CUSTOMER & RETAILER LIFECYCLE MANAGEMENT

Project Report submitted to Symbiosis Institute of Business Management, Bengaluru in partial fulfilment of the course “Summer Internship Programme” for the award of the degree

of Master of Business Administration

Submitted By

Students Name: Priyanka ManchandaPRN: 13020841097

Under the guidance of

Prof. A.Vidyasgar

Adjunct Faculty (Marketing)

Symbiosis Institute of Business Management, Bangalore

SYMBIOSIS INSTITUTE OF BUSINESS MANAGEMENT, BENGALURU

95/1 & 95/2, Electronic City Phase-1, Hosur Road, Bengaluru – 560100

Certificate

This is to certify that Mr/Ms. Priyanka Manchanda of MBA (2013-15 Batch) of Symbiosis Institute of Business Management, Bengaluru has done the project entitled Customer and Retailer Lifecycle Management under my guidance.

Signature of the faculty guide

Name: Prof. Vidyasagar

Designation: Adjunct Faculty (Marketing)

Date: 9th June 2014

DECLARATION

I hereby declare that the project work submitted by me entitled “Customer and

Retailer Lifecycle Management” done during my Summer Internship Program (SIP) is

submitted as a partial fulfilment of the requirement of MBA program at Symbiosis Institute

of Business Management, Bengaluru.

Project Details:

Project Title: CUSTOMER & RETAILER LIFECYCLE MANAGEMENT

Company: MTS

Company guide name : Mr.Pranay Handa

Faculty guide : Prof. A.Vidyasagar

Place: New Delhi Name:Priyanka Manchanda

Date: 9th June,2014 PRN:13020841097

Acknowledgement

Armed with only theoretical expertise in hand, the Summer Internship Project in one of the

well established Company in India – MTS was a wonderful learning experience.

The success of the project depends on the encouragement and several others who motivated

me. I take this opportunity to express my gratitude to all those who have been instrumental in

the completion of this project.

I express my sincere gratitude to Company Guide Mr. Pranay Handa (Product manager U&R,

Marketing dept.) who gave me this golden opportunity to work in the organization and took

special interest for the success of the project. I would like to thank him for his valuable time,

advice, and guidance, which enabled this report to occur.

I would also like to thanks Mr. Debajyoti Mal (Marketing Head, MTS Delhi Circle) who

provided me with such great opportunity to work and learn with MTS.

I would like to express my gratitude towards members of MTS for their kind cooperation and

encouragement which helped me in completion of this project.

I am also thankful to Prof.A.Vidyasagar (Faculty Guide, SIBM Bangalore) for his continuous

support throughout my training period.

Prof. A.Vidyasagar Mr. Pranay Handa Mr. Debajyoti Mal

Adjunct Faculty (Marketing) Specialist, Voice (U&R) Head Marketing

Faculty Guide Project Guide MTS Delhi

Table of Contents

Chapter 1

Industry Analysis

Company Analysis

Introduction of the Project

Objectives of the study

Chapter 2

Literature Review (Minimum 5 research papers) (optional)

Hypothesis Development (optional)

Research Methodology

Limitations of the study

Chapter 3

Analysis of Data

Chapter 4

Findings and Conclusions

Suggestions

Bibliography (APA format), References (Footnotes)

Annexure

EXECUTIVE SUMMARY

MTS India is an Indian subdivision of Russian Mobile Tele Systems  Telecommunication

Company headquartered in New Delhi, India. It provides wireless voice, broadband Internet,

messaging and data services in India. MTS India is a subsidiary of Russian

conglomerate Sistema and operates across India with over 16 million customers.

The Project focuses on Customer Lifecycle Management at Sistema Shyam Teleservices Ltd.

(MTS) .

The purpose of the project Customer Lifecycle management is to understand the perceptions

of customers towards different offers and their satisfaction with the services offered by MTS

in particular and to segment the customers according to their usage so as to target them. The

project comprises of studying the market potential of MTS in comparison to other players in

the telecom industry

This will ultimately help me in finding out the untapped customer segments and exploit it to

the fullest and to the advantage of the company.

