Airtel’s customer relationship model


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Airtel’s customer relationship model

  1. 1. AIRTEL’S CUSTOMER RELATIONSHIP MODELDeveloped a Customer Relationship Model based on experiences attained from CRMproject engagements globally. The Model shows that the customer relationship isstrengthened by Relationship Building tactics, which are continuously measuredthrough time. The end result is a strong customer relationship, which lead toacceptable customer loyalty, profitability and retention. Success criteria such asshare of wallet, profitability and cross-sell rations are also applied as part of thecontinous measurement to ensure that Business Case requirements have beenachieved.SOLVING CUSTOMER RELATIONSHIP MANAGEMENT INVOLVES ADDRESSING APRINCIPLES-BASED VALUE CHAIN
  2. 2. Technology Data & Applications People & Activities Data Warehouse/Data Application Specific Data Business Strategy Mart Model External Data Providers  Business Process Extract & Transformation Data Hygiene / Enrichment Reengineering Database  Change Management OLAP  Cleansing & Conditioning  Project Management Data Mining  Householding - Application Statistics - Segment of One Implementation Query & Reporting Marketing - Data Warehouse/ Warehouse Management  Customer Valuation Data Modeling Metadata Management  Customer Risk Analysis  Warehouse Architecture High-End Servers  Profiling and Segmentation  Logical, Physical Design IT Infrastructure  Predictive Behavior  Channel Integration Networking Modeling  DB Implementation Network & Systems  Targeted Marketing - IT Infrastructure Management &CampaignManageme  IT Architecture Internet nt  Network Design, Planning Web Warehouse Customer Contact & Implementation Security Management  Network & System Integration Technologies Customer Profile Management Operational Data Stores Content Management -On-going Customer Call Center & Messaging Catalogue Management Support Middleware CHURN MANAGEMENT What are the commonest reasons for customers to switch from one service provider to another? Some of the common driving factors for churn are  poor performance,  poor customer care,  rate plans and
  3. 3.  handset issues - GSM or CDMA service.Regarding churn, something interesting that’s been noticed is that it’s much higherin the case of pre-paid services, with a churn rate of 8:1, than in post-paid servicewhere the rate is 3:1.The idea of pre-paid cards is that the customer will mature to become a post-paidone and so it pays to retain him too. After all, it’s five times more expensive toacquire a new customer than to retain an existing one.HIGH CHURN RATESThe industry standard is around 2 percent a month. The cost of acquiring a newcustomer is more than that of retaining one. The cost of acquiring a new customer ismore than five times that of retaining an existing customer. Even if you calculate achurn of 2 percent a month, an operator is losing 24 percent of its customers everyyear. Whatever the numbers, the fact remains that the telecom industry’s bottomline is getting affected significantly thanks to the high churn rate.WHY IT HAPPENSUsually, such a high churn rate is witnessed in more mature markets whereoperators try to attract customers from competitors since market growth issaturated. But with one of the lowest telecom penetrations, the Indian market isanything but mature. Then what are the reasons for this trend?Many subscribers shift to another vendor due to brand image. Beyond the brandimage, higher churn is generally attributed to the numerous tariff options availableto customers. A customer may also churn due to billing disputes with a particularvendor—billing fraud also comes into play. More than tariff plans it is the quality of
  4. 4. customer service that prompts a customer to churn or remain loyal. In the currentmarket scenario there is hardly any difference in offerings, prices and quality ofservice offered by different operators. Cut-throat competition has ensured thatthere is not much difference between the tariff plans offered by different vendors.This is where customer service and value-added services come into play. If anoperator doesn’t anticipate market needs or does not provide value-added servicesoffered by the competitor, then the customer is likely to churn.Other than this, some of the key factors that encourage churn are inadequatenetwork coverage, which includes dropped calls that occur in places where networkcoverage is thin and blocked calls that occur when the demand for network servicesexceeds capacity.The churn problem is more prevalent in the prepaid segment, which today accountsfor the vast majority of Indian cellular users. The prepaid customer is more price-sensitive than the post-paid one. With rentals as low as Rs 300, customers with lowusage prefer prepaid cards. Also, students and those who like to experiment withdifferent networks prefer the prepaid offering.Bharti Cellular reduced its churn from 3 percent to 2 percent with immense positiveimpact on its bottom line after deploying the churn management solution SAS.Today, they can predict with 80 percent confidence, which customer will churn.Internationally they have reached accuracy levels of 90-95 percent. But customervariables keep changing. Hence the solution has to be continuously fine-tuned toimprove accuracy. SAS offers a total end-to-end customer retention solution, whichsupports the whole process of managing churn—right from gathering and
