​Why do clients leave? How to prevent customer churn: early symptoms Social media survey with incentives for participation.

Impact of conservation efforts on subscriber life cycles and value

Proactive measures include built-in processes to prevent the outflow of customer groups (personalized campaigns for small target segments).

In this case, the basis for determining the “propensity to outflow” can be:

• results of the analytical model, for example, using Churn Prediction, Data Mining Technology techniques;

intuitive predictors of outflow (competitor promotions, network failures, etc.);

certain moments of the subscriber’s “life cycle” (completion of a contract, etc.).

To implement proactive customer retention measures, you need to:

adapt the solution for business use by improving the efficiency of models (adding missing data);

develop a methodology for determining the reasons for predicted churn to develop campaigns;

develop a list of intuitive churn predictors, indicating their impact on the propensity to churn;

develop and implement external bases data (market monitoring, network operation, etc.);

develop a list of key points in the “life cycle”;

develop and implement transport to use the system.

Also, when developing a system for retaining and loyalty of subscribers, it is necessary to provide for the implementation of control systems that allow monitoring qualitative and quantitative indicators of the effectiveness of the changes being carried out. For example, such controls can be:

As practical example implementation of a customer retention system, I would like to note Mobile TeleSystems OJSC, whose activities in this direction began in the middle of 2004 . and was caused by the negative dynamics of the increase in the outflow of existing clients during 2001 - 2003. The development and implementation of technologies and mechanisms for retaining existing clients, which was carried out at MTS, was positively reflected in a change in the direction of the trend (decrease in the level of outflow).

This result was achieved through the implementation of full-scale unified reactive retention processes, including measures for dealing with complaints, working with clients who intend to voluntarily terminate the contract, etc., implementing a system of discounts, optimizing service procedures, introducing additional services to optimize the solution of subscriber problems. Also, the introduction of measures for proactive customer retention based on intuitive predictors of churn contributed to the effectiveness of the activities, which made it possible to more effectively retain existing customers, increase their loyalty and stimulate them to increase the intensity of use of services.

Requires centralized influence

For company executives striving to gain leading positions in the market and at the same time aiming to increase profitability, the most important and necessary direction in development should be maintaining and increasing the loyalty of existing subscribers.

The creation and implementation of a subscriber retention and loyalty system for telecommunications companies, as well as for companies in other industries, is a project with both short-term and long-term goals, objectives and results.

The final decision on the creation and implementation of a subscriber retention and loyalty system remains with the managers and owners of the companies.

Analyzing the world experience of creating and implementing such systems, we can confidently say that without management support, these systems are not viable and practically impossible to implement for implementation. This is mainly due to the fact that these systems, when developed and implemented, require unified leadership, a unified concept and significant changes not only in the strategy of working with subscribers and service processes, but also a change in the ideology of working with their clients.

An integrated approach to the implementation of these systems is the most appropriate approach to implementing this direction of development. This is primarily due to the fact that the company’s clients are influenced by the activities of almost all of its divisions, even those that do not directly interact with them.

In this regard, in order to obtain tangible results and improve the qualitative and quantitative performance indicators of working with existing clients, it is necessary to have a centralized impact on most divisions of the company and change the principles of their work from the principles of a narrow profile, to principles taking into account and understanding their role in the service process, and therefore and optimization of its activities taking into account the principles and strategies

customer focus.

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The article was prepared based on materials from the certification workMBA-TELECOM program of the Moscow International high school business "MIRBIS"

Customer churnchurn) is the loss of customers expressed in the absence of purchases or payments for a certain period of time. For some areas of activity, the concept of outflow is not applicable (for example, real estate sales), since purchases are not regular. The churn rate is extremely important for companies with a subscription and transactional business model, which imply regular payments to the company. These are banks, telecom operators, SaaS services.

