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Integrated Insight Strategy for Customer Retention
Tony MooneyCustomer Retention Summit, London14th Oct 2009
2Customer Retention Summit October 2009
Agenda
• What do we mean by ‘integrated insight’?
• Steps to Success
• Examples and Summary
3Customer Retention Summit October 2009
For retention, two important domains need an integrated, insight-driven approach
Product
AcquisitionCustomer Experience
DifferentiatedPropositions
Customer Journey
Brand
What is ‘integrated insight’?
Legal
Policies Processes
CompetitionChannel
Financials
Customer Behaviour Business Behaviour
4Customer Retention Summit October 2009
Insight techniques need to be integrated in the right sequenceInsight is a business process supported by technology
What has changed?
Why?
What to do about it?
What is customer behaviour Vs organisation behaviour
or process?
What will happen?
What is important?
What is ‘integrated insight’?
Propensity Modelling
Scenario Modelling | Forecasting | Segmentation
Portfolio Dynamics Analysis and Reporting
Financial Sensitivities | Profiling | Segmentation
Market Research | Exit Interviews | Internal Reference
Customer Process Mapping | Policy Analysis | Portfolio Analysis
Insight Technique
5Customer Retention Summit October 2009
Right-time Decision support for multi-channel marketingNot ‘some-time’ analytics
Creative
Develop Review Plan Optimise Execute
Business &ProductStrategy
Customer Strategy
Planning
DecisionManagement
Analytics
DataAcquisition
DataManagement
Strategy Product Proposition Offer
Base DataOptimisation
Reporting& Profiles
OpportunityDiscovery &Data Mining
Value &PerformanceImprovement
Strategies
CampaignEvaluation
CampaignReporting
Analytical Domain Operational Domain
ResponseCapture & Management
CandidatePropositions
BudgetsTargetsOperationalConstraints
Creative Requirements
Rapid Insight
ScenarioBuild
Model Build&
Maintenance
BuildPlan
Third PartyData Purchase
Report & review last cycle, define next steps
Optimisation
& Iteration
Plan
Specification
Define new inputs, requirements, assumptions
ScenarioOptimisation
Real-timeAssignments
Decisioning &OptimisationDeployment
Creative & ContentManagement
‘Offline’ ‘Online’
Timing is key
What is ‘integrated insight’?
6Customer Retention Summit October 2009
Issue: IT has not delivered for Marketing Increasing demand for integrated technology from marketing
“Marketing vs. Technology is a cage-fight between ignorant
marketing people who expect technological miracles immediately
and the propeller-heads who talk only about the benefits of some
coding philosophy that no-one this side of the Klingon Empire really
understands.”
CMO Magazine
What is ‘integrated insight’?
7Customer Retention Summit October 2009
Agenda
• What do we mean by ‘integrated insight’?
• Steps to Success
• Examples and Summary
8Customer Retention Summit October 2009
Establish Customer Metrics using financial modelling, profiling, predictive modelling and segmentation
Potential Value
CurrentValue
Low
High
Low
Low High
Retention
High
High
Predictive Modelled
= Customer Lifetime Value
Steps to Success
9Customer Retention Summit October 2009
Product YCustomer
Base
Product XCustomer
Base
The Washing MachineCustomer portfolio dynamics must be understood and mapped
.. by recognising customers as individuals & tracking and measuring customer behaviour better
value evaporation
Voluntary Churn
Compulsory Churn
Migrations(soft churn)
Migrations/downgrading
Inactivity
Revenue Pool
New Revenue
New Revenue
Voluntary Churn
Upgrading
Steps to Success
10Customer Retention Summit October 2009
Select and focus on material, addressable areas of churn that offer best chance of success
Strategy will also have to recognise that some drivers of churn will not be addressable
Net Churn pa
Goal ?% ? pa
Target Churn reduction ?
