CASE STUDY

Customer Lifetime-Value Prediction for a Telecommunications Company Helps Reduce Customer Attrition Levels

Dec 28, 2017

The client: telecommunication company

Area of engagement: Customer lifetime value

The global telecommunications industry is mainly driven by the ongoing innovations and technological developments to offer a wide range of services at low-cost margins to the customers. With the relative significance of the internet, the telecommunication market has manifolded in the last two decades, and the sector is expected to gain significance in the coming years. With the relentless demand for agile and seamless services among the target audiences, global telecom providers are striving to improve their network and offer expanded services to their customers. Moreover, the telecommunications space is also gaining significance owing to the affordability of services and the demand for high internet speed. Although the telecommunication space is witnessing a promising growth owing to the additional services such as storage area network, storage products, and storage networking services; certain factors pose a hindrance to the growth of the telecom space. These factors include:

  • Increasing competition: In the recent years, there has been a considerable increase in the competition among the OTT services space. It is estimated that approximately 2.5 billion people worldwide use message app which is further affecting the text services offered by the telecom space.
  • Innovations: With the integration of IoT services, connecting devices have become more agile and seamless. It is estimated that with the help of IoT services, connected devices are estimated to reach 21 billion by 2020. This relentless growth in innovations is putting a lot of pressure on the telecom space to develop a platform that supports the technology.

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To enhance connectivity and offer reliable solutions to the customers, organizations are necessitating the need for a customer lifetime value. Customer lifetime value determines the value of the money that the company spends on acquiring new customers and the customers worth over a specific period of time. The customer lifetime value can be calculated from the revenue generated by the company in terms of the expenditures per visit, the services utilized, and the average customer value by week, and year.

The Business Challenge

It is estimated that the revenue generated by the telecom services is expected to reach almost 1.2 trillion Euros in 2019.

A prominent client in the telecommunication space with a considerable number of service offerings spread globally wanted to identify the profitable customers and determine their average revenue per use. The client wanted to determine the total value of the customers by source, channel, and campaign. With the help of a customer lifetime value study, the client wanted to efficiently spend their resources to acquire potential customers and retain the most profitable ones. Moreover, the client also wanted to seek ways to make important business decisions about sales, marketing, and product development, and offer reliable customer support to the customers. Through the solution, the client further wanted to develop and maintain a long-term relationship with profitable customers.

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Customer Lifetime Value Solution Benefits

Strategies that we recommended based on our analysis to drive customer loyalty.

The customer lifetime value solution offered by Quantzig helped the telecommunications provider profile the right customers and build a long-term relationship with the customers. The engagement also sought ways for the client to ascertain sufficient marketing efforts to reduce churn rates and ensure right marketing investments toward the right clients. The engagement also sought ways to develop a marketing strategy that maximized retention and net profit and minimized acquisition costs and remarketing costs. Moreover, the engagement helped the client achieve a higher retention rate by increasing spending on customer service.

Customer Lifetime Value Predictive Insights:

The customer lifetime value offered by Quantzig created retention-based models to reduce the attrition rates further. The solution optimized interactions and conversations to drive repeat purchases, customer referrals, reduced support costs, and price premiums. The solutions also offered real-time insights into the customer based on future cash flows and efficiently distinguished customers in terms of the profitable, nearly profitable, and unprofitable segments.

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