9/30/2010 10:43:00 AM
Managing customer acquisitions to stay ahead
With the dominance of the iPhone and emergence of Google’s Android software, the mobile phone market has never been more competitive.
Mobile phones aren’t just another commodity; they’re a social lifeline.
They play a vital part in everyday communications and are even transforming the way we pay for goods and services with the arrival of technologies such as tap and pay. But with the latest smartphones becoming status symbols, these must-have fashion accessories are tempting consumers to spend beyond their means.
Although the UK has officially emerged from recession, many consumers are still struggling to manage their finances and are signing up for contracts which they can’t afford. The challenge for telecoms companies is identifying how to continue to grow their customer base while preventing bad debt and reducing network churn.
To ensure that a company’s time and resource is dedicated to ‘good’ customers who will make repayments and prevent false positives, a simple affordability check can significantly reduce levels of bad debt. This will allow telecoms companies to identify potential customers who are likely to default on payments or have no intention of paying for services obtained, without lengthening the application process for the vast majority of consumers who can afford the products and services.
An affordability check can also identify customers who are close to reaching their limits and therefore are at high risk of defaulting in the near future.
Wouldn’t you like to know if a high revenue customer is going to default on a payment up to six months before it happens? Or how about understanding whether customers have the potential to pay for the entire contract, rather than just afford the credit in the first few months?
An affordability tool can assess a customer’s existing credit commitments in relation to their income. While a customer may not have a history of missing or defaulting on payments, one extra monthly payment may push them past what they can afford. Along with the obvious financial benefits of reducing the amount of bad debt on the books, there is also a reputational benefit from using this finance tool.
As well as protecting the company from bad debt, a more in-depth knowledge of your customer at the acquisition stage can offer insight that will affect the entire customer life cycle and have a direct result on identifying and preventing customer churn.
Clearly, customer insight and acquisition is a vital part of any telecoms organisation’s strategy, but since the global financial crisis started in 2007 it has become increasingly important to balance this with financial insight. The introduction of affordability tools makes it more achievable than ever before for telecoms companies to increase their customer base, while incurring less bad debt and reducing fraud.