The major part of the project deals with as to how to communicate effectively in the already

cluttered telecom market and help the company to extract revenue from the target customer.

Customer Lifecycle Management though Retailers at MTS. The basic aim of the project is to

show various means where we touch base the customer Indirectly through Branded Retail

stores (BR’s) by providing personalised offers to the customers through a message which is

being delivered to the BR , when BR sends a message to MTS containing the customers

number.

Also,I was required to design the special offers to the customer base for the month of June

based on various criterias. In order to improve the efficiency of the telecalling agency

catering to MTS I paid regular visits to the telecalling agency which deals with our entire

customer base and informs them about the expiration of their recharges and provide them

with the best offers and schemes available.Also note their complaints and maintain monthly

record of the recharges done.

The project also involves customer engagement via telephone,mails to know the customer

perspective for our product whether the customer is interested in the product and whether its

selling as expected in the market.and if its not,then list the possible reasons and alternatives

for the same.

CHAPTER-1

INDUSTRY ANALYSIS

India's telecommunication network is the second largest in the world based on the total number of telephone users (both fixed and mobile phone). It has one of the lowest call tariffs in the world enabled by the mega telephone networks and hyper-competition among them. It has the world's third-largest Internet user-base.According to Telecom Regulatory Authority of India(TRAI) Annual report.The year 2012-13 has been an eventful year for the telecommunicationsand broadcasting sectors. In the telecom sector, activities centred aroundthe National Telecom Policy 2012, Spectrum Management, SpectrumAuction and Unified Licensing. In the broadcasting sector, based on theAuthority’s recommendations, a landmark decision has been taken by theGovernment to migrate to Digital Addressable Cable TV Services. TheAuthority has laid down an appropriate regulatory framework for themigration to take place. Besides, the Authority has taken a number ofmeasures in the consumers’ interest; these include steps in the areas ofquality of service, tariffs, transparency in service provision, mobile numberportability, protection of telecom consumers from the menace of unsolicitedcommercial communications and consumer complaint redressal.

The Telecom Sector witnessed a marginal decline in the number ofsubscribers during the year 2012-13. At the end of the financial year, thesubscriber base was 898.02 million, out of which 867.80 million werewireless subscribers. During the year, wireless subscriber base recorded adecline of 51.37 million, while the overall teledensity declined marginallyto 73.32 from 78.66. The year also saw increase in rural teledensity to 41.02from 39.22 while the urban teledensity decreased to 146.96 from 169.55.During the year, 47.82 million subscribers submitted their porting requeststo different service providers for availing Mobile Number Portability (MNP)facility.

The table below shows how the telecom industry via both the wire line as well as the wireless

has shown a tremendous growth over the past few years.

Table 1:-Growth of telephone over the years (In millions)

(Table 1) Source: www.dot.gov.in

Changes in structure of composition of Telecom Sector Wire line vs. Wireless

The growth of wireless services has been substantial, with wireless subscribers growing at a

compounded annual growth rate (CAGR) of 57.1% since 2004. Wireless has overtaken wire

lines. The share of wireless phones has increased from 46.54% in 2004 to 95.54% in

December, 2010.

Source: www.dot.gov.in (Figure 1)

After years of splendid growth, wireless subscriber base shrunk by 7.7 percent during June

2012-January 2013, primarily due to removal of inactive subscribers. Active subscribers

continued to grow modestly at 1.8 percent over June 2012 - January 2013 period but nowhere

close to the growth of 11 percent recorded during the same period a year ago. Industry

estimate expects total subscriber base will continue to slide in FY14 and recover mildly in

FY15. Active subscribers will continue to grow though at much lesser pace than their

historical average.

 One of the biggest inhibitors for growth of VAS industry is inverted revenue-share model

where telecom operators keep 60-70 percent of VAS revenue, which needs to be reversed.

