Customer Value - Managing Acquisitions through Retention in Competitive Market
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Customer Value - Managing Acquisitions through Retention in Competitive Market

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Customer Value - Managing Acquisitions through Retention in Competitive Market Customer Value - Managing Acquisitions through Retention in Competitive Market Presentation Transcript

  • 3rd Annual Telecoms in Africa: Customer Loyalty & Retention Conference Sathya Karthik R© Abiba Systems | www.abibasystems.com
  • © Abiba Systems | www.abibasystems.com
  • Category 2005 2010 2014 (est.) Subscriber 133.55 506 911 BasePenetration 14.30% 41.00% 62.4% ARPU ($) 14.5 10.34 >6 3G Key Drivers Voice Voice, SMS VAS Acquisition, Business Network, Network Retention, Priority Acquisition Profitability Customer Market Share Wallet Share Focus Hottest: Mobile > 65% , Internet > 40% Hot in mobile: Mobile > 65% , Internet > 40% Hot in Internet: Mobile < 65% , Internet < 40% Coolest: Mobile < 65% , Internet < 40%© Abiba Systems | www.abibasystems.com
  • 20 105% 18 99% 99% 100% 16 97% 98% 99.30% 14 95% 12 94% 90% 10 9 90% 8 6 85% 6 5 4 4 3 3 2 80% 2 0 75% Kenya Algeria Botswana Egypt Nigeria Sudan Tanzania Number of Operators Prepaid Base % of Total • Intense competition – choice for customers • Rapidly increasing penetration • Very high churn© Abiba Systems | www.abibasystems.com
  • Subscriber base Vs ARPU 1000 16 900 14.5 14 13.4 800 Subscriber base (Mn) 12 700 10.34 10 600 561.18 ARPU ($) 506 500 8 7.5 400 6 280.7 300 4 200 133.55 100 2 0 0 2005 2007 2010 2012 Subscriber Base ARPU© Abiba Systems | www.abibasystems.com
  • Gabon, Ghana, Kenya, So Benin, Chad, Democratic uth >3 Republic of Africa, Nigeria, Sudan, Tan Congo, Uganda zania No. of operators Africa <=3 Ethiopia, Eritrea, Guinea, Algeria, Botswana, Egypt, Togo Tunisia <= 50% >50% Mobile Penetration© Abiba Systems | www.abibasystems.com
  • • ABIBA Systems is a Business Intelligence and Analytics company based out of Bangalore, India • Our industry focused product and services portfolio is getting wide acceptance. • We offer a consulting based approach to identify cost effective solutions to enhance the decision making capabilities of senior management. Our solution approach Domain specific pre-built solutions Lower TCO to ensure Rapid deployment higher ROI for quick wins Business User friendly solutions Top BI & Analytics Companies Our Clients© Abiba Systems | www.abibasystems.com
  • Up sell (new product/service) Value Retention Cross-sell Re activation Acquisition Life stage© Abiba Systems | www.abibasystems.com
  • Differentiated Profile the customers and employ retention approach based on approach to maximize lifecycle of customer revenue from retained to enhance value customers Revenue Attack ‘entry point’ Enhance revenue from by improving quality ‘terrorist’ customers of acquisition© Abiba Systems | www.abibasystems.com
  • High ABIBA Competition Penetration Matrix Retention Penetration Life Time Value Life Time Value Up-sell Acquisition Acquisition Low Cross – Sell Up Sell Low High Competition© Abiba Systems | www.abibasystems.com
  • • Additional services • Increase wallet share Terrorists Already taken care? • Loyalty • Better services • Benefits Profitability Steady ??? eddies Increase wallet share Do not focus on retention Average Life of Customer Operator Focus ---- Maximise(Life * ARPU) - Cannot retain – then enhance revenue; have to sacrifice ARPU to enhance life© Abiba Systems | www.abibasystems.com
  • © Abiba Systems | www.abibasystems.com
  • Prepaid subscribers – little information Cost of acquisition > initial ARPU Competitive market – getting Multi SIM users Distribution driven – differing objectives Strategic focus – Sub.base and market share© Abiba Systems | www.abibasystems.com
  • Metrics Scenario 1 Scenario 2 No of customers Acquired 1000 750 ARPU (in USD) 6 8 Annual Churn Rate 60% 48% Customers retained 400 390 Cost of Acquisition/Customer (in USD) 12 15 Total Acquisition Cost 12000 11250 Revenue 48600 53280 Profit 36600 42030 A targeted acquisition results in •Lower churn •Higher ARPU •Increased revenue •High Profits© Abiba Systems | www.abibasystems.com
  • Scenario 1 Scenario 2 1000 750 Customers acquired 6 8 ARPU (in USD) 60% 48% Churn Rate/ annum 400 390 Customers retained© Abiba Systems | www.abibasystems.com
  • Scenario 1 Scenario 2 12000 11250 Cost of acquisition 48600 53280 Revenue 36600 42030 Profit© Abiba Systems | www.abibasystems.com
  • © Abiba Systems | www.abibasystems.com
  • The propensity of a pre-paid customer churning is three to five times that of a post-paid customer. “ It is costing operators 8 to 10 times to acquire a new customer than to retain existing customers” – Gartner Churn rate in emerging markets is averaging > 50% p.a and is expected to go up further with new operators and MNP. A loss of just 10% of its high value subscriber base amounts to a loss of 85% in revenues for the company – Dataquest. e.g. In some markets – ARPU of older valuable subscribers is about $20 – while for new prepaid subscribers is <$2 Churn cost global telcos $10 billion annually in the form of customer defection -Telecommunications Online© Abiba Systems | www.abibasystems.com
  • The matured approach Value based WAR+Analysis Now retention Proactive retention – Mass, higher cost, customer Beyond 48 monthsEffectiveness dormancy management fatigue, low effectiveness Reactive, higher cost, 24 months to 48 Reconnections low life post months after launch reconnections high costs, low life Up to 24 months Only acquisition after launch post connections Maturity© Abiba Systems | www.abibasystems.com
  • Limited customer information Minimal customer engagement when compared to Postpaid Very low exit barrier Low Loyalty levels and sticky Very Low ARPU which does not factor justify ‘generic’ retention© Abiba Systems | www.abibasystems.com
  • © Abiba Systems | www.abibasystems.com
  • Set Clear CLM Objectives Value based approach Control at entry – channel management, brand fit, Cost of acquisition No retention at any cost – ROI driven If you can’t retain - ARPU enhancement No customer fatigue OR dissatisfaction© Abiba Systems | www.abibasystems.com
  • Whom should I retain / acquire? CLV Response Modeling BI & Segmentation Who will respond to What is happening? the campaign? How long can the customer be retained ? Survival Analysis Why is the customer churning ? Profiler Churn Prediction Actionable Decisions Which are the Who is churning? better campaigns ? Recommendation© Abiba Systems | www.abibasystems.com
  • Data Mart Campaign Planning Pre Campaign Post Campaign Analytics Target Analytics Campaign Location Analysis Sampling Analysis Hot Spot Analysis Reports What -if© Abiba Systems | www.abibasystems.com
  • Understand customer behaviour and drivers for churn Assist good quality and foil poor quality Retain the high acquisitions value subscribers Improved ARPUs by upselling Effective resource Extend life of utilisation – better desired campaign ROIs subscribers Quick response to market Manage internal reviews with little ‘sweat’ – Makes you an internal Champion© Abiba Systems | www.abibasystems.com
  • © Abiba Systems | www.abibasystems.com