfolio is key to customer experience.
Marketing and sales Marketing and sales are rarely the first things to come to mind when customer experience is discussed, but they are in many cases the workhorses of the acquisition cycle. They are also drivers of important touch points, supporting offer management and educating the customer base through well-run campaigns. Properly leveraged, they can contribute heavily to the bottom line in both good and bad economic times. For example, the promotion of new offers with simplified pricing models or carefully targeted bundles can improve customers perception through greater productivity, convenience and simplicity, not to mention a bigger slice of the customers spend. Information about the customer (customer intelligence) is especially important here, as it is throughout the customer lifecycle. Service quality Service usage is of course the most common experience the customer has with the service provider, yet monitoring the quality of the service provided to individual customers has been a tall order for them. The difficulty lies in collecting and aggregating data, on an endtoend basis, by customer rather than asset or service. Doing it in anything approaching realtime is difficult, but has the advantage of allowing the service provider to see its networks and service performance as its customers see it. This is a far more effective and specific picture of particular customer experience than that given by performance management systems. They tend to measure the performance of networks, or particular areas in networks, or perhaps the experience of a group of users. There are a variety of uses for the output of these systems, including identifying poorly performing network assets or devices, but perhaps none more powerful or useful than providing an up-to-date view of the experience of a customer talking to a customer service
representative (CSR) about a problem. Quick, accurate identification of problems can help speed their resolution and shorten the time the customer has to spend with the CSR, thereby increasing satisfaction. Shorter resolution time is also likely to reduce the CSPs handling costs, making it a win-win for both CSP and customer. Service providers can also use these systems for proactive outreach informing a customer that a problem has been corrected before the customer even reported it. This can improve customer confidence and satisfaction, and it also allows the service provider to capture the usage revenue it would have missed had the problem not been proactively resolved. Customer support Customer support encompasses the response to a variety of situations, from responding to billing questions, to service problems, product questions, and so on. Such a broad remit, combined with the preference of human contact by many high-touch customers can create a challenging financial situation for service providers. Some keys to an effective, affordable customer care strategy include: Providing an appropriate experience based on a customers lifetime value; Driving down cycle times; Resolving problems through the first call; Supporting the customer through their preferred channel Personalizing the experience
Providing an appropriate level of service is key to profitability. Building an effective support strategy for a customer based on their lifetime value, service portfolio and pricing plans is the goal. This can be tricky because customers preferences vary greatly. Certainly self-care using the web, interactive voice response technologies and even messaging can be effective, but preferences vary among business users and consumers, and high tech and high touch customers not to mention teens and seniors. The key to an effective experience is knowledge of the customer so that the appropriate channel is used for interaction. Driving down cycle times is an important goal that reduces cost for the service provider while improving the quality of the customers experience. This can be accomplished by providing the CSR with the right customer account information prior to or while the call is routed, and providing CSRs with thorough training in questioning and problem-solving techniques. Wherever possible, simple issues should be channelled into self-care. Service providers should be working continually to reduce cycle time on traditional services, as they need to master these skills before moving on to the more complex services of the future.
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Billing, charging and cost management There seem to be as many views of billing as there are bills. Long standing billing employees at incumbent carriers may recall nostalgically the paper bill as a monthly touch point, arriving in an envelope stuffed with promotional materials and the latest news from the operator. Customer memories may not be so fond. Many businesses and wireless customers, for example, remember large, detailed, complex bills filled with charges borne out of complex tariffs, plans, and government taxes and fees. Turning customers into accountants should not be the goal of a customer-centric organization, yet the inflexibility of legacy systems has often created just that scenario not to mention the increase in billing costs acting as an impediment to new product introduction. In addition, many customers have approached new offers with real caution because they have felt burned by higher than- expected data, messaging and roaming charges, due to the lack of visibility of usage. While service providers have come a long way in simplifying tariffs and plans, they are far from being out of the woods in many areas. Many still lack the cost transparency or spending control mechanisms (such as allowing the customer to set usage limits) that would ease customers concerns about new services. Branding In many ways, the first five areas we have identified are important to, or even defining characteristics of, brand. Yet, in turn, brand has an impact on these elements, and is essential to the overall perception of the service provider. It can also be a powerful acquisition and retention tool. Service providers also have something to gain from their association with other brands and products, such as the benefits of being associated with the likes of Apple or Google (Android) device While CSPs may not be aiming for the same brand image as Amazon or Apple, they should be working to establish a brand that is: targeted appropriate to the market and product set; clear delivering an instantly comprehensible message; desirable something customers want to have or be part of; unique stands out in the crowd; meaningful matching customers expectations; consistent across all aspects of the company; recognizable clear, easily identified, repeated; actionable eliciting appropriate response; supportable and extensible able to support new products and partners
In summary, most service providers have a rich set of capabilities that could and should be able to satisfy customer needs. The key is applying them appropriately and profitably across the customer lifecycle.
The service providers speak; perceptions and priorities for customer experience
Expectations