  5. 5. warehousing data to predictive churn modeling to reporting and distributingactionable results to decision makers.The solution enables an operator to gain a better understanding of the variables thatinfluence customer churn. The solution predicts a customer’s likelihood ofcancellation or switchover by scoring them on a scale of 0 to 1. If a customer scores0.73 it means there’s a 73 percent chance of his churning. The lower the score, themore content the customer. Once the scores are known, it is easy to figure outwhich customers are likely to switch.The solution provides the telecom company with a sliced and diced view of thecustomer base, thereby empowering it to treat each customer differently as perneeds. The customer attributes typically considered in a churn analysis can bebroadly categorised into customer demographics, contractual data, technical qualitydata, billing and usage data and events-type data. But the most commonly usedhistoric variables include the time a customer spends on air, the number of calls hemakes and the revenue generated from that customer.The predictive information becomes crucial as it gives the service provider a windowto proactively fix the glitches in service and contain churn, thereby improvingbottom lines. The solution also helps identify cross-sell and up-sell opportunities,which can have a further positive impact on the operator’s bottom line. Once theyhave identified the customers who are likely to churn they can take immediatemeasures to retain at least 85 percent of them.POSTPAID CHURN SOLUTIONS THAT WORK Optimising subscriber acquisition costs
  6. 6.  Managing retention costs healthily How do you keep your customers with an effective pricing dimension? Matching the right customer profile with the right marketing bundle creatively Learning points from past campaignsEFFECTIVE CHURN MANAGEMENT AND PERFORMANCE MEASUREMENTFRAMEWORK Exploiting historical churn data and optimising the churn prediction Structuring a strong churn management frameworkMeasuring the effectiveness of your churn management strategy in terms of: Methodology ResultsMINIMISING CHURN & BUILDING CUSTOMER PROFITABILITYPOSTPAID CHURN SOLUTIONS THAT WORK Optimising subscriber acquisition costs Managing retention costs healthily How do you keep your customers with an effective pricing dimension? Matching the right customer profile with the right marketing bundle creatively Learning points from past campaignsCOMPREHENSIVE APPROACH TO CHURN CONTROL IN HIGH GROWTH ANDCOMPETITIVE MARKETS Acquiring quality customers Using new customer induction and expectation management as a retention tool
  7. 7.  Managing monthly payment cycles to minimise defaults Engaging channels to expand your reach for your retention programs Customer retention Revenue stimulation Direct customer communicationAll these enhancements successfully changed the customer retention paradigm froma reactive to a proactive one resulting in a continuous decline in postpaid churn overlast year leading to an all time low churn.BEST WAYS TO PREVENT THESE HIGH RATES OF CUSTOMER CHURN Effective customer service could be a deterrent to churn. Branding and service differentiators also help in taking customers away from competitors. proper operational and analytical CRM tools in place that would help segment and analyse customer behavious and predict their propensity to churn. It is necessary to proactively strategise and service customers so as to retain the high value ones.For Airtel , Analytical customer retention solutions would help identify the high-,mid- and low-value customers and the valuable ones who are most likely to cancelservices, and their reasons for doing so. They would also help in better campaigntargeting and a more focused strategy.The multidimensional data base (MDDB) thatAirtel has, let internal sales and marketing groups research customer informationfrom their desktops .CUSTOMER ACQUISITION
  8. 8. Steps: Identification of potential customers Influence the target customer buying behavior Customer acquisitionSTRATEGIES:Introduction of a new tariff plan with different slots like leisure lifestyle, executiveand premium for postpaid customers.AirTel also offers different tariff plans todifferent segments like students, professionals, etc.Airtel has also implemented an e-CRM platform to create a central database ofcustomer information, to enable pan-India access and service delivery.
