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Amdocs: Telcos still reactive to churn threat, need positive strategy

Most service providers understand that customer loyalty is the prime directive. The question is how do they tackle it while addressing customers’ biggest issue -- the network?

Network capacity, network coverage and voice quality are still the three most important drivers of churn, says a new report from Informa Telecoms and Media, sponsored by Amdocs. All of these network issues score over 90% in the opinion of 40 service providers from North America, Latin America, Western Europe and the Asia Pacific region. The respondents were all business executives with a strategic customer loyalty remit.

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The problem: a ‘loyalty gap’ according to Michal Harris, leader of the market insights group at Amdocs. From a carrier’s point of view, 80% of telcos surveyed said there are new providers and more competition entering the market. From the customer’s point of view, there has never been more choice and they are spending more on communications and entertainment than ever before. Customers are less loyal than in the past and yet the biggest challenge facing telcos – typically, network issues – are seen as a basic requirement by customers.

The challenge: telcos need to stop being reactive to customers, taking action only at the point of churn. They must be more proactive and implement campaigns that reward loyalty and provide personalized services. Of those surveyed, 80% indicated that loyalty would be important or very important by 2015, and 50% believed it would be embedded into strategy by then. Customer loyalty must also change from being seen as a cost center to being a profit center – the money is now coming from the relationship with customers, after all.

With a career in customer service with a major carrier, Amdoc’s Harris believes that a change in thinking is required. It will be difficult, culturally, but “a holistic approach is needed,” she says, “ the goal is to create an emotional bond with customers and to do this every layer of the company must be involved, from the most senior down through the organization.”

For instance, Sprint CEO Dan Hesse is often cited as implementing a compensation program that measured employees against the customer experience benchmark – a leader in this new thinking. “Measurement techniques need to mature as the industry becomes proactive,” says Harris, “not all service providers use a customer satisfaction index, some still just measure churn. In future we will see a customer loyalty index replacing the current measurements.”

Reflecting one of the most significant trends in the industry at the moment, Harris sees the customer being the agent that finally breaks down the barriers between the OSS and BSS worlds. Customers will have one profile based on requirements and ‘likes’ as well as on usage patterns and behavior. However, this will not be easy - only 21% of service providers say they have the necessary collaboration between their IT and customer retention and loyalty departments today to enable this.
An immediate goal must be consistency of service across channels – indeed the survey suggests that 40% of customers will pay a premium for a seamless experience across channels.

One of those channels is the social one. Harris sees a promising trend as telcos increase the resources in this area and half the respondents to the survey acknowledge the need to do so. Social media provides the means to be proactive. A service provider can monitor trends and react before the call center is snowed under. For example, says Harris, “say over 300 people complain about the battery life of a certain device, a service provider’s social channel can post announcements before customers’ react and deluge the call center.”

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© 2014 Penton Media Inc.

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