1. Maximizing Customer Retention
A Strategic Approach to Effective Churn Management

2. Companies can achieve better retention rates,
reduce acquisition costs and boost market share by
addressing the root causes of customer attrition and
applying targeted treatment strategies that involve
all service channels and functions in an end-to-end
effort to improve the customer experience.
Page 1

3. The Challenge
Today’s customers want it all—com- Accenture’s most recent global
petitive pricing, value for money, and research exposes the scale of the
above all, high quality service. What’s challenge. Despite a small overall
more, they won’t hesitate to switch decline in switching levels, two in
providers if they don’t find what three customers have changed provid-
they’re looking for. Even in industries ers in the past year in at least one of
where satisfaction is relatively high, the industries covered in the research
loyalty levels are declining. And thanks because of dissatisfaction with service
to social media—the ultimate in word- levels (see Figure 1). Consumers,
of-mouth communication—individual moreover, perceive few barriers to
switching decisions can have rapid and switching in their constant quest for
widespread consequences. differentiated offerings (see Figure 2).
Figure 1: Percentage of Customers Who Switched by Industry Due to Poor Customer Service
26%
Retailers 40%
18%
22%
Banks 33%
15%
19%
Internet Service Providers 25%
15%
17%
Wireless/Cell Phone Companies 24%
13%
16%
Home Telephone Service Providers 19%
14%
13%
Cable/Satellite Television Service Providers 20%
9%
10%
Life Insurance Providers 18%
6%
10%
Hotels 15%
6%
9%
Utility Companies 9%
9%
8%
Airlines 12%
6% Global
4% Emerging Markets
Another Type 3%
5% Mature Markets
Source: Accenture 2010 Global Consumer Research
Page 2

4. Figure 2: Perception of Providers Offerings and Shopping Behavior
Companies are the It’s too much of a hassle I consider shopping
same in terms of to switch providers around for better deals
offerings and services
Disagree Agree Disagree Agree Disagree Agree
Travel and Tourism 44% 11% 61% 8% 12% 53%
Life Insurance Providers 33% 18% 28% 28% 33% 26%
Consumer Goods Retailers 40% 13% 63% 7% 11% 51%
Consumer Electronics Manufacturer 39% 11% 55% 8% 11% 50%
Retail Banking Providers 33% 20% 32% 28% 34% 27%
Internet Service Providers 34% 15% 27% 27% 28% 29%
Cable/Satellite Service Providers 33% 19% 28% 29% 33% 26%
Landline Phone Service Providers 35% 17% 27% 30% 34% 22%
Wireless Phone Service Providers 34% 20% 37% 26% 30% 31%
Gas and Electric Utility Providers 27% 30% 25% 42% 47% 20%
Global Average 35% 18% 38% 24% 28% 33%
Source: Accenture 2010 Global Consumer Research
Switching varies by industry, but • Few organizations are masters of The upshot: Unhappy customers who
customer churn is plainly a universal retention marketing. The ability too often suffer the consequences of
problem—a cause for concern since to deploy highly targeted offers organizational processes optimized
the cost of acquisition is always in-market across multiple channels to deliver operational efficiencies,
significantly higher than the cost of at speed; to learn which offers work instead of positive customer experi-
retention. Indeed, our research find- most effectively, and scale them; and ences—poorly executed product or
ings suggest that most companies to take full advantage of customer- service launches, erratic or conflict-
with large and diverse customer or initiated contacts in order to make ing experiences across multiple chan-
subscriber bases are struggling to highly-targeted retention offers. nels, and inadequately trained and
retain customers. Yet few understand • Loyalty programs are often equipped employees.
exactly why customers leave them— inconsistently executed; and incen-
and fewer still know what to do tives for front-line employees are
about it. frequently misaligned with overall
• Many organizations lack the tools retention goals.
to identify the drivers of churn. • Many companies lack cohesion across
The ability to correlate churn to their customer interaction channels—
actionable customer segments, for Web, call centers, retail stores—or fail
example, is critical to retaining to implement incentives for front-line
customers by proactively addressing employees that are aligned with
their needs. overall retention goals.
Page 3

