Home Asia-Pacific III 2012 The ‘Power of One’: Increasing customer loyalty with real-time, targeted offers

The ‘Power of One’: Increasing customer loyalty with real-time, targeted offers

by david.nunes
Yann ChevalierIssue:Asia-Pacific III 2012
Article no.:9
Topic:The ‘Power of One’: Increasing customer loyalty
with real-time, targeted offers
Author:Yann Chevalier
PDF size:370KB

About author

Yann Chevalier is the CEO of Intersec. Yann earlier career included a number of positions at France Telecom and AFNIC, which oversees « .fr » domain names. He contributes to several national R&D projects in the field of telecommunications (including national studies about the ENUM protocol). Between 2002 and 2004, Yann was Chairman of Polytechnique.org Society, which now has more than 15,000 members, all alumni and students from Ecole Polytechnique. He is also one of the founders of the Manageurs.com project. In 2004, Yann founded Intersec with Olivier Guillaumin. He has been the CEO of the company ever since.

Article abstract

Customer Base Management (CBM) is the system that helps marketing departments to produce highly targeted campaigns to reduce churn, engender loyalty and improve customer experience. CBM must cope with high volume of event-based information to glean insightful information from ‘Big Data’. It must operate in real-time for timely activation of incentives and offers. It is especially effective for stimulating usage, reviving inactive accounts, preventing ‘at risk’ customers churning and up-selling renewals. CBM must empower the marketing team to analyse data, create meaningful segments, launch campaigns and evaluate results without seeking help from the IT department.

