Telecoms Pricing 2011     Juho Härme, Head of B2C Produce Management and formerly Director of Pricing for                 ...
JH: Especially when it comes to bundling, it’s really critical that we understand whichcomponents are the key value driver...
switching to the competitor, or whether it’s just customers terminating, but still maybe stayingas your customer while the...
IQPCPlease note that we do all we can to ensure accuracy within the translation to word of audio interviews but that error...
Upcoming SlideShare
Loading in …5
×

Telecoms Pricing: Measuring churn and value

699 views

Published on

Juho Härme, Head of B2C Produce Management and formerly Director of Pricing for TeliaSonera, will be presenting at Telecoms Pricing 2011 on the issue of determining how to effectively price service bundles in order to provide real value to customers, whilst remaining competitive within the market...

Published in: Business, Technology
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
699
On SlideShare
0
From Embeds
0
Number of Embeds
3
Actions
Shares
0
Downloads
21
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Telecoms Pricing: Measuring churn and value

  1. 1. Telecoms Pricing 2011  Juho Härme, Head of B2C Produce Management and formerly Director of Pricing for TeliaSonera       Juho Härme will be presenting this year on the issue of determining how to effectively price service bundles in order to provide real value to customers, whilst remaining competitive within the market.Telecoms IQ: Great to hear from you, Juho. So, you’ve recently moved to this role atTeliaSonera, after almost four years as Pricing Director. Can you tell us about thattransference of knowledge and how you’ve observed the industry changing over the years?JH: Yes, prior to my previous position I’d had four years of experience as Pricing Directorand then previously, four years as Pricing Manager in the B2B market and that has given mea very long experience across many generations of offerings and ways to remain competitivein the business. And now it gives me the opportunity to look at things from anotherperspective, to build on what I’ve been working on the B2B side in pricing, but also now toapproach the consumer market and from the product dimension, more closely.Telecoms IQ: And to get us started on this very short session today, would you care to giveus your general opinion of pricing in the telecoms market as it stands today?JH: Well, I think the trend we are seeing is that we are moving over from simple tariff plansand towards more complex price structures, bundling if you’d like to call it. Convergencebetween fixed and mobile, bundling of access and content, using content in various ways toboost the access business and to boost the capacity sales. There’s voice and data and thenadding the handsets and tablets into the equation. So, all of this is converging into nicepackages for the consumer and then shifting first the price message away from traditionalminute prices or [similar] to more what the customer gets for the bundle.Telecoms IQ: Now, in a recent interview with the Director of Pricing at Colt EnterpriseServices, he mentioned that, as he saw it, the crucial challenge for those in the field today isan understanding the needs of whom you’re actually selling to. Can you tell us what yourexperience has been in properly grasping and fulfilling the needs of your customers, andwhat you would advise as perhaps being the significant things to understand in order toachieve an effective relationship with the market?Telecoms IQ      1 
  2. 2. JH: Especially when it comes to bundling, it’s really critical that we understand whichcomponents are the key value drivers for the customers, which are the things they musthave and which are the things where there’s absolute little less focus on, but which will thenallow us to enlarge the package to deliver more value and capture a bigger share of revenuefrom the customer. I think that it’s a combination of both an analysis of knowing how are youroffers doing in the market, which is selling, which is not and it’s also an analysis of what youcould provide the customers. Maybe they don’t need… they don’t know they could need, orthey don’t know yet they would need, but we can, by introducing through it an attractive offer,we can then convince them to buy a bit more than what they originally thought they wouldneed. So it’s a combination of both knowing the customers and knowing what you need tooffer them.Telecoms IQ: Okay, so, really analysing, I suppose, the assumptions that are already beingmade from both the customers’ perspective and from your own. That’s good to hear. Now,budgeting concerns across Europe are, of course, also a fundamental challenge as with anybusiness, and by that I mean there’s probably a lot less leeway to make errors and a lot lessopportunity, really, to take risks when it comes to budgeting. Has TeliaSonera managed tostrike the right balance, do you think, in order to offset the financial shortfall that we’re facingthis year, and possibly in further years down the road?JH: Yes, I think the way we see it is that we’ve been focusing a lot on the quality of sales,so not just on the gross amount or the gross intake of subscriptions, but also on what kind ofsubscriptions we get. Do we get active customers or do we get just people paying theminimum monthly fee, who are mostly in for it for the handsets or for another give-away?And there, I think, clever bundling is really the trick where we see a lot of potential and whichwe’ve been steering towards, is that by making sure that we are not just giving somethingvery