The telecommunications sector in Africa is evolving from a network-centric to a customer-centric business model, where deeply understanding the individual behaviour of subscribers is becoming a competitive differentiator.
Craig Palmer, CEO of VAS-X
In Africa, retaining customers is often seen as more cost-effective than acquiring new ones in an environment of high churn rates, while the significant revenue opportunities that arise from loyal customers is certainly compelling.
This means that telecoms customer relationship management (CRM) platforms need to evolve from basic customer management tools towards more strategic value creation platforms. In other words, modern CRM systems transition a telecom’s primary focus from demographic segmentation to individual behavioural profiling to offer personalised services, deals and products.
Customer value management (CVM), therefore, represents the next evolution of customer relationships as it can drive retention, prevent churn and provide real-time one-to-one offers to customers.
Let’s take a closer look at some general trends that African telecoms face. The sector is characterised by growth, high levels of competition and diverse market conditions. Sub-Saharan Africa has seen significant mobile penetration but there are shared challenges across markets, including high churn rates and multiple SIM cards (from different providers) per customer. This complicates both acquisition and retention strategies.
For instance, in South Africa, research into the South African telecom market found that churn rates in the country are three to four times higher than in developed markets. If we look towards another market, according to a report by Bain & Company the prevalence of multiple SIM card usage in Nigeria, where about 40% of customers use more than one SIM, means telcos are faced with higher acquisition costs as they work to attract customers who may switch providers.
In this context it makes sense why retention after the hard work of acquisition, and extracting maximal lifetime value, is a key objective for telcos.
While still specific to South Africa, the same Bain & Company report found that reducing SIM swapping by just 3% could boost revenue, again highlighting the potential cost-effectiveness of retention as compared to acquisition.
But what does this all mean? At its simplest, telecoms markets across the continent are saturated with rising mobile virtual network operator (MVNO) competition and increased churn when compared to other regions. To this backdrop, there is a pressing need for telecoms providers to offer hyper-personalised customer experiences to enhance their customer retention strategies.
Modern CRM systems can, by their design, unlock strategic value creation capabilities. For instance, they can identify potential customer migration patterns, while helping operators understand individual usage behaviours. Through this real-time insight, telecoms businesses can develop preemptive retention strategies that are targeted as opposed to broad-stroke interventions.
Beyond this, a deep understanding of individual customers provides revenue optimisation opportunities, where telecoms businesses can upsell and cross sell through personalised offer strategies that identify individual customer value potential and then develop targeted pricing models.
The best way to think about this is through the concept of precision marketing. No longer is a telecom looking at broad demographic segments, but through intelligent CVM they are developing segments of one, so to speak. This enables businesses to create individualised engagement approaches that leverage real-time, comprehensive customer data insights.
Telcos can move beyond one-size-fits-all loyalty programmes, and can offer contextual rewards based on individual preferences and behaviours. Modern CRM platforms can use machine learning to optimise timing and the channel used in a telecom’s retention efforts.
Retention is about loyalty, and this deep understanding of the customer can create emotional connections through personalised experiences that happen proactively, at critical moments in the customer journey.
Consider this, if one operator launches highly personalised offers for specific customer segments, and subscribers take note and start shifting their spending patterns, this creates competitive pressure in the market for sophisticated customer understanding, meaning we are likely to see an increasingly accelerated migration from old legacy systems to modern, digital CRMs.
Telcos hold a unique position as digital gatekeepers. They have established billing relationships with their customer base. This means they have rich data repositories with multiple digital touchpoints, all living within the existing network infrastructure. Being able to take advantage of this position requires a rethink about the value a CRM platform should be enabling.
To get the most out of their CRM in order to capitalise on the immense personalisation and upselling opportunities that modern CVM enables, telcos need to consider talking to partners that are experienced in implementing software that provides a unified customer view with 360-degree subscriber profiling. It goes without saying that the best systems boast omnichannel engagement capabilities with real-time data processing and behavioural insight generation.
The goal, when looking at CRM in the context of telecommunications, is to transform the business from reactive customer management to proactive, predictive engagement. In other words, anticipate a customer’s needs before he or she articulates them. This approach to CRM represents the next frontier in telecommunications customer retention and maximising the lifetime value of each customer.