Full Article

The mobile market is an increasingly competitive environment and the rise of new entrants such as OTT (Over The Top) players is changing the rules of the game by bypassing the operators and striking up direct relationships with subscribers. High smartphone penetration rates and 3G service consumption are today an established trend in mature mobile markets, while high market volatility and price wars are undeniable factors in emerging markets. Indeed, operators are under considerable pressure to find new and innovative ways to engage with customers, ensure ROI (Return On Investment) and reduce churn.
While the Asia-Pacific region is composed of both mobile market extremes, two common trends are driving the regional telco industry: the push for cost optimization and tailored customer service. Consequently, operators need to find new ways to increase the value of their customer base by offering highly personalised and targeted offers, in real-time, based on subscribers’ actual behaviour. Harnessing these behaviour patterns to create tailored marketing propositions is a powerful way in which mobile operators can dramatically improve their customer loyalty and engagement and strengthen their relationship with subscribers through customer knowledge enrichment.
Today Customer Base Management solutions exist that can effectively fulfil this function and such technology is already installed in many emerging market countries by both Tier One and recently launched operators. The technology has proven particularly effective in targeting the pre-paid user community, where operators hold scant information, enabling them to make timely offers to encourage top ups and gain greater loyalty from subscribers switching between multiple SIMs. In these highly competitive emerging markets, this type of technology has been proven to increase ARPU by 5-9 per cent per annum. Surprisingly, operators in APAC still have a lower adoption rate of such solution compared to other regional markets.
The purpose of this article is to examine the merits of the latest Customer Base Management Solutions and share examples of how operators have deployed them to best effect.
Defining a customer base management solution
Firstly, let us start by defining what we mean by a Customer Base Management (CBM) Solution. Frequently confused with Customer Relationship Management (CRM), a CBM is an end-to-end solution that provides marketing teams with comprehensive information to analyse and segment users, based on their behaviour and creates tailored campaigns to meet the individual’s specific needs in real-time. The aim of these solutions is to deliver highly targeted campaigns to reduce churn, engender loyalty and improve customer experience.
Traditional CRM solutions are not capable of processing the high volume of event-based information that an operator generates through the day-to-day activities of its consumer base, including all Call Data Records (CDRs), but instead focuses on providing in-depth analysis of smaller volumes of data.
In a world obsessed with ‘Big Data’, nowhere is the thirst for insightful customer information more sought after than in the Telco sector and operators equipped with a CBM solution avoid facing risky decision-making based on assumptions or unrelated data. Customer Base Management solutions sit in the network core collecting meta data about all network events concerning the type and pattern of usage of both voice and data traffic and building up a valuable profile of the individual, their preferences, habits and lifestyles. The CBM is also integrated into the organization’s billing, Intelligent Network, Data Warehousing and CRM systems offering three key advantages: customer knowledge, contextual data to ensure optimal timing and targeting, all of which help to arrive at the age-old marketing mantra of ‘providing the right products, to the right people at the right time’. Real-time reporting is vital to increasing an operator’s reactivity and identifying new consumption patterns rapidly, ahead of competitors.
Making an impact in emerging markets
In today’s world, the mobile device is no longer seen as a luxury item but is widely viewed as a commodity. Mobile penetration is approaching, even exceeding 100 per cent. In this climate, the emphasis for all operators, even in emerging countries, has long since moved from customer acquisition to focus on increasing customer usage and loyalty and reducing churn. To this end, CBM’s have been used very effectively in the pre-paid environment where aggressive price wars have served simply to cut operator margins and the Holy Grail has long since moved from price-cutting to delivering extra value.
One of the main challenges operators face in these markets is the lack of accurate and reliable subscriber consumption data, limiting considerably their effectiveness in implementing an effective customer loyalty programme. A Loyalty Management system would prove particularly effective for operators who want to increase usage of their service in a market typified by users with two or more SIM cards. Such users alternate between operators to use the same operator as their friend or family member to reduce call charges. To counter this tendency the operator offered incentives based on the number of calls received to encourage them to keep their SIM in the phone longer. Being able to identify the normal pattern of top-ups for users and sending a timely reminder just before their credit expires can be useful for consumers. This offers operators an early warning that someone may be considering changing to another operator, thus prompting a more enticing incentive. The results of such loyalty strategy have been shown to successfully increase annual Average Revenue Per User (ARPU) by 5-9 per cent per year and decrease churn by between ten and 20 per cent annually, enabling reaching ROI within three to nine months.
Nonetheless, the relevance of behaviour-based solutions is not only limited to emerging countries or pre-paid environments. Mature markets pose their own set of challenges and the recent trend for ‘All-You-Can-Eat’ bundles has resulted in the operators losing touch with how consumers are using their services. This lack of visibility has itself created difficulties in knowing the optimal timing to offer incentives such as a handset renewal or a service migration. Top-ups themselves are another service where timing is critical.
There are a number of applications where CBM’s have proven to be particularly effective. These include: usage stimulation, inactive account revival, securing ‘At Risk’ customers, offering migrations or up-selling and handset renewals. Equally there are a range of offers that have been proven to be effective in achieving these goals such as: Incoming call bonuses, Opt-ins to gain bonuses and service subscription incentives where subscribers – who for example are using Ring Tones – might be incentivised to try Ring Back Tones in return for a particular offer.
In-House vs off-the-shelf
Whilst the wisdom of deploying Customer Base Management Solutions can offer excellent rewards for operators, it’s worth considering carefully the different approaches to obtaining such a system. Firstly, there is the choice between developing such a solution in-house versus a customisable off-the-shelf alternative. Secondly, when you opt for the latter – what criteria should you consider in choosing between the various solutions available on the market?
Let’s deal with the choice of custom-built or off-the-shelf. Developing such a sophisticated system from scratch would take years and entail a major investment of both time and money. Outsourcing the task to a company, whose core business is developing such solutions, who possesses extensive experience and knowledge in this specialist market area seems much less risky. However, before going down this route, it would be wise to evaluate the range of customisable solutions available which can be integrated and fully deployed within a 3-4 month timeframe. Operators need to ensure that their chosen solution is able to process effectively high volumes of data in order to facilitate real-time offers and ensure it has the ability to quickly analyse trends in usage or competitors’ activity and instantly respond with a tailored campaign.
Another key requirement is the ease of use. A key prerequisite of CBMs is the ability to empower the marketing team to analyse data, create meaningful segments, launch campaigns and evaluate results without relying on the IT department. An intuitive and easy-to-use solution will optimize internal processes, increasing marketing professionals’ autonomy and saving precious resources. Another point worth remembering is to ensure that your chosen solution is able to deal with fixed, mobile and CDMA traffic using multiple channels and multiple screens. These are important factors for operators and are the reason why it is generally advisable to work with a specialist provider of these solutions as it not only reduces the Time To Market (TTM) but the technology is now widely recognised and has been specifically developed to address the telco industry demands.
Winning the hearts and minds of customers
So returning once again to the original premise for this article in examining how understanding and dissecting actual usage patterns and behaviour can allow operators to create highly segmented, personalised offers to individuals or groups of subscribers, we should not forget the consumer’s perspective. In today’s market OTT competitors like Google and Apple are battling with incumbents and new operators for the hearts and minds of the mobile consumer, while margins are under attack like never before. The ability to create individually tailored services based on a customer’s known preferences and behaviour at the optimal time, via the channel they are most engaged with, will have an equally favourably impact on the customer experience. Operators around the globe, both in the emerging territories and the mature markets, are now truly realizing the ‘Power of One’ and opting to deliver tailored propositions to delight and engage their customer base.

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