Understanding and managing customers expectations seemed to draw the most heated debate; both while discussing how expectations are set and also regarding the role and responsibility of the service provider in supporting customers. At TMForum conference, the discussion round setting customers expectations centred on the source of expectations. Two factions emerged here. One argued that setting realistic expectations is relatively straightforward; CSPs should simply tell the customer what they plan to deliver in measurable terms, then do it. This should result in a satisfied customer, since the CSP has met the expectations it has set. The other faction argued that in practice customers expectations are less well defined and more personal, and develop more based on what is available across the market, not only on offerings from the CSP they are using. This group felt that expectations could only be grasped by understanding individual customers, because each customers priorities and perception of the market are different. They also argued that a CSP that simply focuses on its own stated goals, rather than trying to understand the customer, risked losing that customer even if it met its internal goals. This group cited a study in a European country as an example of perception and reality differing; an mobile virtual network operator (MVNO) was cited by customers as having the best service quality in the country, while the operator which ran the network the MVNO used was cited as having the worst service quality. Supporting roles and responsibilities In the area of roles and responsibilities for support, while all agreed that the world is changing rapidly, and a service now commonly spans the network, one or more devices and one or more applications, there were marked differences in opinions as to the CSPs role in supporting the service. Again, heated debate ensued with two factions developing. One argued that it is enough for CSPs to demonstrate excellence in the delivery of service components, such as the connectivity. This group worried about the cost of supporting the applications and devices that a customer might have, and how that might impact profitability. The other faction felt that the CSP is the only one truly in a position to support all aspects of the end to end service, and that consequently, the CSP has the opportunity to provide tremendous and unique value to the customer. They argued that if the CSP abandons that role, it risks losing the opportunity to upsell to the customer, as well as losing the customer
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altogether. This group also suggested that it may be possible to charge a small premium for supporting applications, and to tailor an appropriate support package. There was no universal final agreement as to scope of the role, but there was agreement that, regardless of the role played by the CSP, no one will own the customer. Rather the service provider will have to work toward gaining the loyalty and trust of the customer. Differentiation Discussions around differentiation, and where to invest in customer experience to create differentiation, brought little controversy, with opinions varying more by target segment and market maturity than by the service providers approach. Most agreed that for corporate customers, service quality and support were especially important. Participants felt that the provision of systems and tools, enabling large customers to efficiently manage their relationship with the CSP, was particularly key. One highly pertinent point of learning emerged here; not surprisingly, those CSPs that had involved their customers in the design of the self service systems had much higher adoption rates than those that had built the tools without customers participation. A final comment that was well received was the changing nature of contract management concerning multi-year contracts for enterprise customers. With so much change occurring in the enterprise, the usual approach of writing a highly detailed contract and dealing with adjustments through a predetermined change management process is less effective, and a new approach is needed. No one was clear on what the approach should be, but participants agreed this needed to be looked into. In discussing consumer markets, several participants felt that the although service quality and support were important, offer management and personalization capabilities were more so in terms of customer retention. This was particularly true in developed markets where there was less perceived difference in service quality between providers. Interestingly, several others commented that while there was little perceived differentiation in service quality for voice, they were experiencing a resurgent push for service quality among their customer base for mobile broadband. Lowering costs, service management Most of the discussion around lowering costs centred on automation, while the service management debate centred on encoding the expertise that is in peoples heads that is, how to manage the services and infrastructure with tools, freeing experts to work on more complex or creative problems. The second area of priority centred on providing customer service representatives (CSRs) with adequate tools to resolve customers problems quickly and efficiently. In particular, the priority was to increase the percentage of problems that could be solved on the first call
without escalation. Service providers expected that this would not only save the CSR time (and so the company cost), but would result in more satisfied customers and greater confidence in the CSP. The third most important area was self service tools, though several CSPs expressed concern about heavy investment here, as adoption rates were relatively low for most of them. Standards and best practices The definition of standards and best practices were cited as key by several of the roundtables participants. The first area of importance mentioned was the definition of a common set of key performance indicators for service management. Participants felt this would allow vendors to develop a core set of compliant management tools, easing the burden of development felt by individual CSPs. The second area that was highlighted was the interface between the enterprise customers systems and the service providers systems. Participants stated that there were no standards here, and that each customer required a customized interface to the CSPs tools. Standardizing the interfaces could lead to lower costs and the promulgation of best practices for CSPs and enterprise customers alike.
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Appendix
Customer Satisfaction Survey TRAI, the regulatory watch dog for the Quality of Service for the telecom services has commissioned this Customer Perception of Service Survey with the objective of measuring Quality of Services under the parameters as per the published notifications. It has been commissioned with the objective of gauging the subscriber feedback on Quality of Services by way of primary survey and comparing them with quality of service benchmarks stipulated by TRAI. The Survey and Audit modules for various circles within the Zones, due to the sheer scale of data collection, have been distributed across various quarterly periods. IMRB International conducted the Survey. Below is customer satisfaction data for each operator and circle.
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Network Audit
The Audit module is commissioned to assess the Quality of Service of telecom operators (Cellular Mobile (Wireless))by auditing the service level records maintained by the operators, conducting drive tests as well as live measurements and comparing them with quality of service benchmarks stipulated by TRAI. Below is Network Audit data for each operator and circle.
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A RESEARCH PROJECT REPORT ON

