Churn Management

Churn Management
Mohammed Akram
Ayyubi
Mohammed
Akram Ayyubi
What is churn?
Churn is a loss of whole or part of services from a customer
Three categories of churn:
Account churn: Where we have lost the customer completely

Product churn: Where the customer has lowered its product profile e.g. from 5 products to 3
products
Decreased spend: Where the customer has not changed its product profile but its spending
has reduced due to:
a) Some circuits have ceased from its existing product profile
b) Reduction in spending due to modification / other billing changes
2
Mohammed Akram Ayyubi
Churn - A complex problem

Churn is a complex issue, both for the customer and us.
It is a symptom of a larger underlying problem. For example, we dont know:

how to optimally manage the complex and critical relationships with
customers
who the customers are

what they want and need
what makes them stay and what makes them go
3
Customer Lifecycle
Customer Lifecycle Management
Customer Joins
Customer Leaves
2500
Migeration
7
2000
10
Bad debt
Renewal
1500
Win
Customer
1000
Churn
Create
Opportunity
500
Cross sell/
Up-sell
11
Capex spend
and billing
install
Win Back
-500
Direct COS
-1000
Recurring
Revenue
-1500
11 opportunity areas in customer lifecycle

4
Courtesy - KXEN
Who is responsible?
Is it a revenue issue?
Finance
Is it a marketing problem?
Marketing
Is it a selling issue?
Sales
Is it a customer satisfaction issue?
Customer Services
Is it coverage and network issue?
Operations
Is it new technologies?
Research & Development
Is it a long term vision issue?
Strategy
5
Who is not responsible

Sales
Customer Services
Finance
CHURN
Operations
Marketing
Strategy
Research & Development
6
Can we be immune to churn?

CHURN ALWAYS HAPPENS, EVENTUALLY
Question is when and how?

End of expansion phase of the Telco market
Starts building up when expansion is over and maturity phase begins
During decline phase
When Contract expires
When new competitors enter your market
When serious customer satisfaction issues are not addressed
7
Customers Economic Graph

Bad Churn
Expansion Phase
Good Churn
Mature
Phase
Declining Phase
Customers economic cycle
8
Need for Churn Management
Churn management is the door to revenue growth

in this challenging market
9
What can we do?
BETTER TO MANAGE CHURN THAN

FOR CHURN TO MANAGE YOU
10
Where to start?
DEFINE STRATEGY
11
Dynamics of Churn Management

What we need to accomplish for better churn management
Reporting
What happened?
Rear view mirror
Inactive approach
Analytics
Why did it happen?

Root cause analysis
Reactive approach
Predict
What will happen?

Forecasting
Proactive approach
Operational
What is happening?
Process Monitoring
Autonomous
Adaptive
What do I want to happen?

Strategy, process modification/ management
Proactive approach
12
Courtesy - IBM
Strategy Statements
Define a standard definition of churn across the organisation
Categorise churn to support analytics
Agree on source and methodology of monitoring churn
Predict future churn events

Run proactive treatment campaign
Set key performance indicators (KPIs)
Set frequency of KPI evaluation
Attach rewards to KPIs
Define
Report
Predict
Treat
Evaluate
Reward
13
Define - The Churn Reasons Taxonomy

New Technology
Technology
Bandwidth
Features
Competitors Pricing
Economics
Usage
Network Coverage
Deliberate
Quality
Quality
Billing
Voluntary
Customer Services
Image
Social/ Psychological
Experimenting
Financial
Incidental
Location
Not controllable
Major life change
Fraud
Involuntary
Non Payment
Under Utilization
14
Courtesy The Teclo churn management handbook by Rob Mattison
High
Report - Reporting and Analytics Layer

Customer Lifecycle Management
Customer Lifecycle Value
Market Basket Analysis
Simple Lifetime Value

Survival Analysis
Value Added Services Value
Cross sell/ Upsell Model
Complexity
Expert
Analysis
Advance
Analysis
Customer Value
Churn Prediction & Retention Model
Response Model
Acquisition Target
Low
Foundational
Analysis
Analysis
Reporting
Monitoring
Low
OLAP
Standardised Reporting
Adhoc Reporting
Business Value
High
15
Courtesy Ehtisham Rao
Predict and Treat - Objective statement
1. Develop a best estimate of the likelihood that each customer will churn in
the immediate, medium and long term
2. Identify the current and future value that those customer represent
3. Develop treatment (campaign, policies, program, etc.) that reduces the
likelihood of churn
4. Assure that the cost and nature of the churn prevention treatment is
consistent with the associated value and churn risk
16
Predict - Customer Churn Index

Customer 1
Customer 2
Customer 3
Risk
10.0
7.0
6.0
Risk
1 Low
2
3
4
5
6
7
8
9
10 High
Time
3.0
2.0
3.0
CV
10.0
7.0
2.0
Time
Long term
Medium
Immediate
FV
10.0
8.0
2.0
1
2
3
CCI
100%
66%
34%
Factorisation
Annual Revenue (Value)

< 1K
1
1K - 5K
2
5K - 10K
3
10K - 50K
4
50K - 100K
5
100K - 250K
6
250K - 500K
7
500K - 750K
8
750K - 1000K
9
> 1000k
10
High
3.0
Medium
1.5
Low
1.0
* The CCI calculations on this

slide is for illustration purpose
only and the actual CCI
should be developed after
taking inputs from divisions.
(R)
Risk Determining just how likely the customer is to leave if nothing is done
(T)
Time The timeframe that the risk applies to
(V)
Value The loss of revenue that the churn event will represent (both current and future)
(I)
Investment The investment of money in treatments that will reduce the risk
17
Treat - Campaign : Start to end

Know
- Understand their business

- Tell them what Colt can do to help them
Sell
- Manage expectations
- Two way communication
- Social networking
Deliver
- Timely
- Appropriate quality
Engage
- Intimacy
- Quick turnaround
Renew
- Pro active
- Offer better value
Project
- Demonstrate new technology
18
Evaluate - Set SMART KPIs

Specific
What is needed? e.g. reduction in churn by x%
Measurable
Reduction of x% against what?
Achievable
Is reduction of x% is achievable?
Relevant
How will this impact the current year and future years?
Timely
Time frame must be given in which the performance is

to be evaluated.
19
Reward It is the best motivational factor
Establish clear linkage between KPIs and rewards

Introduce additional cash and non-cash rewards
Appreciate and give recognition at a larger platform
20
References
The Telco Churn Management Handbook by Rob Mattison
Thank you
21
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What are the three categories of churn discussed?

What are the three categories of churn discussed?

What factors contribute to a customer's churn?

What factors contribute to a customer's churn?

Churn Management

Churn is a loss of whole or part of services from a customer

Three categories of churn:

Account churn: Where we have lost the customer completely

Churn - A complex problem

It is a symptom of a larger underlying problem. For example, we dont know:

who the customers are

11 opportunity areas in customer lifecycle

Mohammed Akram Ayyubi

Is it a customer satisfaction issue?

Is it coverage and network issue?

Research & Development

Is it a long term vision issue?

Who is not responsible

Can we be immune to churn?

Question is when and how?

Customers Economic Graph

Customers economic cycle

Need for Churn Management