INSIGHT: Why telcos must turn big data into smart data

Utilising big data analytics to personalise the customer experience will be crucial for telcos to manage customer churn and improve loyalty.

Utilising big data analytics to personalise the customer experience will be crucial for telcos to manage customer churn and improve loyalty.

It takes on average, at least 3.5 years for telcos to break even on SAC (subscriber acquisition cost), however the average customer lifetime for telcos is currently only two years.

To offset this, telcos must look to monetise their big data analytics investments and launch initiatives that will deliver value to their customers, reduce churn propensity and reduce the overall telco SAC.

Churn rates among telcos have reached staggering heights and are climbing. Across all regions, telcos are seeing customers churn at rates as disparate as 1.5 percent to nearly six percent per quarter.

Telcos recognise the importance of customer retention and understand that big data analytics will help to differentiate the customer experience; many, however, have hesitated to launch big data analytics initiatives that will drive personalised offers and encourage the cross-sell of products that will lead to greater loyalty.

This was confirmed further in our survey results which showed that while more than 70 percent of telcos that have invested in big data have planned to apply big data analytics across the business, less than 20 percent of these telcos have been able to fully deploy analytics to support customer-focused initiatives.

Poor management of customer-centric KPIs such as Average Revenue Per User (ARPU), Subscriber Acquisition Cost (SAC) and customer satisfaction scores have resulted in a vicious cycle of customer churn for telcos.

When leveraged properly, however, big-data analytics can be used monitor customer sentiment, anticipate their activities and provide actionable insights to trigger proactive measures; it supports a wide range of business initiatives, and can be used to improve churn and loyalty metrics, as well as ARPU and customer satisfaction.

By Chantel Cary - Research Analyst, Ovum

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