CHURN MANAGEMENT POST MNP

SITM, LAVALE, PUNE-411024

CHURN MANAGEMENT POST MNP

Mr. Sunil Patil Director-SITM Pune

SITM, LAVALE, PUNE-411024

SITM, LAVALE, PUNE-411024

SITM, LAVALE, PUNE-411024

1.0 Objective Of Research

SITM, LAVALE, PUNE-411024

2.0 Executive Summary

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3.0 Scope of our Project

Figure 1: Scope of the project

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4.0 Churn Management

4.1 Churn Taxonomy

Figure 3: Understanding customer churn

4.2 Churn Classification

SITM, LAVALE, PUNE-411024

Figure 4: Involuntary Churn

Non-payment churn (customers with credit problems)

Underutilization churn (customers who do not use the phone)

Managing involuntary churn

SITM, LAVALE, PUNE-411024

Figure 5: Voluntary Churn

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4.3 Telco churn management techniques

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5.0 Motivations for conducting the research

SITM, LAVALE, PUNE-411024

Figure 7: Revenue and Profit Concentration in Subscriber Base

SITM, LAVALE, PUNE-411024

SITM, LAVALE, PUNE-411024

6.0 Review of the literature

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7.0 International case studies on churn management

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8.0 Impact of MNP on churn

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Figure 8 : Key reasons for MNP churn (Nielsen)

MNP effect at initial stage

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9.0 TNS research on customer classification

Figure 9: TNS TRI*M customer typology

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Figure 10: TNS Market Resistance Ratio (MRR)

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10.0 Customer experience

10.1 Difference between Customer Experience and Customer Satisfaction

SITM, LAVALE, PUNE-411024

10.2 Customer experience management

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10.3 Overall customer experience leading to satisfaction

A Brand Touch point Wheel can be depicted as follows:

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