How telcos use big data to keep customers loyal: Veda

Telecommunications is gradually becoming an indistinguishable dumb pipe service, and telcos have been trying to differentiate themselves with new offerings so that they can give customers a reason to stay with them. But big data is becoming a valuable asset in helping telcos build loyalty within their customer base, according to Veda.

The data-intelligence company has been working with utilities and telecommunications companies for some time, making use of its vast database of credit information to identify high-risk customers.

This usually involves combining the data that Veda has at hand with the customer data held by its clients to determine which of their customers are less likely to pay their bills, and focusing collection efforts on that group rather than across the whole customer base.

"The more data you have, the more recent it is, the more accurate it is, the more predictive you can be with it," Veda head of commercial risk Moses Samaha said at the Big Data Summit in Sydney.

Both Telstra and Optus are actively collecting large volumes of customer data, including information from customer interactions.

As well as driving down overall debt-collection costs, targeting risky customers also has the added advantage of lowering churn rates for telecommunications companies, according to Samaha.

"In telecommunications, churn is enormous," he said. "Often, it's when you touch a customer, and you mess something up, that you remind them you are there and they decide to churn.

"So the biggest benefit through modelling risk is to leave good customers alone. They will pay, so don't touch them, don't remind them to pay their bills — they were probably on holidays — it will happen."

Letting the data speak for itself, drilling in on specific aspects of it, and altering the way they interact with customers is also important for telecommunications companies, Samaha said.

He recalled when he was working with a particular client, and discovered that customers paying their bills through Australia Post were more inclined to churn. This resulted in an initiative to encourage customers to use direct debiting.

Telecommunications companies have also framed reward programs through data analytics, according to Samaha.

"We really derived a phenomenal insight into the customers that stayed with [telcos] and those that don't," he said. "In response, the telcos I worked with changed their marketing behaviour to stop selling to those customers that were just going to leave, and rewarding customers very heavily for things that made them stickier."