Customer Overboard!

Most carriers know that without a strong customer-retention program, their subscriber base eventually will sink. Traditionally, some wireless providers have used save teams to bring back customers who are trying to jump ship. Some, however, have discovered that towing in struggling subscribers before they float away is even more effective.

Save teams usually work like this: When a subscriber calls in and tells the customer service representative (CSR) that he wants to cancel service, the CSR transfers the call to the save team, which entices him to stay. Debra Depping, Western Wireless director of customer-service operations, said since her company started a 10-person save team three months ago to handle all service-cancellation calls, the total number of customer saves has increased tremendously. When a Western Wireless customer calls in, the voice-response unit tells customers to press a certain button if they are interested in changing their service. Those calls are routed directly to the save team, and employees in this group have extended training and enjoy the challenge of retaining the customer, she added.

At Omnipoint, calls are handled a little differently, said Tony Heyman, director of customer care. A CSR takes the call. If the customer is upset about something, the CSR will hand that customer over to the customer-retention team. Although all of Omnipoint's CSRs are well trained, he said, the customer-retention team has more experience in handling complex customer issues.

"We are a new company, and sometimes we hit speed bumps," he said. "We use this group to help work through those issues and smooth them over for customers."

Denise Nieves, ALLTEL vice president of marketing services, said her company makes it a point to educate all of its CSRs so they feel comfortable handling disconnect calls. It also has another team of people who work with more sensitive or complex accounts.

A New Approach Some save teams have been afloat for years, and they have served carriers well, said Stephen Huson, Lightbridge product development manager, but a new trend is evolving in the industry. Lightbridge recently completed market research with about 20 different carriers, and the survey showed that most carriers have implemented save teams in some capacity. Carriers now are starting to combine them with pro-active customer-service programs.

"Many moons ago, it was strictly a save team that would take all disconnect calls, but as time has progressed, our corporate philosophy at ALLTEL about how to deal with retention has changed," Nieves said. "I'd like to put save teams out of business by attacking churn before it even happens."

A pro-active approach sounds great, but some carriers are hesitant to add departments to their customer-care divisions due to cost and efficiency concerns. Heyman said Omnipoint is cautious about spending shareholder money, and a simple mailout or phone call to every Omnipoint customer could cost thousands, even millions, of dollars. Heyman wants to be sure Omnipoint would be contacting the right group of people before it creates a full-blown, pro-active retention program. Instead, it uses customer satisfaction surveys to get an accurate feel for customer satisfaction.

Huson said some carriers are reluctant to work pro-actively simply because they do not have the information they need to segment customers efficiently and determine the action to take. Predictive technology can arm them with that information.

Sending Out an S.O.S. "In a save-team environment, you only have one chance to save the customer, and when it is an outbound call, you only have one chance to increase their loyalty," Huson said. "You have to bring the data to customer service representatives rather than having them go get it."

For example, ALLTEL segments its customer base through technology that its own analysts and statisticians developed in-house. It can identify a customer's propensity to churn within a 90% accuracy rate, three months in advance. The company's marketing information group looks at a customer's usage, historical behavior, demographics, credit and other variables to predict the likelihood to churn. The group updates the information monthly by determining whether a customer is on the most cost-effective rate plan or not.

"We try to maintain a close relationship with our customers and monitor changes so we can offer suggestions," Nieves said. "We don't usually like to wait for customers to tell us what they need."

Matt Bixler, Lightbridge product manager of customer-management products, said some carriers have virtually no understanding of which customers are at risk. His company builds products to determine who is unhappy through a 4-step process: measuring, analysis, profiling and acting.

"Our philosophy is that the more successful you are on those first three steps, the more successful you will be on your 'act' step," he said. "With outbound calling, the technology lets you know who to contact pro-actively before they call you, and what to say to them."

Once you have that information in place, you can build scripting guidance into your computer system so your CSRs have added confidence when they deal with angry customers. The script tells the CSR what to do to save that customer based on that person's value and the problems he is experiencing. It allows you to organize your pro-active campaign so you can target one phase toward high-value customers.