There are three types of churn:

• Natural– change of place of residence, death, change in needs (as an illustration, children's products lose relevance as the child grows older).
• Motivated- the client refused the company’s services in favor of another company or found an alternative option to satisfy his needs. For example, abandoning cable TV services in favor of subscription content delivery services.
• Hidden- the client continues to use the company’s services, but the volume and frequency of consumption decreases. This is a sure sign that the client is simultaneously using the services of competitors or substitute products. This phenomenon, as a rule, is not classified as churn, although most lost customers first reduce their share and frequency of consumption before finally breaking ties with the company.

The reasons for customer churn vary depending on the industry and the specifics of the company. However, a number of reasons for customer churn are universal for all areas of activity:

• Dissatisfaction with the quality of the company's products and services– as numerous studies show, this main reason outflow.
• Low level of customer service– it is important not only to offer the buyer a quality product, but also to provide the proper level of service.
• More attractive offers from competitors, but not necessarily more profitable. Perceived value can differ greatly from the actual value of a product or service. Clients may fall for advertising or beautiful presentation competitors' products.
• Emergence of substitute products or services– the emergence of new solutions on the market that meet customer needs. A typical example is the emergence of VoIP telephony that caused a serious decrease in the subscriber base of traditional telephony users.
• Declining brand loyalty- the desire to try something new, fashion trends, recommendations from family and friends are quite common reasons for churn. “Fatigue” from consuming the company’s products encourages customers to experiment and try alternative options.
• Personal factors– change in income level, marital status, preferences, hobbies, etc.

How to calculate customer churn

The level of outflow seriously depends on the chosen calculation method. The main question that comes up when measuring churn is after what period of inactivity a customer is considered lost. The incorrect choice of this parameter leads to serious distortions in the assessment and interpretation of outflow. The basic formula for calculating churn is quite simple:

Customer Churn Rate= number of lost clients during the time interval \ total number of clients at the beginning of the measurement period.

The time interval at which churn is measured should be selected taking into account the specifics of the business - seasonality, stage of the product life cycle, if new product or service, etc.

The churn rate itself is an uninformative indicator. It is important to understand the structure of outflow:

• Which customer segments are primarily susceptible to churn and why.
• What factors most often cause customer loss?
• What are the dynamics of outflow and trends in its structure.

Estimation of churn in in monetary terms based on modeling cash flows, which the company would have received if the client had not stopped using its services. The formula for assessing damage from outflow is as follows:

Damage from churn = number of lost customers * average bill (size of payment) * frequency of purchases (number of payments) per time interval

Calculation example:

Conditions: Churn rate -1,000 customers over the last 12 months. Payment per month – 100 rubles.

Damage from outflow = 1,000 people * 100 rubles * 12 = 1,200,000 rubles

The hardest part is assessing the impact of specific initiatives on churn rates. There are always many external and internal factors, influencing this indicator. A change in the economic situation in the country, a reduction in prices for services or an improvement in the work of the technical support service - what and to what extent influenced the outflow rate? To correctly assess each factor, control groups are usually used.

How to reduce customer churn

Eliminating the causes of churn

Reducing churn is a difficult task. And the larger the company, the more obstacles arise. The fight against churn is associated with the need to transform business processes. The first step on this path is an impartial and, preferably, third-party analysis of the causes of churn.

At this stage, it is important to diagnose existing problems as accurately and honestly as possible. As part of this stage, it is necessary to collect and analyze the following information:

• Client Profile– social demographics, structure and consumption model, loyalty, preferences, contacting the company.
• Recent client interactions with the company(making a purchase, marketing communication, appeal, review, etc.)
• Survey results client in order to receive feedback regarding the reasons for refusing the company's products and services.

Once determined key reasons outflow, it is necessary to develop a plan for their elimination and a system key indicators, reflecting progress in expanding bottlenecks. The solutions proposed within the plan do not always bring the desired result, so it is important to measure and evaluate the results obtained.

The process of analyzing and eliminating the causes of churn is not a one-time activity, but a regular activity. IN working group To combat churn, representatives from sales, marketing and customer service departments should be included.

Churn forecasting

Another area of ​​customer retention work is predicting churn using statistical methods and machine learning technologies. The purpose of forecasting is to identify clients at risk.

