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4 Important Key Performance Indicators for Telecom Companies

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Telecom companies are often some of the largest organizations. Due to their sheer size, it’s important that telecoms take extra precautions when organizing and evaluating their data. Not all metrics are created equal, and some make much more sense than other for telecom industry analytics. Here are five important key performance indicators (KPIs) for telecom companies.

Average Return per User

The name of this KPI is self-explanatory. Average return per user (ARPU) tells the story of how much money a company is making for each person using its service. This is a particularly valuable KPI for telecom industry analytics because these companies generally have an extremely high user base. It’s also important to note that there’s a difference between users and customers when it comes to the telecom industry. Think of it this way: If a family of four is on a phone plan, they are all using the service; but only one person is paying the bill. It’s crucial to differentiate between customers and users because that will greatly affect the return per individual. The best option is to keep track of return for both—as this will likely provide some interesting pricing insights.

Subscriber Acquisition Cost

This is an extremely difficult metric to accurately measure. Although it seems straight-forward, subscriber acquisition cost (SAC) has many layers. Of course, you’re going to need to factor in money spent on marketing and advertising. But those aren’t the only costs involved with gaining new subscribers. You also need to factor in commission costs to the people selling your product, as well as the costs involved with actually onboarding customers. In order to get a more comprehensive view of SAC, companies can introduce machine learning and AI to their telecom industry analytics strategy. This will help organizations get much closer to an accurate value for true SAC, which will in turn help leaders make smarter business decisions.

Churn

Churn doesn’t sound pleasant. And it isn’t for telecom companies. Churn is the term given to user turnover for industries relying on subscribers, and obviously, this impacts the telecom too. There are a few reasons why it’s important to keep a close eye on churn in a telecom business. Churn can be symptomatic of greater issues within a company’s product. If your business is offering something that provides customers with value, there’s no inherent reason for them to cancel your service. A high level of churn often means that your product is too expensive, or isn’t living up to customer expectations. Of course, the true problem with a high churn rate goes deeper than that. If customers are constantly leaving, you need to be continually signing up new ones, or else finding other ways to make up for the lost revenue. Failure to meet these conditions can be disastrous for a telecom company.

Network Operating Cost

A telecom company’s network is its most important hard asset. This is the thing that makes it so hard for new players to break into the telecom game, as establishing a network requires a ton of investment. Even after that initial investment has been made and paid off, a telecom’s network will require continual upkeep. This costs money. It’s absolutely necessary for telecom companies to keep tabs on network operating cost. If costs are running too high in proportion to return per user, something will need to be changed in order to maintain a healthy business.

Telecom businesses have a lot of moving parts. Due to this, it’s important to diligently track KPIs such as the ones listed above.

 

 

 

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