"If a customer uses 200 minutes a month but pays $1 a minute because he is on the emergency plan, he should get on another rate plan," Huson said. "Eventually, he will figure that out and go to the competitor."

So you could pro-actively come up with a better rate plan, which would decrease your revenue at first but increase it in the long-term by retaining the customer.

On the other hand, if a customer is experiencing a problem with dropped calls, you could suggest he bring his phone in for free service. If he is a high-value customer, you could even offer to replace the phone. The trick is figuring out who those high-value customers are.

Bill Brunette, Matrixx Marketing director of market development, said Matrixx uses technology to score subscribers according to revenue value and propensity to churn.

Matrixx separates customers into four quadrants: high value, high churn; high value, low churn; low value, low churn; and low value, high churn. You can use the information to come up with targeted offers and incentives.

"We make those models and come up with an overall lifetime value score," Brunette said, "and that lifetime value score helps you determine who your most valuable subscribers are, in terms of month-to-month revenue, and who are ones that need to receive special attention."

Leap of Faith If predictive technology works so well, why hasn't every carrier installed it yet? According to Omnipoint's Heyman, it costs a pretty penny. Once again, shareholders' money buys the software. Part of Omnipoint's hesitation to invest in predictive technology is that it wants to be absolutely sure it will work effectively before it makes a decision.

"I've looked at a number of these systems and have been involved in the evaluation process in some of them, and people are really still sorting out their effectiveness," Heyman said. "Before you throw a lot of shareholder dollars into it, you have got to make sure that it is going to do the things for you that you want."

Douglas Strubel, project manager at The Richmark Group of Chicago, said one way to assess whether the cost of predictive technology is worth the investment is to decide if it leverages your knowledge of your customers. If it does, it eventually will pay for itself.

"Knowledge is a competitive tool," he said. "One thing you know about your customers that your competitors do not is what their calling activity has been. Unlike the competitor across the street that may give him a new phone, you already know the value of that customer. Your competitor has no idea who your good guys are and who your bad guys are. You should make sure you use that knowledge as best you can."

No matter how you slice it, Strubel said, a pro-active program will be expensive. You need to consider the cost to develop a retention program, which would include internal and external expenses. You also need to think about the cost of the software, the cost to implement it and the cost of the actual incentive you would offer a person to stay. The bottom line, however, is worth it, he said.

Western Wireless's Depping said her company easily can justify the cost of keeping its pro-active group running based on the number of subscribers it has saved. Outreach, a group of about 10 Western Wireless CSRs, saved almost 1,000 accounts last year and is close to 50% of the same saves in the first three months of 1998, she said. Carriers need to put the pro-active step into place, then compare their performance to the days without it, she suggested.

But those carriers that are concerned about pulling resources from other departments or spending too much money on predictive technology can still put a pro-active program together, she continued. Western Wireless added a pro-active approach and a save team without taking away from other areas at all. The inbound save team integrates pro-active calls into its regular retention duties, she said. Part of the time it handles normal CSR calls, but disconnect calls are a first priority. Conversely, the Outreach group provides additional support for the inbound group if the call volume gets high.

"We use the groups to back each other up," she said, "and I get around the cost by hiring CSRs that are multitalented and having them handle multiple responsibilities."

She considers the company's outbound retention program a success, even though it has not yet purchased churn-predicting technology. The company has done its own survey work, and through analyzing the database, Western Wireless's Outreach group can identify customers likely to cancel service. The company also developed an intranet database reference tool called Einstein. Einstein information is used to detect churn patterns in different markets so that CSRs know who to contact outbound. It also has information on competitors' markets so that the CSRs know what they are up against when an unhappy subscriber is on the line.

An outbound calling program can work side by side with your save team with little cost to you. In order for it to work, though, your entire company -- from the top, down -- must support it. The money you do spend will be recovered quickly and is worth it in the long run as your most valuable customers remain loyal to you. With the number of competitors increasing in every market, your retention program could determine whether your company will sink or swim.