5. The Solution Consider, for example, the case of one bottlenecks and take pro-active steps
North American telecommunications to remove them. Success also requires
A few companies are winning the provider, which boosted incremental cultural change and commitment to
battle for customer share. The margin by $1 million a month as a result a permanent business model that
secret of their success: Combining a of a 10 basis point improvement (e.g. that may challenge the organization’s
top-down, enterprise-wide retention moving from 0.5 percent to 0.4 percent) beliefs about who owns customer
strategy with sophisticated analytics in its customer churn rate (see Success relationships.
that enable them to “micro-segment” stories sidebar for other examples).
2. ecognize that not all customers
R
their customers.
are the same. Customer value and
Guiding Principles of Successful
Leading players have established a profitability are key elements of the
Churn Management
company-wide culture of accountabili- company’s retention tactics.
ty for churn management across chan- In many markets, growing the custom-
er base has been all about the acquisi- 3. uild a new set of capabilities.
B
nels and organizational siloes, with
tion of new customers and retention Acquire a detailed, fact-based under-
the core tools to support integrated
marketing has typically come a distant standing of customers’ intentions and
execution. As a result they have been
second in terms of senior management what makes them switch; get offers
able to reduce customer attrition,
attention and resource allocation. to market swiftly, using a rapid “test,
improve customer loyalty, and increase
To reverse this legacy mind-set and learn, and scale” mode; deploy real-
both revenues and profitability.
manage customer attrition effectively, time treatment tools across customer
Accomplishing this goal requires organizations need to adhere to three interaction channels that will ensure
significant and simultaneous changes fundamental principles: the right retention decisions by
in many areas of the organization, as weighing customer churn propensities
well as a committed leadership team. 1.
Ensure the support of senior against customer value.
But even relatively small improve- leaders, and a strong governance
structure. Accountability requires Organizations with the commitment
ments in churn can pack a punch on
the ownership of fully engaged to adopt these principles can focus
the bottom line.
stakeholders with the confidence and on building an appropriate operating
authority to challenge organizational model to manage churn.
Page 4

6. The Operating Model Figure 3: Churn Management Operating Model
It’s essential that any operating model Churn Command Center
take an end-to-end approach to churn
management—from overall program Program Management
management, through analytics and
retention marketing, to the manage- Multi-segment Decisioning
ment of channels (see Figure 3).
Customer Insight & Analytics
Multi-dimensional Analytics- Closed Loop Feedback
Closed Loop Feedback
(Customer, Behavior, Value)
Retention Marketing
Channels
Retention Interactions Customer Lifecycle Interactions
Assisted SMS, Mail, Assisted, Self Service,
Self Service, E-mail Face-to-face Channels
Face-to-face
Channels
Copyright © 2011, Accenture LLP, All rights reserved.
Page 5

7. CAR—Driving Success Our patented Customer Analytic Users can benefit from fast and
Record (CAR)1 database includes cheap experimentation to develop
with the Right Data thousands of variables and customer-targeting models in just
How do you know what data uses proprietary methods built a few hours. And because CAR
really matter to your business? over years of experience to pinpoints the data that matter,
There are thousands of pinpoint those variables that it significantly outperforms
customer attributes that one will be useful in a particular traditional approaches to raising
could potentially collect, and situation. The CAR provides a sales campaign closure rates.
determining the most important single view of the customer for
is not straightforward. use in analytics and modeling.
It also provides a framework for
Accenture tackles the challenge standardizing and automating
by constructing a comprehensive analytic processes, as well as
view of the customer and the reducing the effort involved in
interactions with the customer scoring different segments.
and the company across
all channels.
The Churn Command Center: necessary cultural changes, including the customers' value to the company
An Integrated, Cross-Functional the introduction of new performance in terms of both current and future
Approach metrics and incentives. And because revenue and profitability, as well as
The Churn Command Center is the its decisions affect the enterprise as their influence on other customers.
nerve center of a successful churn a whole, it’s vital that the company’s They also infer the drivers of churn
management program. Spanning senior leaders are involved in setting by using multi-dimensional analysis
organizational boundaries and central- the direction and governance of in novel ways. Correlating churn with
izing churn improvement decisions, the churn management program it the interactions a customer has had
it streamlines the end-to-end churn coordinates. with the company can trigger reten-
reduction process—across analytics, tion treatments, as well as identifying
marketing, channels, IT and finance— Customer Insight and Analytics: areas where the customer experience
and drives swift and timely course Understanding Why Customers needs to be improved. This may sound
corrections based on a closed-loop Churn straightforward, but it requires the
feedback around the effectiveness of Retention strategies based on cus- ability to build a service interaction
existing treatments. tomer value and profitability are criti- history across all interaction chan-
cal to success—hence the importance nels—retail, contact centers, Web
Thanks to its cross-functional
of analytics. and Integrated Voice Response (IVR)
structure, the Command Center
systems (see CAR sidebar).
eliminates the inefficiencies caused By leveraging a diversity of data—
by organizational bottlenecks, thereby demographic and behavioral (products, Once a churn “hot spot” has been
significantly accelerating the time- usage, interaction), as well as identified, and its churn drivers
to-market of retention treatments. value-related—retention analytics can inferred, the right retention treat-
It is also responsible for driving any predict just when and why customers ments can be developed and tested.
are likely to churn. They determine
Page 6

