“If you don’t like your Internet provider, just switch it,”
— some guy from Reddit.
Updated: November 30, 2024
How to reduce the churn rate in telecom is merely the concern of most telecom providers. The industry is highly competitive, with numerous service providers fighting for customers’ attention.
As of 2024, Europe hosts a substantial number of telecommunications companies, with estimates indicating approximately 65,276 telecom operators across the continent. Germany leads with about 16,828 companies, followed by France with 11,104, and Italy with 9,119, collectively accounting for over half of the European telecom market.
This extensive network of telecom operators underscores Europe’s commitment to connectivity and digital communication, fostering competition and innovation within the industry.
The continent remains one of the world’s most fragmented telecom markets, with four or more providers often competing for individual market space. This abundance of options means that customers who are dissatisfied with their current provider have plenty of alternatives to choose from. Companies, in turn, are seeking efficient ways to minimise customer churn in the telecom industry.
What is the Churn Rate in Telecom?
In essence, churn rate, also referred to as client turnover or attrition rate, represents the frequency at which customers end their engagement with your services and stop being your clients. This phenomenon can occur in various businesses, but it’s predominantly observed in the telecom sector, primarily due to its reliance on subscription models.
Specifically for telecommunications companies, churn rate signifies the proportion of subscribers who terminate their agreement or subscription with your enterprise within a certain timeframe. A substantial churn rate indicates a failure in customer retention, implying a lack of allegiance to your services. Thus, customer churn in telecom industry has become a significant issue in the sector.
An elevated churn rate serves as a telling sign that there are significant shortcomings in your service, leading customers to seek superior options elsewhere, and highlighting a critical deficiency in your business model. Thus, churn management in the telecom industry (particularly customer retention in telco) is another area company leaders should practice proactively.
High Churn Rate in Telecom: Why are Customers Abandoning the Service Provider?
Despite the various reasons customers may choose to switch service providers, there are several ones to consider as key contributors to customer churn in the telecom industry:
Poor network quality: Network quality is cited as a factor in about 45% of smartphone user churn. Customers demand effective, dependable, and extensive network coverage and they will go to any lengths to find a service provider who can meet their needs.
Unclear billing processes: They might be confusing. Clients who feel they have overpaid and overcharged and cannot tell why are more likely to switch for a better deal.
Poor customer service adds up to churn in telecom: Since the telecoms sector places a high priority on providing excellent customer service, organisations that want to retain their current clientele must make this a top priority. In fact, 39% of customers openly admit to abandoning a telecom provider due to subpar customer support, as per CustomerGauge.
Better deals: Some people leave simply because they were offered better deals that fit their budget. This has made an innovative approach to service delivery a crucial customer retention tactic.
Therefore, the conclusion is inescapable: businesses in the telecommunications industry face challenges in retaining customer loyalty and providing excellent customer experiences. To eliminate reasons for customer churn in the telecom industry and improve customer retention, telecom providers should prioritise network quality, billing transparency, and customer service excellence.
The Silent Killer: Why is Reducing Churn in Telecom Important?
According to industry experts, attracting a new customer can cost up to six or seven times more than retaining an existing one. Additionally, the likelihood of selling to a repeat customer is 70%, whereas the likelihood of a first-time customer buying from a company is just between 5% and 20%.
On top of that, the most committed customers spend more in general (almost a third more), partly because they are more likely to try new products or services, which brings about significant opportunities for business growth.
So, to sum up, your existing customers bring you more money than potential ones. And vice versa: an uncontrolled rise in the churn rate results in a loss of profit, which, if left this way, can eventually grow to be significant.
So, what can companies do to reduce churn in telecommunications?
A Data-Driven Approach to ‘Tame’ the Churn Telecom Rate
Telco businesses need to do the metric analysis as part of telecom churn management since the telecommunications industry is one of the most volatile and competitive markets. To effectively evaluate the churn rate for the telecom company and make a well-informed decision on the proper course of action, it’s best to employ a data-driven approach that consists of three steps:
- Step #1: Data Collection and Analysis
One of the benefits of automated processes, including customer management, is that all customer data can be stored securely in one system and can be accessed at any time. It is crucial to have a unified way to gather details about each consumer so that it can be analysed later.
Having enough data allows for breaking down the customer base into different segments based on demographic data, behaviour, geography, revenue per period, etc.
Modern internet service companies like Facebook or YouTube are inherently data-driven companies. They need to understand their user base intimately, how it changes over time and how to facilitate those changes.