Based on forecasts and results of work to identify the causes of churn, a customer retention plan is developed. It should contain segment-by-segment strategies for working with clients, including:

• Ways to retain customers - changing service methods, material incentives, non-material involvement.
• Channels and triggers for communications– how, when and in what context to contact the client in order to achieve the goal.
• Stimulus Budget– how much the company is willing to spend to retain a client of a particular segment. Business case assessment.
• Ways to measure and evaluate results– how the effect of the plan will be measured.

Customer Returns

If a customer is diagnosed as lost, the company can try to get him back. How to win back customers varies depending on the industry, the type and importance of the customer, and a variety of other factors. Here are just a few of them:

Material incentives

• Discounts, bonuses, prizes
• Special conditions for purchases and/or services
• Free use of the service for a period of time
• Access to exclusive features
• Attractive affiliate offers

Intangible ways

• Apologies for any inconvenience caused (if any is established)
• Personal address on behalf of the company's top manager
• Invitation to a potentially interesting event
• Restoring contact using publications useful to the client
• Exposure through family members, loved ones and acquaintances

Farewell to the client

Part 1. Theoretical aspect

From the editor: The Lipetsk cable operator told Cable Guy about the Telecom Novation company, for whom it greatly helped stop the outflow and normalize sales. The company specializes in a relatively new, but very important area - subscriber retention. Of course, we could not miss this opportunity and turned to the specialists of Telecom Novation with a proposal to talk about their experience and give professional recommendations to cable workers. The material turned out to be voluminous, so we divided it thematically into three parts, two of which will be published following this material. The first part is theory. It contains the main points that you should pay attention to for a more informed understanding of the following parts.

Subscriber retention strategy

Retaining the subscriber you spent money on attracting is a necessary component of running a successful business. However, not all companies are at the stage of understanding this direction and do not think about the fact that a new client can cost five times more than an existing one. Some people don’t see any point in retaining subscribers at all, considering disconnected subscribers to be a “natural flow” from one provider to another. Here I would like to mention the following phrase by M. Fry: “There is nothing more deceptive than confidence in one’s own invulnerability.” In order not to be deceived, pay attention to the points below that will help you understand the situation with the retention of subscribers in your company.

You can determine the need to optimize the “retention” direction in your company using the following parameters:

You believe that there is no churn in your company;

You do not divide churn into “managed” and “unmanaged”;

You do not have a classifier of reasons for churn;

Managers do not have colorful presentation materials and high-quality speech modules that allow them to retain clients;

You do not take into account the number of new subscribers in the churn;

There is no plan for outflow;

You cannot give an average life cycle of activity per subscriber;

You are convinced that attracting new subscribers is more profitable than retaining regular customers;

You do not generate monthly reports on outflow to competitors;

You are not familiar with the concept of “hidden churn”;

The company has no business processes, job descriptions and time plans in this direction.

If you answer positively to at least 2-3 points above, you need to think about reorganizing the work of this block.

Let's bring typical situation: the company has an increasing number of disconnected subscribers, and management decides to reconsider its attitude towards retention. As a rule, first of all, they look at the reasons that prompted subscribers to disconnect. Some, for inexplicable reasons, go to competitors (and this, by the way, is the result of the competent work of direct sales agents), some move, some are switched off due to poor quality, and some simply do not see the need to further use the services...

In today's competitive environment, and especially among telecommunications providers, the following anecdote is often heard:

There are three competing stores nearby.

The owner of the left one hung a sign: “We have the lowest prices.”

The owner on the right hung a sign: “We have the highest quality goods.”

Nowadays, in the fast race for a client, the winner is not the one whose product is of better quality or cheaper, but the one who is able to be the first to find the right approach. Retention is the same as selling, only you must be able to sell services to a subscriber who has come to disconnect from your services. And this, you see, is not easy.

Our method of retaining subscribers is based on a systematic approach. The figure below shows the order of analysis of churn controls from top to bottom, and the order of its design from bottom to top. A well-structured order of all these elements leads to the achievement of planned indicators for reducing churn.

