Earthlink Focuses on Spotting and Keeping Potential Churners

For Internet service provider EarthLink, silence really is golden. The company regularly analyzes its customers with an eye toward identifying those likely to drop the provider. Which does it feel most sanguine about? Those who use e-mail, surf the Web, don't have service issues and don't contact the company.

These customers churn at the rather low rate of 1.5% annually, says Stuart Roesel, EarthLink's director of customer insights, analytics and strategy. “Our contact strategy is ‘Let's just touch the customer on a monthly basis through our e-mail newsletter,’” he says. EarthLink doesn't need an elaborate strategy for retaining a customer it doesn't have to work to retain.

Roesel's energy is much better spent identifying individuals with high attrition potential — and then staving off that likelihood.

“We are not aggressively going after new customers,” he says. “With the overall cost to acquire a customer, especially a dial-up customer, the margins are razor thin. We have to be really careful about the channels we use. Through the online channel we have passive ads, but given the landscape of the marketplace and the percentage of customers who have dial-up, our whole mantra is around retention.”

A multidimensional look

The company's models predict customer behavior 60 days out. “Over the course of two or three months, you can develop a mini-lifecycle,” says Roesel. “But when we target our highest-propensity-to-churn customers, they don't respond well. They're already gone.”

Partly for this reason, Roesel eschews the typical one-dimensional number-crunching that passes for attrition analysis. Often that type of analysis is based solely on the customer's stated reason for leaving. The problem is that this information is usually captured after the customer has left, which moves the individual from the retention marketing stream to the more expensive win-back stream.

“We have to marry the traditional market research with the analytics,” he says. “We talk directly to the customer, [not just] through churn surveys, but through customer service surveys. We have a series of market research activities that are is designed to understand customers across the lifecycle.”

The goal, Roesel says, is to have more than a broad understanding of why customers churn. “[The analysis] shows our non-technical experts — product managers and such — how to talk to customers in English about what their key drivers are.”

Customers who report trouble are ranked in deciles based on several factors, including their churn propensity (which is determined, in part, by the number of calls for service they've made), payment history and use of related EarthLink products. Even a customer having more than one EarthLink address indicates increased affinity.

These rankings are calculated several times a year. Each decile is broken into multiple test and control groups, and EarthLink offers a variety of customer service scripts and incentives designed to reduce customer loss — provided the customers are worth saving.

“If you call and have a question about your bill, we have an understanding of you,” says Chris Schmidt, EarthLink's director of products marketing. The company can tailor a response in accordance with what Schmidt calls a “four-S” strategy — speed, security, service and simplicity — in its messaging.

Rewards of using rewards

The analysis also helps EarthLink target rewards based on the value of each customer. One program empowers service reps to offer Starbucks or Amazon.com gift cards to inconvenienced customers.

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