Data reporting and data-driven marketing along with short learning cycles allow those companies to continually improve key metrics week over week, month over month. This might serve as a good example to reduce churn in telecommunications, though.
This, in big part, is a driving force behind those companies’ ever-growing presence. The same principles apply to service providers to ensure increased visibility of the key metrics per customer segment. This, in turn, allows for comparing churn rate dynamics in different service areas and seeing more clearly which one needs more focused attention.
Those insights are clear and actionable data: as you are doing a series of marketing campaigns, for instance, not only the results of each promotional effort can be measured per segment but different campaigns can be started if necessary based on the segment preferences.
Moreover, as companies divide the customer base into groups sharing similar characteristics, it becomes more evident how business practices impact the key metrics for a given group (segment) of the customer base.
- Step #2: Predictive churn analytics in telecom
Once the data is being gathered and there is operational reporting in place, insights can be expanded even further by applying self-evolving machine learning algorithms. Here’s how to reduce churn in telecom industry with predictive analytics as there are plenty of methods to collect and assess data.
MaxBill uses an ensemble methodology that combines several ML algorithms to achieve an impressive outcome: the results of a control run on historical data show 97% accuracy of churn prediction.
The model involves validation of the existing records of customer data against their consequent behaviour. After the tuning, a system is ready to analyse the new incoming data in real-time and predict the customer’s behaviour. This way the risk of churn for each specific user can be detected and calibrated based on each new piece of information.
Our team plans on enriching the model with the additional data artefacts from a variety of segments and use them to determine which customers are at risk even faster and more precisely.
“Risky” customers, who are likely to go away, are those who require the most attention. Direct measures, be it an additional benefit or personalized offer, can be offered to the subscribers who already have one leg out the door.
Related: learn more about the role of machine learning in predicting customer churn.
- Step #3: Empower CSRs with Data to prevent Churn in Telecom
Another way how to reduce churn rate in telecom is using CSRs (customer service representatives) to act upon any sophisticated analytics. They can use the report created by the system and give extra attention to the risky customers.
The analytical tool that we showcased in the previous steps can notify the CSR about any individual who needs additional attention. A customer services representative then can view the available information and take data-driven actions to engage with the consumer.
Actions to reducing churn in telecom often include the following:
- enhanced onboarding;
- personalized offers;
- discounts and credits;
- faster technical support.
CSRs can choose from the above and pick the right course of action with the support of hard data.
As the industry’s best practices show, data and machine learning are not here to replace humans. The best results are achieved when human expertise is combined with computer-generated data. After harnessing the power of data, it’s time to apply the strategies that streamline churn reduction in the telecom industry.
Customer Retention in the Telecom Industry
Customer retention in the telecom industry is a key factor for maintaining competitiveness and ensuring the profitability of telecom operators, as in any customer service-related business. The number of service providers is growing yearly, with new operators emerging, more flexible tariffs, better coverage, and customers facing more opportunities and temptations to switch to competitors. Therefore, your telecom company should focus on strategies that build trust and enhance customer satisfaction.
Perhaps the most important factor for success in customer retention is understanding customers’ needs and preferences. Telecom companies can utilize data analytics to segment their customer base and tailor their offerings accordingly. An average telecom company develops up to 30 different products based on customer age, region, types of services consumed, and frequency of use. For example, in Ukraine, with the onset of the war, mobile operators offered their subscribers the “Roaming as Home” service in 27 European countries, allowing customers to stay on the same tariff and receive all services in these 27 countries. This significantly increased customer satisfaction and retention and prevented them from switching to other operators in the countries where they were forced to relocate. Personalized marketing and service plans can significantly improve customer satisfaction and increase retention rates. Research shows that personalized experiences can boost customer retention by 30%.
Another important factor is the enhancement of customer service quality, which plays a significant role in customer retention in the telecom industry. Customers expect quick and effective assistance (including 24/7 online support), and companies that invest in training their staff and implementing advanced support systems enhance their customers’ trust. Research shows that 70% of customers are likely to remain loyal to a company that provides excellent customer service, including virtual operators, chatbots, online user accounts, and more.
Stop Losing Customers: How to Reduce Churn in Telecom Industry?
