What is your customer worth to you? This is important because it determines if it makes sense to keep that customer in the ecosystem or let them go. As telcos see a heavy movement of subscribers’ entry and exit daily, customer lifetime value or CLV becomes an important KPI to track. The era of mass marketing has been replaced by hyper-personalization. The fat budgets of OOH advertising are done away by the segment of one marketing; hence it becomes highly critical to know your profitability at each customer level. How much you can spend to acquire a customer, is it worth all the efforts, should you retain a particular customer- these are the questions that telco marketers ask before running the next campaign.
What is the customer lifetime value (CLV) in Telecom?
It’s the total revenue a service provider gets from a single subscriber during their entire lifespan on the network. It includes all types of monetary transactions – recharges, bill payments, plan upgrades, top-ups, and more.
How does tracking and measuring customer lifetime value (CLV) help Telcos?
Calculating the customer lifetime value (CLV) has a multitude of benefits ranging from devising retention plans to revitalizing sales/marketing programs.
Customer Segmentation
By identifying customer segments and stacking them based on various parameters (such as ARPU), telcos can use data insights to group the most valuable subscribers. This, in turn, helps in assessing loyalty, projecting revenue and devising strategies to nurture customer journey by pushing the right products/services based on the context and relevance.
To Devise Retention Plans
Customer lifetime value or CLTV also comes in handy to design personalized retention plans and offers. Customer success teams can target low CLV/ARPU subscribers and possible churn behaviour with customized plans to retain and revive dormant accounts.
Mapping Customer Journey
Measuring CLV also helps determine other specific KPIs such as CAC (Cost of Customer Acquisition) and APV (Average Purchase Value). This, in turn, helps in studying the outcomes of Sales/Marketing programs in general and their impact on new customer acquisition.
Planning Sales Programs – Upsell/Cross-sell
Understanding the CLV helps marketers identify and reach out to subscribers at various junctures of their interaction to maximize ARPU and increase uptake to offers/plans. It helps in driving programs based on the context of each customer to increase acceptance and offer uptake.
Factors that contribute to a low customer lifetime value
Poor network/service
Considering the era of dual-SIM smartphones and a hyperconnected world, poor connectivity and network issues can take a toll on lifetime value. Subscribers are more than willing to pay for an excellent service and do not shy away from churning out as a response to a bad one. Each customer’s constant flow of revenue is directly proportional to a strong network, connectivity, and great customer service.
Irrelevant offers/plans
Gone are the days of lacklustre bill plans and recharge offers. The expectation is that the CSP understands customer behaviour/usage patterns and responds appropriately. Imagine sending a “free voice calls” recharge offer to a customer who consumes a large quantity of 4G data daily.
Lack of excitement for usage
Rewarding loyal customers speaks volumes about a Telco’s efforts to ensure a great customer experience. Subscribers often look forward to being “rewarded”, which keep them enticed to maintain/increase the usage.
By boosting marketing programs, Contextual Marketing and Loyalty Rewards can positively impact CLV. We’ll tell you how in our next blog.