New customers
At renewal
At Home move
Re-acquired customers
Est Materiality pa
Price Rise
Channel mis-selling
Focus areasUniverse
illustrative
Competitor offer
Steps to Success
11Customer Retention Summit October 2009
Sequenced and integrated, closed loop consumer experience - for decisions and data capture across all channels
Uninterested & rejecters
Interested Enquirer On boarding
Subscribe Establishment In LifeNursery Renew or Cancel
Ex Customer
Suspect-prospect-customer journey
Value-based acquisition
Actionable measurement of consumer dynamics
Informed Interactions: Recognise, Remember, Value
Differentiated propositions and flexible, reactive consumer strategies4
1
3
2
Marketing ‘with memory’
Steps to Success
12Customer Retention Summit October 2009
Customer Lifecycle Management requires Multi-dimensional, dynamic segmentation
illustrativeUnderlying
DriversLifecycle state Triggers
& EventsProduct Holding Payment Exit Routes
AffordabilityAffordability
Value for MoneyValue for Money
FraudFraud
ChannelMiss-selling
ChannelMiss-selling
New not paidNew not paid
New in contractNew in contract
New 12-14 mthsNew 12-14 mths
Winback <14 mthsWinback <14 mths
Renewal <14mthsRenewal <14mths
14-24 mths14-24 mths
2-4 years2-4 years
Over 4 yearsOver 4 years
HomemoveHomemove
Price RisePrice Rise
Service ProblemService Problem
Competitive OfferCompetitive Offer
Offer EndOffer End
ChurnAttempt
ChurnAttempt
One ProductOne Product
Multiple ProductsMultiple Products
BundleBundle
Premium ProductPremium Product
RegularRegular
Failed OnceIn 12 mths
Failed OnceIn 12 mths
Failed multipleIn 12 months
Failed multipleIn 12 months
Call-to-cancelCall-to-cancel
Cancel PaymentCancel Payment
1 2 3 4 5 6
CompulsoryChurn
CompulsoryChurn
Direct DebitDirect Debit
• Integrated
• Sequenced
• Operationalised
• Timely
• Customer-centric
Steps to Success
13Customer Retention Summit October 2009
Retention strategy will under-perform without creating differentiated propositions for key customer states
Tenure
Chu
rn R
isk
High
5 years +
New kit£XX offer
Samplepremium
FreeProduct
FreeProduct
Product deal
Service
DD migration
On-lineExtra kitFull price
Service
Service
Service
Service
Tenure Basedoffer
Service
Service
Tenure Basedoffer
Tenure Basedoffer
ServiceService
Samplepremium
Samplepremium
Product deal
Extra kitFull price
Extra kitFull price
Extra kitFull price
Samplepremium
New kit£XX offer
New kit£XX offer
New kit£XX offer
On-line
Product upgrade
Extra kitoffers
Pay up front3,6 months
Free content
Replace Old
equipment
Optimisedupgrade offer 2
Optimisedupgrade offerOptimised
upgrade offer 3
Free content (14 days, free)
Free contentWeekend (free)
BOGOFcontent
Sample DVD
Mid tierSample
CONTENT£5 for x months
CONTENT£5 for x months
Extra kitoffers
Extra kitoffers
FreeProduct
Free content
Product upgrade
Existing proposition
New – product based
New – Sample based
New – pre payment
New – anniversary
Low
Sample DVD
BOGOFcontent
BOGOFcontent
Free content
FreeProduct
Optimisedupgrade offer 2
Optimisedupgrade offer
Optimisedupgrade offer
Optimisedupgrade offer 2
Replace Old
equipment
Fairly well covered, but only
with introduction of new propositions
(green)
illustrative
Steps to Success
14Customer Retention Summit October 2009
Strategies for Customer Acquisition & Retention must be joined up
Need for New Customers
Need to Keep Existing Customers
Financials
Customer Expectations
Customer Understanding
Marketing Techniques
Metrics
• Scale economies/market position• Return against CLV/Payback
• Set by Marketing & Sales Promises
• Researched• Assumptive
• Interruption advertising to all• Offers, incentives, discounts
• Volumes• Costs
• Market position• Retained volume/value at
lowest cost
• Set by experience
• Transactional• Behavioural
• More targeted communications• Offers, incentives, discounts
• Volumes• Values• Costs
Steps to Success
15Customer Retention Summit October 2009
Agenda
• What do we mean by ‘integrated insight’?
• Steps to Success
• Case Study and Summary
16Customer Retention Summit October 2009
An integrated insight approach transformed churn management
Starting Point Delivering the solution Building on success
• Success in growing its customer base but it came at a price – an increasing customer churn problem
• Internal analytical teams and other consultancies had been tasked with solving the problem, but none of them were able to tell the executives what was really driving churn
• Focus on diagnostic, hypothesis-based approach
• Concentrating only on the material issues
• Capability to enable analysts to deliver rapid profiling
• Development of portfolio analysis
• Impact analysis of organisational policies and processes
• Interpretation and synthesis to turn insight into a coherent strategy
• Scenario modelling
• New churn strategies and policies implemented
• Automated portfolio dynamic reporting
• Propensity Modelling based on strategy objectives
• Proactive retention programme
• Optimisation of retention budgets
Case Study: Integrated insight for Churn Management
17Customer Retention Summit October 2009
Key dynamics were identified and remedial initiatives implemented and measured
Key Trends Identified
Growing instability in client baseDamaging “offer culture”
Churn risk from basic channelsHigh churn from winbacks
Falling quality of acquisitions
Main Initiatives
Offer “Washout” Saves & WinbackProactive Retention
Winback Optimisation Acquisition Survival Targeting
Churn “Deep-dives”
Benefits
Increased % of stable customers in the base
Lower churn calls as % of baseBetter profile of acquisitionsOptimised Winback activity
Case Study: Integrated insight for Churn Management
Profiling & Segmentation
Dominant Insight Technique
Modelling & Targeting Reporting & Evaluation
18Customer Retention Summit October 2009
The rewards for getting it right were considerable.. Churn was reduced by 25% - £100m in retained revenue
Actual (Disguised) Example
Integrated Insight Programme
Case Study: Integrated insight for Churn Management
19Customer Retention Summit October 2009
Integrating insight and making it actionableKey messages for improving retention performance
Create customer value metrics and align to P&L sensitivity
Integrate and operationalise prospect-customer journeys that manage customer state
Drive differentiated customer propositions not just different-coloured envelopes
Put more science into acquisition strategy
Be clear on materiality and let this guide where you focus efforts
Understand portfolio dynamics and the impacts on enterprise value
1
2
3
4
5
6
Summary
20
Thank you