There are multiple approaches out there. But the most game-changing strategies should stem from the most critical needs. So, here’s what telecom businesses can do today:
#1 Optimise the network
In the telecom industry, customers expect nothing less than lightning-fast and reliable network connections. To meet these expectations, continuous monitoring of network performance is crucial. This includes swift detection of issues with infrastructure, security, applications, and hardware that can hamper bandwidth and latency, thereby impacting customer satisfaction.
Telecom analysts must efficiently gather and analyze data to optimize network performance, ensure customer satisfaction and, thus, help churn reduction in the telecom industry.
Furthermore, in the 5G era, edge networking has emerged as a critical solution for optimizing network performance. By leveraging edge computing, telecom companies can conserve network resources, reduce data center strain, and prevent network latency and bottlenecks that can negatively impact customer retention.
In short, staying ahead of the curve in the telecom industry requires proactive monitoring, swift action, and the adoption of cutting-edge solutions like edge networking.
# 2 Use Appropriate Billing & CRM Solution for Telecommunication & Connectivity
Telecom companies know that keeping clients happy and retaining them is vital for business success. Offering attractive pricing plans and promotions is a popular strategy to keep clients from leaving. But it’s not just about offering good deals – it’s about communicating with customers effectively.
This is where telecom billing software and CRM solutions for telecommunication and connectivity come in and allow for reducing customer churn in telecommunications drastically.
By accurately charging customers and managing their accounts, telecom companies can prevent misunderstandings and confusion. This, in turn, leads to more satisfied customers who are less likely to switch to a competitor.
An effective billing and CRM solution delivers omnichannel communication, ensuring that customers receive clear and consistent messaging across all platforms. Honesty, transparency, and great service that saves customers money are all part of the package that today’s discerning customers expect from their telecom providers.
#3 Perfect the customer’s lifetime value
Existing customers are the lifeblood of any company. After all, loyal customers bring in more earnings over time. But how do you keep them loyal? That’s where a well thought-through retention strategy comes into play.
Think of your customer’s journey from point A to point Z. Everything in between can be mapped out and optimised to ensure your customers stay with you for the long haul. And one powerful tool in your retention strategy toolkit is predictive modelling.
How to reduce Churn in the Telecom Industry with AI?
Predictive modelling can be a powerful part of such a strategy and give solid insights into how to reduce the churn rate in telecom. It allows you to identify which customers are at risk of leaving and prioritize them accordingly.
By analyzing customer transaction data, you can uncover behavioral patterns that lead to a better understanding of your customers. Armed with this information, you can develop personalized packages, offer incentives, and improve customer satisfaction and loyalty.
At MaxBill, we deliver the AI-driven churn prediction model tailored to the energy and utilities sector. However, the models are being taught and improved and can be leveraged in any industry, had the relevant data outputs and parameters provided (check out details below).
# 4 Use Innovative Upselling, Cross-Selling, and Rewarding Methods
“They can steal your recipe, but the sauce won’t taste the same”, says the quote. Think about how you can innovate the way you upsell and cross-sell services. Do you reward your customers?
Encourage your sales, marketing, and customer service teams to join forces to deliver new offerings. According to research, 40% of telecom customers claim they would have made a different decision if given a better service package.
How to retain customers in the telecom industry with AI and ML?
MaxBill’s ML models allow you to estimate the probability of customer churn and conduct “What If?” simulations to identify effective initiatives for retaining customers in the telecom industry. See how the model works and what parameters you can input for customer retention in the telecom sector. More than 70 different parameters are considered in the model, enabling you to run simulations.
Closing Remarks: the Most Meaningful Highlight for Telecommunications
There is no denying that it is hard to be a player in this game, especially when you have strong competition. Service providers in the UK, the US and the EU are facing the challenges of market saturation and thus telecom churn management. Even though new technologies evolve constantly, opening up opportunities for adding new services like 5G connectivity, IoT support and others, telecom businesses would always benefit from improving customer retention, no matter the size and specifics of the business.
The pivotal metric to keep track of is customer churn. By monitoring it, tracking changes over time, and analyzing the impact on various customer segments, companies can identify areas for improvement. This will definitely help work towards reducing customer churn in telecommunications.
A CRM powered with analytic and machine learning tools that supports the decision-making process of a dedicated team of CSRs can help determine the risk of churn for each customer in real-time and is a vital aid in keeping the user base loyal.
The synergy of customer service representatives and modern technology is the future of customer service. It’s that simple. Don’t let this ‘churn in the telecom industry phenomenon’ harm your business – try our billing and CRM solution to keep your customers happy and loyal!
