Invest more in customers who make you profitable, and less in the ones who don’t. The challenge is determining which customer is which.
This telecom client had grown fast, primarily through acquisition — so in some ways they were still operating as an assemblage of “mini-fiefdoms,” each with its own accounting system, customer list, etc.
They had tried diligently to analyze and segment their customers, but could never quite crack the code. Since determining the value of each customer seemed all but impossible, the client had defaulted to their original policy—treating all customers the same. All customers were receiving the same direct mail enticements to expand their services. And all were being treated the same way when they called customer service.
The result was that even when volume was up, profits were not. They needed to know the value of each customer and fast.
The first thing we did was to open the client’s eyes to the real costs involved in servicing their customers: mailings, telemarketing, service calls, phone calls to late payers, etc.
Next, we did something pretty cool. We applied statistical techniques and some creative thinking to the client’s customer data and eventually uncovered some specific patterns of behavior leading us directly to the most high-maintenance, low-profit customers.
By tweaking the formula here and there, we were able to segment customers into buckets ranging from Not At All Profitable to Highly Profitable.
So how did all of this enlightenment change the client’s way of doing business? Two ways:
- They stopped all direct mail and telemarketing to the low profitability customers. Result: immediate cost savings
- With our help, they used technology to alter the call queue coming into customer service, rerouting the most profitable customers to the most highly skilled retention agents. Customer loyalty + customer profitability = a service upgrade, plus a selling opportunity for the rep
Ultimately, the client learned how to operate more efficiently and improve their customer experience, which together helped them become more profitable. These savings continue to be reinvested in attracting more profitable customers.
The new customer infrastructure is still paying off today. The company is viewed as having the best insights into their customers, their operations and their costs when compared to any other peer company.
This is just one example of how Sense Corp is using its creativity and expertise to help other clients in the telecom arena.