  9. 9. CRM BUSINESS STRATEGYIn fact, Airtel has seen that CRM actually represents a business strategy that involvesfocusing knowledge, business processes and organizational structures aroundcustomers andprospect for the whole organization. Surrounding this business strategy is aninformation technology infrastructure consisting of data warehouses, decisionengines and integrated middleware for touch points/channels in order to betterunderstand customer behaviour and respond in a timely and relevant manner.Today’s consumers’ can no longer be treated as a “homogenous collection ofrevenue generating units”†, but rather as individuals whose specific wants andneeds determine unique behavior (buying patterns, channel usage, etc.).
  10. 10. CRM CONCEPT AND IMPLICATIONS BY AIRTELWith the increased penetration of CRM philosophies in organizations and theconcomitant rise in spending on people and products to implement them, it is clearthat AIRTEL see improvements to establish long-term relationships with theircustomers. However, there is a big difference between spending money on thesepeople and products and making it all work: implementation of CRM practices is stillfar short of ideal. Airtelis recognizing the importance of creating databases andgetting creative at capturing customer information. They Are continous learninghow to develop better communities around their brands giving customers moreincentives to identify themselves with those brands and exhibit higher levels ofloyalty.One way developing an improved focus on CRM is through the establishment orconsideration of splitting the marketing manager job into two parts: one foracquisition and one for retention. The kinds of skills that are need for the two tasksare quite different. People skilled in acquisition have experience in the usual tacticalaspects of marketing: advertising, sales, etc. However, the skills for retention can bequite different as the job requires a better understanding of the underpinnings ofsatisfaction and loyalty for the particular product category. In addition, time being acritical scarce resource makes it difficult to do an excellent job on both acquisitionand retention. As a result, Airtelhas appointed a chief customer officer (CCO) whosejob focuses only on customer interactions.In this organization, the person overseeing the company’s marketing activities, theVP-Marketing, has both product management and the CCO as direct reports. The
  11. 11. CCO’s job is to provide intelligence to the VP from marketing research and thecustomer database for use by product managers in formulating marketing plans andmaking decisions. In addition, the CCO manages the customer service operation.Although it would perhaps seem more logical for the CCO to report to productmanagement, the reporting arrangement to the VP-Marketing is a signal to thecompany of the prominence of the position. The CCO also interacts with othercompany managers whose operations may have a direct impact on customersatisfaction.The notion of customer satisfaction is being expanded to change CRM to CEM,Customer Experience Management. The idea behind this is that with the number ofcustomer contact points increasing all the time, it is more critical than ever tomeasure the customer’s reactions to these contacts and develop immediateresponses to negative experiences. These responses could include timely apologiesand special offers to compensate for unsatisfactory service. The idea is to expandthe notion of a relationship from one that is transaction-based to one that isexperiential and continuous. As with any decision with substantial resourceimplications, a cost-benefit analysis of CRM investments must be performed.CREATING A CUSTOMER DATABASEA necessary first step to a complete CRM solution is the construction of a customerdatabase or information file. This is the foundation for any customer relationshipmanagement activity. This should be a relatively straightforward task as thecustomer transaction and contact information is accumulated as a natural part of the
  12. 12. interaction with customers. The task will involve seeking historical customer contactdata from internal sources such as accounting and customer service.Ideally, the database should contain information about the following:  Transactions. This should include a complete purchase history with accompanying details (price paid, SKU, delivery date)  Customer contacts. Today, there is an increasing number of customer contact points from multiple channels and contexts. This should not only include sales calls and service requests, but any customer- or company- initiated contact.  Descriptive information. This is for segmentation and other data analysis purposes.  Response to marketing stimuli. This part of the information file should contain whether or not the customer responded to a direct marketing initiative, a sales contact, or any other direct contact.  The data should also be over time.CRM RESPONSIBLE FOR MAGIC AT AIRTELThough it is continuously spreading its wings, expanding its capabilities, andexploring new horizons, one rule at Bharti remains unchanged: seek out the world’sbest technology and put it at the service of customers. CRM is part of this process.WHY CRM FOR AIRTELIn a telecom services company like Bharti, airtime is considered a product. “It is vitalfor them to manage the expectations of their customers and provide them withinnovative products and services in a manner which makes them loyal,”.
