Management Cover

Retaining customers

Holding on to customers is not easy. Srikanth R P finds out how BPL Mobile uses BI solutions from SAS to reduce churn

When you have a market where several telecom operators compete for customers in a single circle, cut-throat competition is the order of the day. Every time a telco announces a new rate plan, its competitors face the prospect of churn. The average monthly churn rate in India is estimated to be between 3.5 and 6 percent (Source: TRAI). This is among the highest in the Asia-Pacific region. When you translate this into annual numbers, the figure could be as high as 42 and 72 percent—definitely a cause for alarm for any operator.

Customised plans

Like other telcos, BPL Mobile faced a monthly churn rate of 3.5 percent. With a customer base of more than a million people across 209 Indian cities and towns, it realised that consolidation was the only route to take for which its existing customer base had to be retained at all costs. As any tariff plan could easily be replicated by competitors, the need was to offer customised plans to individuals and corporates catering to their specific needs.

In an endeavour to improve its customer service levels and get to know its customers better, BPL formed a customer asset management team. The goal was clear. It had to retain customers and raise revenue per customer by enhancing the telco’s relationship with him or her. But identifying customer preferences and coming out with customised plans for a million users was tough without the aid of specialised software.

Mapping the customer

BPL picked a BI solution from SAS that would give the company insight into customers’ behaviour patterns. The solution is SAS Customer Retention for Telecommunications. A team from SAS worked with BPL to collect relevant data from the latter’s billing system, call centres and customer demographics for analysis.

Says Dinkar Sathe, senior principal consultant, SAS Global Services, “We used historical information to build a predictive model of the customer. We also defined relevant data points to capture customer behaviour that helped BPL predict churn.” After these data points were accumulated, BPL was in a position to gauge the factors that make customers switch. The BI solution assigned a score from 0 to 1 for every customer, wherein 0.15 would mean a higher degree of satisfaction while 0.85 would mean a lower degree of satisfaction. BPL discovered that the reasons for customer dissatisfaction could be anything from issues with tariff plans or billing to the non-availability of its network in certain areas.

Controlling churn

What BPL found was that the typical reason for churn was generally a competitor’s attractive tariff plans. By using BI, it was able to gauge the probability of churn for a given set of customers—or even a single one. For instance, the telco was now in a position to analyse factors such as usage pattern and customer complaints, and proactively try to address the customer’s complaints by resolving the issue and offering sops. Additionally, if there were an abnormally high number of international or STD calls, it could be concluded that the customer was likely to default. Based on usage patterns, the BI tool is able to spot customers who are likely to churn or default.

Says N A Ramanathan, head of BI at BPL, “It is four times more expensive to acquire a customer than to retain an existing one. Our immediate challenge is to retain customers. The intelligence provided by the SAS solution has helped us proactively identify customers who are likely to leave or default.” Based on the inputs received from SAS, BPL has managed to reduce the monthly churn from 3.5 percent to 1.74 percent. Considering that its base in December 2004 was 5,18,244 subscribers (Source: Cellular Operators Association of India) in the Maharashtra circle, the number of customers saved are truly significant.

The intelligence provided by BI has also helped BPL create new plans according to the customer profile. For example, a recent concept called the MOTS Zone card has been targeted at college students. The concept of zoning lets subscribers call other phones within a defined zone or area at significantly lower rates. Additionally, subscribers can select an SMS buddy mobile number so that they SMS or e-mail the said number for free. As most college students prefer sending SMS’ to making calls, BPL has concentrated on making a greater number of SMS’ available for college-going teenagers instead of raising their number of telephone calls. Ramanathan says that this plan was launched based upon intelligence gathered by the BI solution which pointed out a big user base in the teen segment.

BPL first did a pilot rollout in the Maharashtra circle. As the solution proved successful in controlling churn and spotting new market segments, the company then rolled out the solution in its remaining circles—Mumbai, Tamil Nadu, Kerala, Goa and Pondicherry.

Though the Indian mobile telephony market is highly competitive, insights into customer behaviour provided by BI solutions can open up new markets—as BPL Mobile has shown.

srikanth@expresscomputeronline.com