After reduction in 3G tariffs by 70-80 percent in May 2012, the traffic has gone up

exponentially. Partial roll-out of 3G has been one of the key reasons for poor adoption as 3G

BTS deployment is just 12 percent of total.

FY12 saw the continuance of growth for the Indian telecom market, which witnessed a 12%

year on year increase in its subscriber base during the 12-month period. At the end of March

2012, the country’s total telecom subscriber base (fixed plus mobile) stood at about 951 m.

Source: - Care research report (Figure:-2)

Growth remained robust in the GSM mobile space. GSM added 115 m subscribers during the

year. After a robust 46% year on year increase in subscriptions during FY11, the growth in

GSM industry has slowed down to 17% year on year in FY12. The year saw the apex court of

the country cancelling the disputed 2G licenses that were issued in 2008. The cancellation

caused the exit of Etisalat and Batelco from the sector

During FY12, India's mobile subscriber base grew by 13% year on year, from 812 m to 919

m, while the fixed subscriber base declined by about 7%, from 34.73 m to about 32.71 m.

Trend in Teledensity

Teledensity is an important indicator of telecom penetration in the country. There has been

phenomenal spurt in the growth of teledensity in the country with the evolution of new

wireless technologies.

The tele-density level stood at about 76% by the end of the fiscal.

Source: www.dot.gov.in (Figure 3)

DATA SEGMENT

The data/broadband story in India has always remained just a nice story. While the telecom

industry in the rest of the world obtains 35-50% revenues from non-voice services, India

derives only 18% of sales from non-voice/ data services. We see a number of key factors of

the data supply chain falling in place and believe India is on the verge of a data revolution.

Data growth could help offset the slowdown in voice revenues for the industry, by adding

500 bps to revenue CAGR over the next three years.

Figure 4: Expect data to thrive over half of incremental revenues over next three years.

Data uptake in India is low by global standards

Globally, the telecom industry obtains only 50-65% of its revenue from plain voice services.

The rest of revenue (35-50%) comes from non-voice services (SMS, retail and corporate data,

Internet, VAS etc.). As seen in the Figure 10 below, this is true even of EMs like China and

Malaysia. However, India seems an outlier with less than 18% of telecom industry revenues

coming from non-voice services. This manifests in the form of low Internet/ broadband

penetration.

We believe this is an unsustainable position, and data revenues should start picking up, taking

India closer to world average – especially given the recent launch of 3G services in the

country.

Figure 5: Data contribution to Indian Telecom Industry revenues is unsustainably low

Source: Company data, Credit Suisse estimates

Low Internet/ broadband penetrationUnlike the rapid uptake in mobile voice telephony by India in recent years (penetration 68%),

the

broadband industry remains a poor cousin of its mobile voice counterpart. Internet

penetration is struggling to even reach 10% – a third of the world average of 29%.In fact –

given its size – India is actually helping pull down the world average by around 400 bps.

Figure 6 : Internet penetration in India is far behind the world average

Source: Company data, Credit Suisse estimates

Potential for Further Growth

Figure 7:-outlook of telecom sector

According to the industry estimates the voice and data tariffs will need to be rationalised in

2013 to sustain the telecom industry. Operators will leverage on innovative pricing strategies

and launch new tariff plans to position themselves competitively in the industry.

Voice and text revenues are declining or becoming stagnant but operating costs are increasing

exponentially. An increasing number of operators and the implementation of regulatory

policies like mobile number portability lead to increased churn rates. The likely, loss of

almost 10% of revenues from loss of intercircle roaming charges will further hit the operators

in 2013. Competitive pressure and price wars are forcing operators to reassess the pricing of

voice and data services.

Although consumers are signing up for mobile broadband in record numbers, often

encouraged by flat-rate pricing, networks are becoming congested and are either running

slowly or denying access entirely. Data traffic is not translating into equivalent increase in

average revenue per MB. Also, the quality of service has gone down in order to comply with

the new EMF radiation norms. Poor quality of service translates into poor user experience.

