Desert Warfare: Pre-empting Churn

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Time Warner's Desert Cities, Calif., division has been able to trim churn levels with new software that gives customer service representatives more insight into customers than a psychic hotline.

Since March, CSRs in the 133,000-customer cluster have been using a program called ProfitNow!, a predictive analytic engine. Using customer information culled from billing data stores, plus credit data obtained by Time Warner's information technology provider, CSG Systems Inc., the cable operator is able to rate a customer's propensity to drop cable service, even before a customer may express dissatisfaction.

In the just two months in use, the operator has used the technology to retain 82.7 percent of identified at-risk customers, according to data provided by CSG and the cable system.

The predictive technology also analyzes accounts and identifies which products a caller would be likely to buy.

Using suggestions generated by the program, CSRs have been able to sell new products to 95 percent of the subscribers identified by the program. That has the potential to increase the annual revenue average for those customers by $287, according to Time Warner.

The Desert Cities cluster, headquartered in Palm Desert, Calif., southeast of Los Angeles, serves customers from Banning to Indio. It is the "showcase site" for CSG's customer care solutions, so it was a natural choice to serve as the beta site for the modeling engine equipped with advance predictive technology.

FOCUSED PITCH

The cluster launched digital TV 10 months ago, said Ron LaChase, director of information technology service. Six months ago, when penetration on that product started to plateau, Desert Cities began selling high-speed data service with multiple Internet-service providers.

With the new software, representatives can pitch the right products to the right customers, he noted, adding the software can help Time Warner overcome some of the challenges of this particular market.

Five percent of the Desert Cities' market consists of "snowbirds" who spend their winters in the desert. Seasonal contact with these customers gives the system an upselling opportunity, if it can find the right message.

Another 40 percent of the cluster's customers are represented by homeowners' associations. In those instances, LaChase said, the system may have only a service address but no customer name. That makes customer-initiated contact more important to the system.

HOW IT WORKS

ProfitNow!'s work begins when a customer calls in and the CSR types in the subscriber's phone number. When the account information pops up, so does a symbol that looks like half a pie chart.

If the chart is green, no extra action is taken. But if it is yellow or red, that alerts the representative that, according to the software analysis, the customer may be at risk. The customer doesn't even have to be calling to complain about service or threatening to disconnect.

If the warning appears, the CSR clicks on a tab that lists offers approved by the local system for that customer.

In Desert Cities, proactive offers include free service for a week or a month, or free pay-per-view coupons.

Customer service representative Sharon Long, a four-and-a-half year veteran, said the software has given her and her staff a sense of empowerment.

The software "looks at what we already have, then gives me ideas on what to offer. The No. 1 suggestion is high-speed data, and it's nice to say 'I can give it to you today," she said.

Workers don't have to make a caller hold while waiting for a supervisor to approve an offer and the information the software provides fits into the natural flow of conversation, she added.

The only glitch initially was ProfitNow!'s loading speed, Long said. But that issue has been resolved, added Meri Christenson, CSG's product manager.

CHURN KILLS

With penetration growth nearing its maximum, cutting churn is becoming a top priority for many operators.

A 2001 analysis by Bear, Stearns & Co. indicated that churn is anywhere from 21 percent to 34 percent annually in the cable industry. Replacing old customers with new subscribers costs between $300 and $600, depending on the level of service, according to that same study. According to operators, it is much cheaper to retain current customers.

LaChase said he defines churn as a complete disconnect. He confirmed that even though Desert Cities is spending money on the per-subscriber, per-month fee for ProfitNow! and losing revenue through the gifts of free service, "we're still very profitable because every customer we lose costs more money."

The cluster will expand its use of the software in July, when it launches video-on-demand and subscription VOD. The operator also will use the software for outbound telemarketing.

The product also will be improved. Currently CSRs have to enter the data to ensure that the offer, such as a month's free service, actually appears on the customer's bill. Christenson said the program would be altered so that one keystroke will fulfill the offer.

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