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IBM Helps XO Reduce Churn via Predictive Analytics

By Tracey E. Schelmetic
TMCnet Contributor

In the business-to-consumer world, one of the most unpleasant realities management must face is customer churn: the defection of existing customers, who then have to be replaced with new customers. It's expensive: it costs many times more to find a new customer (via marketing and advertising) than it is to keep an existing customer happy. For this reason, businesses try to keep their churn – and therefore their customer defections – as low as possible.

Easier said than done, of course.

Technology has become invaluable in the b-to-c world for helping keep customer churn to a minimum, primarily through analytics and prediction: understanding what makes customers churn helps you avoid any activity that causes customers to defect.

IBM (News - Alert), which is a maker of predictive analytics solutions, recently announced that XO Communications (News - Alert), a provider of advanced broadband communications services and solutions, was able to lower its customer churn rates by nearly 50 percent. By leveraging the IBM solution, Virginia-based XO was able to achieve significant improvement in customer retention, lowering churn in the process, and also improve revenue protection.

How? By helping XO understand how to improve the quality of customer interactions in its contact centers, as well as more effective marketing campaigns, according to the companies.

“IBM business analytics software has been the difference maker to our organization, allowing us to exceed our initial goals by improving retention rates, and creating millions of dollars in annualized revenue protection,” said Cris Payne, senior manager of customer intelligence at XO Communications. “With a better overall customer experience, XO is now able to stay competitive against other carriers and improve our overall satisfaction. Our IBM business analytics portfolio allows us to quickly produce edible customer information leading to more strategic decisions affecting our top and bottom lines.”