If you’re in a rut, it’s time to optimise
Acquiring and retaining customers in today’s saturated telecoms market requires providers to make the best decisions quickly and across every individual credit lifecycle, writes Anat Hoida, the Telecommunications Practice lead at FICO. With prescriptive analytics, communications service providers (CSPs) can now optimise their automated decision-making processes to improve business outcomes.
Prescriptive analytics draws on available data to determine the best course of action. By applying these analytics-driven insights, CSPs can create more effective business strategies and gain that competitive edge. Here are four key areas to consider:
- Grow customer value
Analytics-driven strategies are programmed to consider various factors – for example, channel characteristics and agreements, credit risk, and price sensitivity – before reaching any decision. As a result, CSPs will be able to competitively price their service plans and equipment to attract new customers, without compromising on profitability. In the face of shrinking margins, identifying existing customers for product cross-sell can further improve business performance. Analytics can adapt to changing customer needs and market conditions, to ensure the right candidates are identified for the right products at the right time.
- Retain customers
Churn rates for multi-play packages can reach 20% per year – representing a serious and consistent drain on profitability. With optimisation, CSPs can proactively identify high-value, yet high-risk customers, and devise tailored retention strategies. Customers can be segmented according to their likelihood of leaving, with attrition scores based on their profile and activity data, such as the number of negative customer support interactions and dropped call incidents. Based on this information, CSPs will be able automate measures to mitigate this risk, such as offering an additional wireless line or a discount on a new mobile device.
- Improve collections
Analytics improve collections performance by alerting CSPs to early warning signs of a customer going into arrears, and triggering preventative follow-up actions, like activating automated messages and temporary credit restrictions. While optimisation might not provide all the answers, it helps CSPs strike the right balance – knowing when to keep someone on contract, and when to move them to pay as you go. Avoiding delinquencies not only lowers attrition risk and collection costs, but also improves customer satisfaction, which is all-important for building loyalty.
- Remain compliant
Analytics are great for making better and faster decisions, but they cannot always explain their thought processes. This lack of transparency might pose a problem when the General Data Protection Regulation (GDPR) comes into effect across Europe in May 2018, as customers can demand clear-cut reasons for any decision made against them.For business performance and regulatory compliance, staff need full visibility into, and control over, the entire decision-making process. It is vital to choose optimisation tools that allow CSPs to easily navigate complex decisions and pick out the inputs used at any point.
Modern optimisation solutions empower CSPs to create, test, scale and modify decision strategies, increasing their agility. The CSPs using insights from analytics-driven optimisation will consistently make better business decisions, leading to greater growth and profitability. Given the reality of the current telecoms market – more choice for consumers, more competitive offers, and more regulatory scrutiny – acquiring this advantage is now more crucial than ever.