Driving High Performance for a Large Wireless Communication Company Through Advanced Customer Insight Accenture Consulting – CRM Customer Insight Presenters: Ramin Mikaili and Lynette Lilly
Why Customer Insight? In saturated competitive markets, the economics of acquisition and retention becomes painfully obvious and requires a shift in the marketing mix from using the 4 Ps to the 4 Rs. 1 1. James G. Barnes book "Secrets of Customer Relationship Management" McGraw Hill copyright 2000, page 22-23 4 Ps Price Product Promotion Place 4 Rs Relationships : effective communication, trust, commitment, understanding customer needs Retention : targeted incentives, rewards, loyalty programs for specific segments Referrals : value selling, Communication Recovery : strong win-back programs, product and service development Acquisition determines how fast a company can grow. Retention determines whether a company will survive over time.
Levels Of Insight Various analysis types are employed to make sound decisions about corporate direction, acquisition and capital investments, retention, ups-sell or service. Retention, up-sell, or service Acquisition, capital investments
Mass media buys
Capital/Technology Investment Strategy
New Market Entry
IT project prioritization
Supply Chain Strategy
New Business/Growth Strategy
The “P’s R’s”
Cross sell of value added services
Differentiated customer service
Telesales calling lists
Web site personalization
Lifecycle communication plan
5-10 Segments 50-100 Cells Millions of Customers Illustrative Business Decisions Level of Insight
Approach Accenture implemented a phased approach for a successful Customer Insight Revenue Generation program. -20% 0% 20% 40% 60% 80% 100% % of Potential Value Captured Insight Obtainment
Develop tactical targeting tools
Apply test and control methodology to examine/generate hypotheses
Identify the customer data requirements for enhancing the effectiveness
Develop optimal campaign program plan
Develop long term road map
Sustained Customer Insight
Institutionalize insight throughout the organization
Ingrain new processes in the organization
Extend/expand the scope of revenue growth strategy to include other channels, customer base
Develop technology based capabilities
Value Capture Value Targeting Phase 1 Phase 2 Leverage Results to Entire Base Phase 4 Results Tracking & Monitoring Phase 3 Establish Growth Strategy Prove Effectiveness Improve Efficiency
The Lifecycle Group is responsible for maximizing the lifetime value of the customer base
Their traditional focus has been retention. Team has had significant success reducing churn and increasing the portion of the base under contract
As these churn programs have matured, focus turned to proactively growing the revenue of existing customers
However, the carrier lacked key infrastructure and capacity to launch a comprehensive cross sell/up sell program
Significant increases achieved for pilot, base, and lifetime incremental revenue
Identify, profile and analyze the segments
Assess market and identify opportunities
Develop portfolio of cross-sell and up-sell pilot opportunities
Select opportunities and develop business case
Create pilot launch plan and identify key metrics
Prepare channels and launch pilots
Monitor pilots and create summary report of results
Leverage Results to Entire Base
Design campaigns based on pilot results
Create launch plan and business case for campaigns
BI Offerings Solution Results
A leading US provider of fully integrated, wireless communications services.
Focuses its products and service towards Business Customers
Leads the Industry in Customer Retention
Increase Revenue Case I: Revenue Generation for a Major Wireless Company
Case I: Growth Segmentation Analysis Framework Rate Plan - Price Point 1 -10% +10% Unstable Trend Separates customers to limit “noise” in trend analysis H M L 1 2 3 Undefined/Error H1 H2 H3 M1 M2 M3 L1 L2 L3 6 month subscriber average of key charges. Forecast change in revenue over 6 months based on a regression of monthly subscriber charges to smooth month to month variations Cut-offs chosen to show significant trends in the movement of revenue and to split the base roughly into three parts Cut-offs chosen to split the base into roughly three parts 1 2 3 4 5 The Revenue Change matrix is the tool we use to analyze the base Rate Plan - Price Point 2 Identify & Profile segments Average Subscriber Charge Subscriber Charge Trend 6 Month
The wireless industry is exhibiting the telltale signs of a maturing and potentially unhealthy market. Note 1: Includes Consumer Post-Paid, Business, Resellers and Pre-Paid Subscribers. Source: CTIA, Morgan Stanley, Client estimates
Declining new subscriber growth
Saturation of high profitability wireless users
Market inefficiencies and gap between customer marketing and sales is adding to declining margins
Largest remaining sources of growth are lower end
Switchers out number new entrants by 2:1
LWNP is not an “if” but a “when”
Spectrum and network constraints abound
Untraditional entrants are shifting the value chain
Bottom-line economics are deteriorating
The Bad News: Case Study II: Insight Driven Customer Strategy
$80B industry with revenues with 12% Cost of Acquisition
New products and services still compelling in value
Bundles are becoming increasing important
Convergence is bringing new opportunities to the market
Market is at an inflection point
Focus is shifting from revenue growth to profitability
The Good News: Rev./User 1 $46 $45 Churn 2.6% 2.7% CPGA $286 $294 Min. of Usage 188 249 Revenue Cost Attrition Decreasing Customer Value $46 3.1% $340 343 Yield 2 $0.24 $0.18 $0.13 Annualized Subscriber Growth Annualized Growth Rate June 85 June 01 0% 50% 100% 150% 200% 250%
Which new products are most likely to have fastest, profitable uptake and by which customers?
