The document discusses customer segmentation and intelligence in the telecommunications industry. It provides insights from a conference on how telcos can better understand customer needs, behaviors, and value through segmentation analysis. The key insights are that telcos need more customer lifestyle and needs data to reduce costs and improve experiences. They also need to adapt to changing consumer trends like personalization and generational differences. An integrated segmentation approach is recommended to develop targeted value propositions and marketing strategies for different customer segments.

1. Customer Segmentation and Intelligence “All customers are equal, but some are more equal” Learning from IIR Conference & THoM’s point of view on segmentation October 2008, Monaco

2. Monaco…the ultimate segment Lifestyle, needs, product/service usage and value

3. The conference offered deep insights in customer intelligence and segmentation, both by telco players and consultants Telco players Consultants

4. Agenda Insights in Telco sector Integrated segmentation approach

5. Economic situation is impacting the industry: Telco as a retailer playing on customer intelligence Current recession only reinforces this trend Telco as a retailer: Capturing value from third parties in order to avoid becoming ‘commoditized’: Differentiated customer care & service support Segmentation & 1-to-1 marketing Intelligence, analytics & 360° customer view Consolidation in VS, coming to Europe - Investors reshape the industry Media, Applications and Content create value by innovation Telecoms Resellers by scope Telecoms Carriers by scale How to reduce cost to serve while at the same time optimizing customer experience? Look for more value in customer The challenge is on Customer Intelligence and Segmentation Collect lifestyle/needs data (vs. a lot of usage data available) Converged services: 3-play (household) vs. 4-play (mobile: personal) US: “Death of proactive telemarketing” (1) Customers only want to be contacted when in their own interest (1): Ruth Rowan, Head of Global Marketing BT Source: IIR Conference Customer Segmentation and Intelligence, Monaco 2008

6. 5 Telco consumer trends also impacting the customer intelligence practice Consumer driven innovation (outside in) Adapt organizational flexibility accordingly (CRM 2.0) Channel preferences: consumers prefer non-human interaction Consumers drive to personalization (individualization) Consumers want more time too choose but not more choice (e.g. Starbucks) Changing demographics: generation gap at 25 “ Anyone younger than 25 has grown up with technology and they are the telco customers for the next 50 years” Bills and statements capture customers’ attention Rediscovery as a communication means (TransPromo: Transaction documents + Marketing promotions) Source: IIR Conference Customer Segmentation and Intelligence, Monaco 2008

7. Some other eye-openers from the conference Churn is not linked to satisfaction Risk assessment when using value based segmentation Don’t get to personal in 1 to 1 communication (do not show that you have detailed data on customers) It might not be a good idea to stop servicing customers with negative profitability (depending on level of fixed costs) Blending B2B and B2C: tag consumers accounts if they have a large potential/influence in B2B (e.g. British Airlines) “ Customer is king…but ‘cash’ is more king” Guerilla BI iterative IT development Sense & Respond (e.g. MCI vs AT&T: Friends & family program) Source: IIR Conference Customer Segmentation and Intelligence, Monaco 2008

8. Agenda Insights in Telco sector Integrated segmentation approach

9. 4 different types of segmentation can be applied depending on the business objectives Needs-based segmentation (including drivers) Segment based on behaviors, needs and drivers. Behaviors indicate past behavior, while needs and drivers indicate planned behavior. Value-based segmentation Segment customers based on how much they are worth (potentially) Lifestyle-based segmentation (including socio-demo and psychographics) Segment customers on their lifestyle and their attitudes towards product categories Usage-based segmentation Segment customers on their past and current usage of channels and products (if possible include also usage at competitors) 1 2 3 4

10. THoM’s methodology for developing a targeted marketing strategy thanks to an integrated segmentation method Understand business issues and define strategic objectives Elaborate integrated segmentation models in function of strategic objectives Macro-level segmentation Micro-level segmentation Integrated segmentation approach Develop value propositions per segment Quantify campaign ROI and evaluate impact of segmentation with regard to strategic objectives Conduct targeted marcom & sales initiatives 1 2 3 4 5