Digital Marketing – Churn Reduction

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One of the biggest issues facing one of the four largest wireless carriers in the U.S. in continually driving growth for their Prepaid business unit was a churn rate running between 6-6.5%. Research showed that the two biggest reasons given by customers for terminating their service and moving to another carrier were finding a perceived better deal elsewhere (37%) and poor coverage (32%). While little could be done to solve the coverage issue, management felt that overcoming the price/value perception would go a long way towards reducing churn and increasing customer lifetime value.

The Challenge

Past churn save efforts implemented by the Prepaid team to entice customers to stay longer had provided some valuable insights. They had shown that conditional offers were more effective than immediate offers in impacting payment performance. In addition, single and multiple month offers had essentially the same impact. The downside of using offers to entice customers to stay was that the positive churn impact was diluted by the revenue hit resulting from offers being delivered to both, potential churners as well as customers that might not have been in danger of churning.

The Solution

The wireless carrier tabbed Real Marketing Solutions partners to project manage and work with their CRM outsource provider to develop a save solution that would 1) proactively identify at-risk customers and 2) right-time the delivery of save offers to minimize any potential discount waste.

Step One: Data Analysis and Right Timing Hypothesis

A review of the data garnered from past save efforts showed that only 40% of Prepaid customers renewed on their expiration date. To eliminate the possibility of giving offers to customers that were going to renew anyway, we decided to right-time the offer to target customers at the 2nd-4th day after their expected renewal date (based on their past renewal history).

Step Two: Right Timing Campaign Structure

An algorithm was developed to identify the at-risk customers with a double check against the carrier’s billing system to ensure that the customer was still in unpaid status prior to the marketing SMS and email being deployed. Taking into consideration the offer learning noted above a $10 one-time conditional offer was selected.

Step Three: Creative Improvements

The $10 offer was built into newly designed creative that included a number of best practices derived from emails that Real Marketing Solutions partners had developed for other clients. These included the use of a preheader to improve preview pane awareness, multiple calls-to-action links to improve click through opportunities and changing the call-to-action button to HTML from an image for visibility when images are blocked.

The Results

The new proactive save program delivered a 32.9% improvement in payment impact by the treatment group versus the control group which equated to just under $17 per month per customer.

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