Which new products will attract new customers that look like our most profitable cells?
How do we launch a new product to maximize adoption?
Which handsets are best for our bottom line (by customer)?
How do we determine inventory and store shelf to best meet the needs of local customers?
How do we better deploy Network capital to improve service and loyalty?
What geographic areas should be our priority in rolling out?
Where can we invest to turn around profitability issues?
How do we maximize new product adoption?
How should we route calls and handle an individual customer contact?
How do we respond to a competitor price change?
Can we institute a customer loyalty program to reduce churn?
How do we handle Increasing volumes into the call centers?
What is the likely reason thus customer is calling and how can we best serve profitably?
How do we prioritize IT infrastructure development to optimize customer experience and our bottom line by segment?
Which potential alliance partners’ support our customer strategy?
Which alliances are most likely to attract and retain the “best” customers? On what terms?
In this saturated market, the company was facing many key business questions that now can be answered with strong analytical support. Sales Customer Service Information Technology Supply Chain Alliances Product Development Network Customer Insight
The first step was to create a 360-degree view of the customer that incorporated factors from all key areas. Case Study II: Approach Component of Segmentation Variable Category Charges from the billing system Minutes of use – used as a proxy for cost to serve Minutes of use Channel preferences
Case Study II: Strategic Segmentation This analysis yielded five strategic segments and the decision was made to further analyze the cells below these for insights in many key decisions areas. Sources: Customer Data Top Level Strategic Segments Population Multiple Seg C Segment D Seg B Seg A Seg E Value Factors Behavior Factors (Average)
Case Study II: Market Research Results 1 Source: Client Data. Segments were at least 20% different from average to exhibit listed behavior. 2 Source: 2001 Convergence Audit. Segments were at least 20% more likely than average to exhibit listed behavior. Using primary research already performed, we were able to determine key product areas for top segments. Segment More Likely to Have Less Likely to Have Product Features 1 Expressed Interested in the Following Data Products 2 A B C D E
Not Interested in Data Products
Not Interested in Data Products
Case Study II: Market Research Market Share Leader in Segment Note 1: Includes carriers such as Nextel, Rural Cellular, US Cellular and respondents who did not indicate a carrier. Note 2: Adding values may not total exactly 100% due to rounding. Segment Company 1 Company 2 19% 22% 22% 21% Company 3 Company 4 Company 5 11% 12% 18% 17% 20% 14% 13% 16% 18% 16% 11% 14% 7% 10% 3% 3% 23% 17% 14% 7% 4% Others 1 Total 2 19% 23% 26% 21% 29% 100% 100% 100% 100% 100% A B C D E Company 6 6% 4% 7% 8% 7% Market Share By Segment Source: 2001 Convergence Audit. Data is from response to question about, “who is your wireless carrier?”. Market versus Client comparison is made using Claritas data and should be used for relative comparison only. Data does not exactly reflect Client’s base. In highly competitive industry with high churn rates, it was critical to identify the addressable market in each area, and to find out where those customers were if they were not in our base.
What is Customer Insight? Customer Insight is a capability that requires the integration of business processes to drive actionable strategies and tactics. From our perspective, Customer Insight provides a holistic platform for the management, analysis, and application of information to drive business decisions across a corporation. Integrated View of the Customer Adaptive Campaign Management and Execution Intelligent, Insight Driven Interactions Gather & Manage Data Apply Insight Analyze Data/Draw Insight Profiling and Propensity Modeling Segmentation and Value Analysis Close the loop so customer responses are quickly incorporated into future analytics Customer Insight Customer Insight Framework Data Enrichment and Refinement