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It's a fiercely competitive market, and for mature entrants in any sector — whether it be telecom, banking, insurance or retailing — retaining profitable customers is now the number one business plan.

SAS, a leader in business intelligence tools, provides operational and analytical CRM (customer relationship management) solutions for companies such as Citibank, StanChart, Orange, Goodlass Nerolac and BPL.

These help in gathering data at the various multi-channel customer contact points and in planning, targeting, acting and learning from the data generated.

Recently, SAS implemented its customer retention solutions at AirTel in New Delhi to reduce a big problem telecom carriers are facing today — churn. That means losing customers to another carrier.

Gourish Hosangady, managing director and CEO, SAS India, explains how IT solutions can help tackle churn, the common denominator in the world’s liberalised telecommunications industry, which is now hitting India too.

How bad is the problem of churn, and why is the telecom industry more vulnerable than the other sectors?

Customer acquistion and retention has been a concern for all industries, but more so for the highly liberalised telecom sector.

The entry of the fourth cellular operator has fiercely increased competition in this industry and so it is imperative to understand the reasons for churn and to contain them. In India, the month on month churn is estimated at 3.5%.

Churn costs European and US telcos close to $4 billion each year. The annual churn rates globally of 25% to 30%. Carriers at the upper end of this spectrum get no return on investment on new subscribers because it takes typically three years to pay back the cost of replacing each lost customer with a new one.

In your experience, what are the commonest reasons for customers to switch from one service provider to another?

Some of the common driving factors for churn are poor performance, poor customer care, rate plans and hanset issues. We’ve for instance found that contact centres can drive away customers to a rival service provider if a customer has to wait long before his problem is looked into.

Globally, handset issues have made a difference too — for instance, a telco not being able to provide GSM or CDMA service.

Regarding churn, something interesting that’s been noticed is that it’s much higher in the case of pre-paid services, with a churn rate of 8:1, than in post-paid service where the rate is 3:1.

The idea of pre-paid cards is that the customer will mature to become a post-paid one and so it pays to retain him too. After all, it’s five times more expensive to acquire a new customer than to retain an existing one.

All this wouldn’t be difficult if you have proper operational and analytical CRM tools in place that would help segment and analyse customer behavious and predict their propensity to churn.

In a rapidly changing telecom market, it is necessary to proactively strategise and service customers so as to retain the high value ones.

Analytical customer retention solutions would help identify the high-, mid- and low-value customers and the valuable ones who are most likely to cancel services, and their reasons for doing so. They would also help in better campaign targeting and a more focused strategy.

In the case of a client such as Sprint, what kind of demands would a company that’s a global leader in the telecom industry have and how would CRM solutions help?

Our solutions give Sprint a central repository that makes things easy for its marketers. The multidimensional data base (MDDB) that Sprint has, let internal sales and marketing groups research customer information from their desktops via the Sprint intranet.