First of all, you need to understand why the subscriber disconnects. In order to understand the true reasons for the shutdown, you should correctly create a classifier, or, more simply put, a list of reasons, and then develop a series effective methods for each of them.

You can diagnose the retention system yourself, or you can contact professionals in this field. During this work, all elements of the outflow management system should be checked: classifier of reasons for outflow, business processes, motivation, etc., i.e. all elements that activate the “mechanism” for achieving planned outflow indicators.

We, in turn, get an idea of ​​all these blocks from the customer’s questionnaires, after which we carry out diagnostics step by step:

1.Questionnaire (quantitative questionnaire + descriptive questionnaire);

2. Formation of a hypothesis indicating the main problems;

3. Testing the reliability of the hypothesis “in the fields” (3-4 days);

But before you start forming a hypothesis, we advise you to study the main differences between the concepts of “cause” and “symptom”. This will help you fill out the form correctly (if you order these services in consulting companies), or independently outline the range of main problems.

To begin with, I would like to cite the main “reasons” that, according to the management of the companies with which we collaborated, prevent them from retaining subscribers:

1.Many subscribers simply stop paying and disappear, which makes it difficult to work with them.

2. When disconnecting, subscribers do not always say the true reason for refusing services or do not indicate it at all.

3.Employees do not retain clients due to lack of time spent on other activities.

4. Difficulties in finding a candidate for retention service managers: the direction is new, so it is difficult to find an experienced specialist for this position.

5. Competitors' offers are much more profitable than the customer's offers. Thus, competitors lure subscribers to more favorable conditions.

As a rule, the problems voiced are SYMPTOMS, but the true REASONS lie in something else:

1. Companies do not have a clearly defined implementation project plan based on market conditions.

2. Subscribers are not aware of the rules for disconnecting from services.

3. There is insufficient experience and knowledge in setting up this direction; there are no prescribed methods.

4. There are not enough human resources to retain clients in the office

5. An ineffective staff motivation system makes it difficult to retain customers.

6. There is no detailed classifier that reflects the real picture of abandoned subscribers.

7. There is no presentation module for subscribers demonstrating the advantages of the company in question and the disadvantages of competitors.

After listing the main problems and formulating a hypothesis, you should move on to building a competent classifier of causes and clarifying the correctness of receiving incoming information. After all, the basis for the correct operation of the retention system is the correct identification of the true causes of outflow and the presence of transparent business processes. Our version of the classifier contains 33 points indicating the reasons for subscribers leaving (below is part of the classifier - the first 15 points and the final 33rd). We clearly divide churn into controlled and uncontrollable. This is necessary in order to correctly determine the volume of subscribers that can and should be targeted when designing retention methods.

Correctly identified reasons for churn are only half the success, because... You can also build a chain of methods to reduce the corresponding positions. For example, the reason “moving out of coverage area” often means leaving for a competitor. Unfortunately, operators rarely systematically consider the “quality of service” group (and care for its reason). Providers, based on forum posts about how all companies in the city are treated, mistakenly believe that “everyone is like this now.” The presence of a detailed classifier and threshold values ​​will allow you to quickly identify weak points and understand economic effect from implementation: it will be expressed in the difference between what is now and the normative figures.

Before we move on to practice, I would like to further focus our theoretical attention on this important element as staff motivation. In order to manage the outflow, you need to have a planned figure for disconnected subscribers in the context of services. It is obvious that a staged verification of all levels of management is necessary. An example of an erroneous motivation system aimed at retaining customers: our company had a customer whose staff motivation system in the customer service department included bonuses/deductions for outflow. The essence of the motivation was that if the company reduced the outflow of subscribers by 20% (this is about 200 people per month), the salary of managers who accepted applications for disconnection would increase by only 200 rubles. Agree, not very much money, even for a person receiving 10 thousand rubles. per month. In addition to such an “effective” motivation system, there was another problem: managers were physically unable to deal with such subscribers due to heavy workload, especially at CHN.

How to retain customers in a highly competitive environment? What is “customer churn” and how to deal with it? Why is this important – and finally, what does data analysis have to do with it? The answers to all these questions are in our material today.