  13. 13. To achieve this, Bharti needed to have the appropriate means. “To better serve theircustomers they needed a tool. It is this need that made them to opt for a CRM(customer relationship management) solution”.CHERRYPICKING A SOLUTIONToday Bharti is using the Oracle CRM platform. “As part of their vision, they intendto provide AirTel services anywhere and at any time.A customer should get the same quality of service no matter which of our callcentres he contacts. This has been the vision, and because of that they have gone infor a centralised application like CRM. The implementation of CRM also helpedBharti in having a unified workflow and unified processes across the country.Before choosing its CRM tool, Bharti evaluated many options. It considered factorslike Proper workflow automation Facilitation of knowledge sharing Integration with the billing system.After a thorough evaluation, it decided to go ahead with the Oracle CRM platform.BENEFITSOne of the primary things that Bharti has done with CRM is SEGMENTATION OFCUSTOMERS, which has helped in providing customers more value for their money.It is important to understand and segregate customer needs depending on theproduct and services he is buying.METRICS
  14. 14. The increased attention paid to CRM means that the traditional metrics used bymanagers to measure the success of their products and services in the marketplacehave to be updated. Financial and market-based indicators like profitability, marketshare, and profit margins have been and will continue to be important. However, ina CRM world, increased emphasis is being placed on developing measures that arecustomer-centric and give the manager a better idea of how her CRM policies andprograms are working.Some of these CRM-based measures are the following: Customer acquisition costs Conversion rates (from lookers to buyers) Retention/churn rates Same customer sales rates Loyalty measures. Customer share or share of requirements (the share of a customer’s purchases in a category devoted to a brand).All of these measures imply doing a better job acquiring and processing internal datato focus on how the company is performing at the customer level.CRM REFERENCE MODELThis reference model is logically layered model that includes touchpoint, businessapplication, process, CRM, Data management and Decision support layers. It wasdeveloped as a result from customer feedback and extensive research in themarketplace on Enterprise
  15. 15. TOUCHPOINT AND PRESENTATION LAYERThis layer presents information to the business end-user through a communicationchannel-specific device. The presentation and navigation displays a consistent “lookand feel” for input and output information in the format required by the device (e.g.,browser, terminal, keyboard, keypad, phone) that is consistent across differentbusiness processes and their functions. Navigational aids will be presented to humaninterfaces; buttons, hotspots, etc on windows or browser (HTML) based interfaces,menus or other simpler interfaces such as 3270 terminals, or interactive voice forvoice channels. The navigation function of a front-end helps the user to control theusuage of, or switch between different elements of the presentation surface, e.g.,activate a specific window with the mouse, or a select a presentation object specificfunction with the right mouse button. In addition, this layer will determine the kind
  16. 16. of communication channel being used, and will transform the information going toand from the process layer to the required interfacing of this communicationchannel, e.g., Text-to-speech for Phone/IVR, CGI/Java for Internet, etc.It will also prepare the user identification and process selections required by thenext layer.BUSINESS APPLICATION LAYERThis layer determines the communication touchpoint being used, and transformsknowledge from the touchpoint to the Application such as Billing.PROCESS LAYERThe process layer provides services to different communication touchpoint- specificdevices, from a single implementation of that specific device. The process layer isseparated into a Contact, Context handler and personalization. The user accessesinformation through a communication channel-specific front-end; the user’sauthorization and profile together form a context under which all interactionbetween the user and IT functions that form and support a business process arecarried out.The Contact and Context Handler initiates and terminates the communicationchannel/user dependent context with a process/routing engine. It registers thecontext to the Contact Management, Segmentation, Routing, Resource Managementand Channel Management making it known to the underlying layers. Personalizationexecutes the business logic initiated from specific context and selects a set ofbusiness rules specific to the business process.
