Surviving the Recession: The Residential Market

Consumers are unlikely to want to drop their broadband connection, since many also use it for video entertainment as well critical things such as job searches, said Sally Cohen, an analyst with Forrester Research, but they may consider cutting back if they have broadband access elsewhere – at work, for instance – or they may look for a cheaper service.

2. Focus on customer retention. “The biggest pain for these service providers right now is losing the customer,” Scherf said. “It costs so much more money to reacquire that customer, if they can even do that.”

Retention strategies can be proactive, in the form of plans and packages designed to meet the needs of consumers facing hard times, or reactive, based on customer service strategies and processes that enable customer service reps (CSRs) to respond quickly when a consumer calls in to cancel a service. On this front, the wireline business has a lot to learn from wireless, Cohen said.

“A retention program must be a multi-fold strategy,” he said. “You have to train your CSRs in retention and loyalty and be really proactive and think strategically about how to meet needs in a downturn. A company also has to have the back-end systems that let you see what the activity is, and I think the telcos are only now coming up to speed with the fancy customer care systems we see in other industries that allow CSRs to be proactive and knowledgeable about their customers and their services.”

Some companies, such as Cablevision, have been very aggressive in retention efforts, giving their reps much more flexibility than telcos have in the past, Altman said. “I think that is changing, and it has to change. Still, the offer has to exist in a system somewhere.”

It’s also important to remember that retention isn’t just about offering lower prices, Altman said. “The number-one thing to do is identify who is vulnerable. The goal of retention experts is to figure out which customers are likely to leave -- 90% of the answer is figuring out who is vulnerable, and 10% is figuring out how to keep them.”

Determining the most vulnerable customers involves database analysis that looks at customers who left and why they left, takes into account what the competition is doing and figures out who is vulnerable going forward, Altman said. The service provider is then in a position to invest proactively.