basic, very simple, which the customer would get for a very low fee and we would get avery low ARPU customer, but instead of putting the effort into targeting a higher ARPUsegment and even if that means bigger discounts, that’s okay, because we are getting goodARPU and that’s been the focus in our sales already for a while and I think that’s thedirection we will be steering even more towards. So emphasising the quality of the customerwe attract.Telecoms IQ: It’s got to be about relevancy. Tracking cost components is also becoming alot more complex, as you know, as solutions become more sophisticated and perhapsharder to determine. Juho, how can a pricing process, do you think, be optimised tomeasure profitability?JH: That is unfortunately, I think, one of the biggest challenges. The more we movetowards bundled offerings where generally, in traditional ways, you’d have it set up in a waythat one product “takes the heat”, while the others do well. And that requires that you track itthrough the offer, not just through the product and I think this is one of the things I’m lookingforward to hearing in our conference session, of perhaps what experiences from otherparties and exchanging the perspective in this area.Telecoms IQ: Yes, I’m sure you’re not the only one. Now, sticking with this issue ofmeasurements, measuring churn has actually been sited as a particular source of frustrationfor the industry, just from some of the speakers and the delegates that we’ve spoken toalready. What would be your perspective or approach to this issue?JH: I think measuring churn and defining churn is really a big challenge for operators and Ithink the only way to tackle it and to gain valuable insight out of that is to actually beyond justthat one figure and look at the actual customers which are leaving your subscriptions, whichare being disconnected. And then, dig deeper to see whether it’s actually customersTelecoms IQ      2 
  3. 3. switching to the competitor, or whether it’s just customers terminating, but still maybe stayingas your customer while they’re terminating some individual subscriptions, or whatever arethe thousand causes underlying that. And that’s actually the only way we can understandtruly what motivates the customers to leave us and that leads to the remedies of how wecould prevent that. If we just combat churn without the understanding why it occurs andwhat are the fundamental drivers, then it will not be successful. Then it’s more like we’re justtrying to change the definition so that it looks better rather than addressing some of yourunderlying issues.Telecoms IQ: Excellent point. And Juno, I know I’m probably making your life quite difficultby asking these particular questions, which I know will obviously require a lot more thoughtand discussion, probably at our event in just a couple of months, but an even more difficultchallenge than churn is, of course, something that you’ll be specifically confronting in yourpresentation, and that’s the issue of measuring value, be it customer value or value to theprovider. Do you think that it’s an achievable aim to expect to be able to measure value as itis? Is it even something that can be measured?JH: I think one way to measure value is to price, so to create various offers, you try them inthe market and you analyse whether you are reaching or attracting the customers. So, Ithink there are, of course, ways to try to predict the attractiveness of an offer beforehand.One way, of course, is to just make sure that you are able to do and also kill some bundles ifthey don’t… to see whether they succeed in the market or if they fail to achieve the resultsyou have set out for them. The important thing is that you can measure them on how wellare you selling which particular offer and ideally also measure their success rate throughvarious channels. And by looking at that data closely, then you are starting to get anunderstanding of what kind of customers you are reaching and what kind of customerdemand you are serving through your offers. And then, with some data, you may start to beable to predict that, okay – if this offer did well here, this offer did well here – maybe wecould try a combination of that… I think that could be one way of tackling the challenge offinding out where the value for the customers is.Telecoms IQ: So a trial and error approach is what you’d recommend. But do you thinkthat is harder to do now than perhaps it would have been, let’s say, three or four years back?JH: I’d say that it’s more interesting to do, because the more we are putting things together,the more we are packaging things, the more options we have available for us, and of course,that makes it much more difficult to tell whether it will sell or whether it will not. But it makeslife much more interesting, at least!Telecoms IQ: And that’s what we like to hear! Thank you very much. We will end there,and of course, we’ll hear more from you during your presentation, but let me thank you verymuch again for taking some time out and speaking with us today, Juho.JH: You’re welcome. Thank you and I look forward to seeing you.You can now register your attendance at Telecoms Pricing 2011, taking place on April 11-14. Email us at enquire@IQPC.co.uk or call us on +44 (0) 20 7368 9300.  Telecoms IQ      3 
  4. 4. IQPCPlease note that we do all we can to ensure accuracy within the translation to word of audio interviews but that errors may stillunderstandably occur in some cases. If you believe that a serious inaccuracy has been made within the text, please contact+44 (0) 207 368 9334 or email richard.desilva@iqpc.co.uk.Telecoms IQ      4 

×