  17. 17. CRM LAYERThis layer represents databases that consist of the single customer view, integratedcontact/dialogue, customer profile, and content information. This layer also providesfor the ability to perform analytics and reporting on the customer experience byusing the variety of knowledge gained from all customer activity.DATA MANAGEMENT LAYERThe data management layer is the first layer that has no direct link to the businessprocesses. It represents purely IT centred objects:Transactions (get data x for user y and reservation z), direct read/write operations(read user profile u), etc. Its main function is the separation of data storage frombusiness process functions. This is done by wrapping the calls to the new or legacysystems and presentingthem as objects to the higher layers. Here, wrapping means transforming data in apredefined (unchangeable) format to the object representation required by theobject oriented environment. This layer may also use existing data warehousemanagement services.DECISION SUPPORT LAYERThe AIRTEL has been a leader in implementing various decision support applicationsin order to determine who their best customers are and what best services to offerthem. Regulatory changes have made this industry so competive that many existingdatabases,campaign management applications, etc. exist and need to be leveraged in theupper layers of this model.
  18. 18. VERTICAL LAYERSThe vertical layers of this reference model provide services that are required by allthe horizontal layers.DISTRIBUTED APPLICATION AND SECURITY COOPERATION SERVICESIn order to support the mangement of objects between the various layers somegeneralized support will be required. DCE-services, Name-services, etc. are otherexamples of distributed services. Security services establish an end-to end secureenvironment for network and system infrastructure, applications (businessprocesses and underlying activities), and the data layer. The following services haveto be provided (following the definitions of ISO 7498-2): Identification andAuthentication, Authorization,Protection, Management, Audit, and Non-repudiation.IT SERVICE MANAGEMENTAll components in the model will have to be managed for availability andperformance (Service Level Agreements). IT management processes and technologymust be in place in order for an IT organization to deliver quality services to itscustomers .CUSTOMER RELATIONSHIP MANAGEMENT - GISIn todays competitive telecommunications market, for AIRTEL , customer service isthe number one differentiator for companies. Customer relationship management(CRM) applications improve the relationship between the company and itscustomers. Timely service provisioning, response to customer queries, and reportingon network performance are aspects of CRM. With GIS, call center operators can
  19. 19. access all the information on a customer and the associated network based onlocation. Databases containing information on outside plant infrastructure, signalquality, and equipment can be integrated using GIS and made available using acorporate Intranet.In CRM, Tier 1 handling means the customers issue is resolved with the initial call.Tier 2 calls require initiating a trouble-ticket and obtaining additional information.Carriers who have successfully implemented GIS support for CRM achieve higher Tier1 handling and customer service is performed more quickly and economically. WithCRM contacts at an all-time high, improving CRM operations can make a big impacton the bottomline of a carrier. In the wireless sector, "churn" refers to the rate thatcustomers jump from one service provider to another. For many carriers, customerchurn is the single largest cost factor. GIS improves the speed and quality of contacthandling, augments customer satisfaction, and reduces churn.