Behavioral Analytics

What is it? 

Behavioral analytics reveal insights into the behavior of your customers—basically, why or how a customer, family or business engages or interacts on digital platforms.  

Here is an example:  

The behavior: a customer keeps visiting the website of your main competition. 

Why might they do this?

Perhaps they are having an internet experience that is less than satisfactory and the customer keeps running speed tests.  

How could you use this information?   

Using the behavioral information you have gathered you might do the following:  

1. Suggest a customer service representative look at the customer record to see if they have called in any trouble tickets? Is there a recurring issue that can be resolved? Have they been complaining about slow speeds?  

1. If the customer doesn’t have any history of trouble tickets you might look at additional data that is available to you—does the data indicate they have gamers in the home? Are they maxing out their available bandwidth frequently. Do they have a low wi-fi score?  Would they be a good candidate for a faster broadband package? Do they have an older router that cannot support their current online activities and devices?  All of this data can help you determine how you might improve the customer experience.  

Why should you care? 

Without behavioral analytics, it’s possible this customer might move to the competition and you would never know why.  

Churn 

What is it? 

Basically, churn is the rate at which customers leave you.  

The most simple way to calculate churn is by taking the number of customers you lost divided by the number of customers you started with during any given period—month, quarter, or year.    

For example: during the month of January, you disconnected 200 customers. If you started the month with 10,000 customers, your churn rate is 200/10,000 = 2 percent.  

How could you use this information?  

• An important consideration as you look at churn is the “reason for disconnect”—was it company or customer initiated? For example, if 100 of those customers were disconnected for non-pay, this was company-initiated churn. Another question you may ask is: was there anything you could have done internally to make it easier for them to pay their bill?  

• If the customer reason for disconnect was “moving to a competitor," you may ask yourself, "when was the last time I did a competitive analysis?"  Was the customer having trouble tickets before leaving? Was the customer conducting a lot of speed tests before they left? The answers to these questions may help you take action that could prevent and reduce churn.  

One note on churn—if you are comparing your churn to other companies, pay attention to how they are calculating churn. There are multiple ways to calculate it. One recommendation would be not to use your “net” customers month to month in your churn calculation (for example—started the month with 10,000 and ended the month with 9,995. In this example, you lost a net of 5 customers during the month, but the reality would likely be that you gained 100 new customers and actually disconnected 105—so you would use the 105 in your churn calculation).  

Why should you care? 

It is much more expensive to get a new customer than it is to retain an existing one.  By reducing churn, you retain revenue and can use your limited marketing resources more efficiently.  

Take Rate (aka Penetration Rate) 

What is it? 

Take rate is the percent of customers that take a service if they are able to receive it.   

For example: If your fiber passes 10,000 homes and 7,000 people have your internet service, then the take rate is 70 percent.  

How could you use this information? 

You can compare this take rate or penetration to other companies and areas. If the national average for broadband penetration is 82 percent, this would indicate you have a very high penetration. It may then be difficult to grow this service if you have competition, without growing your network of homes/businesses passed.  

Some key things to consider about overall take rate or penetration rate:

• One important number to calculate is the “homes/businesses passed” number. This means you could easily provide service to this location without extending your wired network.  

• How can you get this number? The best and most accurate way to get this information is to ask your outside plant engineers. They may have a mapping tool that shows all of the homes/businesses passed.  

• Alternately, and less reliable, you can utilize the US census data for households and businesses that most closely match your footprint.  

• If your footprint matches that of a city utility, you may be able to call the city and get a count of “water meters." Again, this count may be significantly less accurate than your actual footprint.  

If you are talking about a service like Managed Wi-Fi, this is a more simple calculation, as you most likely only sell it to your Internet customers. In this instance, if you have 7,000 Internet customers and only 700 Managed Wi-Fi customers, your current take rate is only 10 percent. That rate would indicate great potential for growth of this service. 

Why should you care? 

If you are aware of your penetration rate for existing services, you can determine where the best opportunity is in your market. You can then spend your marketing dollars where the greatest opportunity lies to improve ROI. Marketing to a fully penetrated market should take a different approach. This information can also help you segment your market. For example, don't market a new internet promotion to households that already have your service. But do market your “new” Managed Wi-Fi service to these households.   

ARPU 

What is it?   

Typically, this stands for Average Revenue Per Unit (or User). It may be called other things, but basically, this is the how much revenue you are getting per customer. Divide your revenue by the number of customers you have.  

For example: If you have 10,000 broadband customers and your total broadband monthly revenue is $550,000, your broadband ARPU is $55.  

How could you use this information?  

• Perhaps you have a goal to grow broadband ARPU by $2 this year. There are many ways to accomplish your goal.  

• You could raise the price of all your broadband packages by $2.  

• You could go get more broadband subscribers.  

• You could run upgrade promotions to get customers on higher priced packages.  

• You could re-package your broadband services to reach this goal.  

• You could offer services that increase incremental revenue growth (like a Managed Wi-Fi service).  

Why should you care? 

If you were to assume this goal would be ONLY accomplished by this tactic, then you could easily determine how many customers it would take to reach this goal. If the new ARPU target is $57 and you still have 10,000 customers, that is $570,000 of revenue per month, an increase of $20,000 per month over the old revenue amount. If you charge $10 per month for Managed Wi-Fi, you would need 2,000 customers on your Managed Wi-Fi service to reach this goal. (20,000/10=2,000). If you annualize the math, your new annual revenue for broadband  is $240,000.  

ROI (Return on Investment) 

What is it? 

In regards to marketing, ROI typically refers to the gain or loss on your marketing investment.  

For example: A simple ROI calculation is current value—post-promotion value divided by post-beginning value. If you spend $5,000 on a promotion and it generates $10,000 in new annual revenue, your ROI on that promotion would be 100 percent. (10,000-5,000) / 5,000 = 100 percent. This example looks strictly at the return on the marketing investment.  

How could you use this information?  

As you start calculating the return on your marketing investment, you will find which types of marketing, what types of media, and which products/services provide the best return, helping you make marketing decisions in the future.  

Why should you care?  

Marketing budgets are typically a finite resource, and you want to do as much as you can with what you have. By paying attention to where you get your biggest return on marketing spend, you can improve how far your marketing dollar stretches. 

Data Driven Marketing 

What is it?

Data Driven Marketing is using customer information to target a marketing message. How is it different from Mass Marketing? Mass Marketing is delivering the same marketing message to everyone.  

For Example: Promoting gigabit internet service to your entire service area.  

• Mass Marketing: “Get a Gig” promoted the same to everyone 

• Data Driven Marketing: utilizing customer information such as behaviors or profiles (i.e. gamers) to deliver a message that is more meaningful and relevant. For example, use a picture of a gamer—consider a message along the lines of “crush the competition with our gigabit service,” and utilize imagery that supports the message. Or target the parents of a teenage gamer—“does your home have bandwidth hogs”.  

• The reality is that a mix of these two may be the best strategy—an educational/informational standpoint, and then a more relevant message delivered to specific targets.