8. Success Stories • A major European wireless • A French telecommunications
operator reduced churn by operator leveraged churn
By taking the strategic, 53 percent—thanks to a analytics and churn prediction
systematic and holistic approach micro-segmentation strategy models to develop both
to customer retention embodied that revealed the distinct inbound and outbound
in the Churn Management characteristics of high-risk marketing campaigns—and as
Operating Model companies customer segments and a result realized a 250 percent
worldwide have been able to thus enabled a targeted and increase in campaign response
reduce churn and boost revenues: differentiated marketing and a 23 percent improvement
• A leading US wireless provider campaign. in customer lifetime value.
was able to cut churn by • An Asian telecommunications
15 percent in six months, company with multiple
retain more than one million customer segments reduced
subscribers and generate churn by between 10 percent
hundreds of millions of dollars and 30 percent—thanks to deep
in incremental net OIBDA—all analytic insights into both
thanks to analytics-driven customer behavior and average
customer segmentation, and revenue per user.
the company’s commitment
to the creation of a cross-
functional Churn Command
Center dedicated to driving
customer lifetime profitability.
Retention Marketing: Accelerating Maximizing campaign return while in finding innovative offers and treat-
Speed to Market, Cross Channel and minimizing risk depends on a rigor- ments. Campaign analytics should also
at Minimal Risk ous, test-and-control approach. Many evaluate the performance of retention
An effective retention marketing companies launching retention cam- programs throughout their lifecycle,
capability focuses on three key paigns evaluate their effectiveness via combining this data with information
outcomes: traditional marketing metrics (the take around incremental revenue and costs
rate, for example) without comparing to come up with a true campaign ROI.
Speed to market is critical to
the treated customers to a control
maximizing the impact of analytics. Operational reporting of key
group—an approach that can end up
The competitive environment means metrics. Churn is a lagging metric
boosting churn and/or costs because it
that many churn “hot spots” are often that may take six to twelve months
treats customers with no intention of
short lived. And unless a company to show improvement, depending
leaving. Campaign analytics, by con-
can implement insights quickly, much upon the timing of treatment in the
trast, tell companies just what their
of the potential retention benefit customer lifecycle. It’s important
churn rates really are. They evaluate
will be lost. Companies can shorten during the test-and-control phase to
test offer effectiveness in terms of
their offer development cycle, and closely monitor such leading indicators
such indicators as size of treated
minimize the handoffs and bottlenecks of campaign effectiveness as list pen-
population and contract renewal rates
that cause delays, by employing a etration and offer-take-up rates. There
across multiple dimensions—channel,
cross-functional team of resources are several ways to monitor success or
customer segment and offer vari-
in analytics, marketing, finance and failure—but in our experience, opera-
ant—and then use the information to
channel support. In our experience, tional level reporting should occur
inform scale decisions and select the
such a cross-functional approach at least weekly to identify execution
treatments to be continued. Our expe-
can cut cycle times by as much as 50 issues quickly and allow mid-pilot
rience suggests that companies should
percent to 70 percent. campaign adjustments. This approach
expect 10 percent to 20 percent of
will accelerate the scaling of treat-
treatments not to be scaled; indeed,
ments that work, and rapidly eliminate
a lower proportion indicates that the
those that are underperforming.
marketing team is taking enough risk
Page 7

