Using Lifecycle Marketing to Better Best-in-Industry Churn Rate

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Category: B2C

Type: Lifecycle Marketing: Acquisition & Retention

Channel: Direct Mail, Email, Digital

Industry: Technology

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Challenge:

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In 2008 Verizon enjoyed the lowest churn rate in the wireless industry of just under 1% of its customer base. However, the carrier was noticing a growing trend towards a much higher rate of attrition during the first 30 days of renewal, especially when subscribers purchased a new smartphone. For many customers this was a major leap in technology from their previous handset and a bad onboarding experience. 

 

Solution:

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We redesigned the existing Verizon Wireless lifecycle contact strategy to target the right customers, with the right offers and messages, at the right time. Working closely with multiple functional groups across Verizon, we developed key targeting tools to model propensity (response, churn, service demand and equipment). We then identified lifecycle triggers and mapped campaigns and communications to each event. We looked at specific communication channels to optimize digital channels and decrease traditional direct marketing costs. We then developed highly personalized creative with customer-specific information and offers based on known preferences and equipment propensity models. In particular, we focused on making sure customers had a positive onboarding experience during the first 30 days. After the design phase was complete, campaigns were launched and tracked for 60 days. The cumulative effect of the pilot communications was tracked monthly for primary metrics compared to hold-out groups.

 

Result:

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• Sending a renewal offer to the right target at the right time increased renewal rates; conversely, sending a renewal offer at the wrong time increased churn.

• Sending a handset offer tailored to their needs increased renewal rates.

• Providing renewing customers with a highly customized Welcome package featuring tips on their new phone greatly reduced churn during the first 30-days of their contract.

• Augmenting the Welcome package with an opportunity to attend a wireless workshop at a Verizon store further reduced churn in the first 30 days.

• Ensuring customers were on the right size plan reduced future churn.

• Engaging customers with customized content in a monthly email newsletter reduced future churn.

• Cross-selling services relevant to the customer significantly increased revenue and decreased churn.

 

Overall, the lifecycle pilot program decreased churn by an additional 10 basis points and increased the lifetime value of a customer. Verizon received more than a multi-fold return on investment for the $10M pilot.