Telecommunications Firm Improves

Equipment Delivery Time and Reduces Churn.

A wireless telecommunications provider, serving primarily business customers, was faced with a losing business proposition:  with a churn rate approaching 50%, the company would have churned through all potential customers within its service area within five years.  This was clearly a case where the organization’s customers did not feel they were receiving sufficient value from their service provider to warrant any degree of loyalty on their part.  Management knew they needed to address this problem but they literally had no idea where to begin.  They knew there were some problems with call clarity and dropped calls, but this was a matter that would have to be addressed over a longer-term because it would require new towers and tower positions.  What other quality factors were sufficiently important to customers that the organization could target for improvement in the near term?

A customer value analysis conducted by MVS revealed that “Technical Competence,” including such performance criteria as call clarity, dropped calls, etc, was indeed the most important quality driver, and the organization’s performance on that driver was not good.  A close second in importance was a driver labeled “customer focus,” which included such attributes as, “Responsive to questions,” “Reps solve problems,” “Clear and timely training,” etc.  Although the “Technical Competence” driver would require a long period of time to address, the “Customer Focus” driver could be aggressively addressed in the near term.

MVS worked with the organization’s front-line employees to map the processes associated with the “customer focus” quality driver.  This value stream included processes associated with the organization’s call centers, billing operations, and equipment repair.  A detailed mapping of those processes, however, revealed that all the problems identified within those process maps could be traced back to the actual order and delivery of equipment, which was being handled very poorly.  Sales reps were being compensated on the basis of new customers they brought to the organization, not on the retention of current customers.  As a result, the sales reps had no incentive for assuring that customers knew how to use the equipment when it was delivered, nor did they have any incentive for following up with those customers to be sure all their needs were being met.

With a clear understanding of what was driving value for their business customers, this organization was able to shift its strategy from one focused on customer acquisition to one that placed more emphasis on customer retention.  Rather than investing heavily in improved call centers, the organization tackled the problem at its source – with improved training and a modified compensation plan for its sales force.  After two years, this company had reduced customer churn by 50%, had reduced delivery time for handsets from 5 days to 4 hours, and had boosted its bottom line by $4.5M.