9. Channels: Delivering the Right managed manually. As the number Organizations need the capability
Experience to the Right Customer of marketing treatments expands to to correlate churn to any of these
For better customer retention, orga- cover smaller groups of customers, interactions across any channel (see
nizations must improve two types of however, campaign optimization and USAR sidebar). And once the interac-
customer interaction: real-time decision-making tools will tions that are root causes of churn
be needed in order to provide offers have been analyzed, they must devise
Retention interactions can be either
that are effectively differentiated by policies, processes, and tools that sup-
proactive or reactive, but in both
channel. port the delivery of a better customer
cases reducing churn hinges on:
experience.
Expanding the number of self-service Customer lifecycle interactions can
interaction channels in which reten- be root causes of churn as well:
tion offers can be made (e.g. Web, • Early life: When the customer is
social media); aligning employee “trying out” a recently purchased
incentives to company churn objec- product or service; a critical moment
tives; improving the delivery of in the customer’s decision making.
channel-specific training material; and
• Change of life events: Such as
ensuring consistent channel processes
marriage, divorce, a change of
and system capabilities. Companies
profession or geographic location.
should also consider providing on-site
execution support to identify and • Mature life: When a customer is
resolve issues early and swiftly. In nearing the end of a contract, or of
the short term, offers and treatments the useful life of the product they
under this new approach can be are using.
Page 8

10. USAR—An Integrated churn—especially when customer
interaction data records are
Approach to Customer usually contained in different
Interactions systems that do not communicate
with one another and are
The root causes of customer collected in varying data formats?
churn can be hard to trace.
They may lie buried in negative Accenture approaches this
experiences associated with any challenge by integrating customer
one of multiple interactions. In interactions across multiple
order to improve and sustain channels through an asset known
customer retention rates over as the Unified Service Analytic
time, companies must improve Record (USAR)2. USAR allows
the customer experience of all business leaders to identify and
these interactions. But in an understand the needs of chronic
enterprise where customers customers and repeat contacts;
may have millions of monthly identify cause/effect relationships
interactions, across a variety between the customer experience
of channels, how do you find and churn; identify and address
them all? And how can you root-cause behaviors at the agent
tell which interactions drive level.
Page 9

11. Summary References
Keeping customers can be challeng- 1. Features of the Accenture CAR may
ing—but as markets mature, successful be covered by one or more pending or
retention strategies are becoming an issued patents worldwide.
increasingly essential element of com-
2. Features of the Accenture USAR may
petitive advantage for many different
be covered by one or more pending or
industries. Accenture experience
issued patents worldwide.
shows, moreover, that such strategies
can be developed. They hinge, crucial-
ly, on really understanding what moti-
vates different customers to churn—a
capability dependent on sophisticated
analytics. They also require the sup-
port of senior leadership, strong gov-
ernance and the commitment to build
a whole new set of capabilities that
accelerate speed to market, maximize
campaign return while minimizing
risk and ensure the right experience
for the right customer. Equipped with
an end-to-end operating model that
optimizes customer interactions across
all channels, companies can ensure
delivery of a better experience for all
their customers.
Page 10

12. About Accenture About Accenture CRM
Accenture is a global management Solutions
consulting, technology services and Accenture’s Customer Relationship
outsourcing company, with more than Management service line helps orga-
223,000 people serving clients in nizations achieve high performance by
more than 120 countries. Combining transforming their marketing, sales and
unparalleled experience, comprehen- customer service functions to support
sive capabilities across all industries accelerated growth, increased profit-
and business functions, and extensive ability and greater operating efficiency.
research on the world’s most success- Our research, insight and innovation,
ful companies, Accenture collaborates global reach and delivery experience
with clients to help them become have made us a worldwide leader,
high-performance businesses and serving thousands of clients every year,
governments. The company generated including most Fortune® 100 compa-
net revenues of US$21.6 billion for the nies, across virtually all industries.
fiscal year ended August 31, 2010. Its
home page is www.accenture.com.
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