Theory

We suggest first understanding the terminology. “Customer churn,” that is, the transfer of part of the customer base to a competing company, is a fairly general term. Therefore, before moving on to discussions about how to analyze and prevent this churn, you need to answer one simple question: “What is customer churn for my company?”

The answers may be different, depending on the scope of the company’s activities and the very specifics of the client base. For example, for the operator mobile communications“customer outflow” will mean the latter’s complete transition to the “camp of the enemy” - with the termination of the contract and refusal of the company’s services. For a restaurant chain, for example, a “defector” will be considered a client who has reduced the number of visits from 3 times a month to 1.

It should also be noted that such criteria are quite individual - and should be determined by specialists within the company. By the way, analyzing customer data can help with this. And also answer other burning questions - for example, how much the company loses due to customer churn and which of the latter are potential “defectors”, that is, with a high probability of leaving in the near future.

We have already partially answered the question that regularly arises among many managers - “Why, exactly, should this bother me?” However, let's break it down point by point:

• Firstly, it is known for certain that retaining an old client is several times cheaper than acquiring a new one;
• Secondly, the company's losses in the long term (taking into account the lifetime value of each departed client) reach a decent size;
• Thirdly, customer outflow provokes indirect financial losses - the business reputation(and this means additional costs for its restoration) are missed additional features and potentially lucrative contracts.

Finally, customer churn analysis helps to see the systemic reasons for customer departure - and this can be anything from business processes that are far from ideal to, say, insufficient flexibility in specific conditions. pricing policy. Well, having found the reason, it’s easier to deal with the consequences - or even nip the outflow in the bud and save the proceeds.

Practice

So, with the phenomenon and its potential consequences We've got it figured out - but what can you do to prevent customer churn? Here you need to remember that the sooner the company understands that the client is going to leave, the sooner you can begin to influence him. Eg:

• Provide discounts on services;
• Invite clients to participate in special promotions;
• Start providing Additional services– ideally those that competitors have not yet thought of;
• Let customers know that they are valuable to the company and the company is ready to reward them for their loyalty - this is where cumulative discounts, various bonuses and gifts come into play, free shipping etc.

However, our main question is different: how to identify customer churn? A client’s departure can be influenced by a huge number of factors that a person (no matter how unique expertise he has) is physically unable to analyze. Plus, these factors - internal and external, social and economic, etc., etc. - in different time can influence the same client differently, and this further complicates the analysis process - manually, of course.

Data Mining algorithms, data mining, can analyze processes such as customer outflow with high reliability, while they take into account not only company data, but also a variety of external data reflecting influencing factors (from the dollar exchange rate to weather conditions).

Examples from real life mass – not so long ago we talked about how an Austrian mobile operator manages to manage customer loyalty using data mining methods. And here’s another one: independent researchers have set themselves the goal of quickly predicting a player’s departure on the day of the last login to the game – the Korean MMORPG Aion. That is, in fact, they decided to analyze the outflow of users in the most general case, regardless of whether they logged in for the first time or the five hundred and first time. In the end, they were able to teach the model to predict the departure of newcomers based on activity metrics with sufficient accuracy so that they could begin to influence them with various “goodies”, thus keeping them in the game.

The second question of interest to researchers is “Why do they leave?” remained unanswered (among 60 factors that could potentially influence the outflow of players, not one showed to be any significant). However, much more important was the fact that the model is able to provide a detailed analysis of the individual style of each player - which means it becomes possible to offer a potential new “defector” personal recommendations on how to play more effectively and get more pleasure from the game.

Summary

In conclusion, I would like to note that the analysis of customer data can benefit even a small company - yes, at first glance, not much information is collected about customers, but do not forget that external sources of information can (and should) be used in the analysis, which, as a rule, are publicly available - weather forecasts, exchange rates, demographic data, and so on.

Having learned to predict customer outflow, the company will not only be able to more effectively manage loyalty, but also potentially identify bottlenecks in its own activities - and in total this will undoubtedly have a positive economic effect.