You also can implement a billing system that monitors real-time usage. There is a variety of methods that billing systems can deploy to bring this functionality to customers. Some systems address the issue by introducing prepaid, fixed rate plans that expire after a subscriber reaches a predetermined usage level. But this system also limits rating flexibility. In addition, it is important to know how frequently the call records are being monitored. If there is a significant lag of time between usage and call-record processing, users may go beyond their prepaid allotment.

For a billing solution to offer true real-time call processing, the system needs a data link from the switch to the billing platform. With this real-time data link, you can process call-detail records (CDRs) at any interval. As the charges near a pre-defined limit, the subscriber can be routed into the customer-service department to determine the proper course of action for that account. Under this method, the account usage can be determined with unique rating plans as airtime usage is recorded. In fact, some systems are sophisticated enough to include concepts such as account- pooling discounts even though it means that individual phone charges will change based on certain usage conditions.

The billing system solution is attractive for several reasons: it provides the prepaid subscriber with the same rating flexibility that other subscribers enjoy, it is cost-effective, and subscribers don't have to rely on their phones to initiate or re-initiate service. In addition, some carriers worry that contacting customers too often can become annoying and end up driving them away. ALLTEL developed a "customer-touch strategy" to make sure it does not bombard customers with too many phone calls or mailings, or ignore then with not enough, said Denise Nieves, ALLTEL vice president of marketing.

"We try to only allow the customer to be touched so many times during the year, especially in our particular situation with our multiple product lines," Nieves said. "We have a team in place that is more or less the customer-touch traffic cop. They notice that there is only one touch left with this particular customer so that we can best take advantage of it."

If ALLTEL runs a telemarketing campaign to sell a new service to an existing customer, and that customer has not bought anything after a certain number of phone calls, ALLTEL suppresses that person from any future list. The company also captures disposition codes, which document the customer's attitude on just about every conversation. If he was bothered by a telemarketing call, his name is taken off the list. All of the information is housed and analyzed through the company's marketing information group.

"The more times we extend information to the customer or call him just to find out if there is anything we can do with his service on a very pro-active approach, we are finding it has an impact in reducing our overall churn," Nieves said.

Whether your company uses an inbound save team, a pro-active approach to customer retention or both, your customer- retention teams are a tremendous force in your company. If they are having a good week, you may save 50 accounts; if it's an off week, you could lose those 50 customers. Because such a large part of your company's fate lies in their hands, it's important that you make them feel completely at ease in their jobs, first by training them well, next by trusting them.

"The difference between the customer-care representative and the save team is that typically the save-team members have been on the customer-care team longer, so their length of service is longer," said Debra Depping, Western Wireless director of customer-service operations.

Her company's save team receives short workshop training sessions from the company's professional development group that include save techniques so they can better handle customer objections.

In addition to giving employees detailed training, ALLTEL has worked to increase the tenure of its customer service representatives (CSRs), said Denise Nieves, vice president of marketing. This way, the more experienced representatives handle sensitive calls, as opposed to having CSRs rotate around the call center. "They are becoming more comfortable," she said, "and it's a major focus of ours to empower all of our CSRs to make the right decision and to handle the situation based on what the customer is telling them."

ALLTEL, Omnipoint and Western Wireless' save teams and outbound calling programs have worked well because they trust their CSRs to use their best judgment when it comes to saving customers. Placing unhappy customers on hold while you pass the call around only angers them further, said Tony Heyman, Omnipoint's director of customer care.

"We have a lot of people on the floor, and everyone is empowered to be flexible and to own the customer issue," he said. "In fact, we hold them accountable to get the customer issue resolved, and they have the flexibility to give the customer what is a reasonable solution."

Of course, there have to be boundaries, said Bill Brunette, Matrixx Marketing director of market development. Not every customer is worth an expensive incentive. Matrixx, which acts as a call center for carriers, uses technology to identify the highest value customers. Then, it works with wireless providers to identify those boundaries before it begins save team or outbound calling services.

"We give whatever is appropriate for each situation," he said. "We are not going to give a $300 credit to every caller. That doesn't do any good for the carrier."