Unhappy customers are voicing their displeasure – but seem unwilling to pay more to

improve service. There is a strong need for more rational pricing, especially in the mobile

market. Firstly, this is forcing operators to move away from unlimited plans and promotional

offers. Secondly, this is pressing them to consider an increase in the tariffs in urban areas to

compensate for the rural operations47.

However, Industry estimates expects that the tariff hike will be gradual in 2013 - either in the

form of removing discounts or increasing tariffs nominally, so as to prevent a sudden drop in

volumes due to a significant hike48.This trend has already begun with many operators

discontinuing the promotional offers and freebies49.They are gradually increasing the voice

and SMS tariffs of both, prepaid and postpaid plans, to support network infrastructure

upgrades. The consensus view on global data pricing has been that the only way to attract

subscribers is to offer unmetered data. Moreover, the consensus also suggests that once made,

the offer of unmetered data pricing can never be withdrawn without enormous customer

backlash50.However, Deloitte predicts that in 2013 network operators in India – both

wireless and wire line – are likely to stay away from unlimited data pricing plans and become

stricter towards fair usage policies.

Specifically, ‘power’ users will almost certainly be billed for how much data they use, and

may be even charged for when they use it and also what kind of data is being used. Moving

away from “unlimited” is only the first step – a key question is what kind of metering will

work best. Should charges be similar to utilities such as water or electricity? On the other

hand, a pure metered “pay per byte used” could dramatically reduce revenues for carriers.

Many service providers offer tiered service, with various caps on total bits used in a billing

period. But, once these caps are exceeded, each additional bit can be prohibitively expensive

or the speed is likely to be drastically reduced to few kbps. These coverage charges may

make sense from the carrier’s perspective as they create an incentive for the consumer to opt

for more expensive plans. However, it leads to unhappy customers either due to bill shock or

due to poor user experience after the capped usage. In order to stop the subscriber loss and to

grow market share, Deloitte predicts that in 2013 operators will be leveraging on innovative

pricing strategies to position themselves effectively against their competition. For example,

recently an operator had launched a unique ‘All Share Postpaid Plan’, which allows up to 10

members within a family or group to enjoy free sharing of voice, data and SMS on a single

bill51. Having one contract, stops users from picking different tariff plans from different

operators and also helps providers to acquire and manage a single account instead of separate

subscriptions, eventually reducing subscriber acquisition and management costs.

Also to develop targeted services and tariff plans, operators will increasingly leverage on the

customer analytics, which provides a more detailed view of the customers’ usage patterns,

leading to new revenue sources. Continuous innovation in the telecom sector has enabled

operators to provide telecom service to people at lowest tariff rates. Operators have been

continuously reducing CAPEX and OPEX through innovative business models (outsourcing

core network operations and network sharing) and marketing service offerings (per second

billing, bundling offers, micro-prepaid).

Figure 8

Figure 9

Voice Segmentation

The factors based on which the segmentation is done in voice sector in telecom are as follows

:

Favoriteleg: This determines the calling pattern of the user. The favourite leg tells us the

minutes of usage of the customer on the network based on his usage pattern.

The favorite leg is determined as per the usage of the customer in following segments:

On- net Usage: This tells us the minutes of usage on the same subscriber on local

network. For e.g. MTS Delhi to MTS Delhi,Airtel Delhi to Airtel Delhi etc.

Off-net Usage: This tells us the minutes of usage on subscriber other than the home

subscriber on local network. For e.g. MTS Delhi to AirtelDelhi,Airtel Delhi to MTS

Delhi etc.

STD Usage: This tells us the minutes of usage on network other than the home

network. For e.g. MTS Delhi to MTS Mumbai etc.

ARPU : ( Average revenue per user) Customers are segmented according to the average revenue generated from each customer which

are:

Marginal: Marginal customers are those ARPU is less than 100.

Fringe: Fringe customers are those ARPU is less than 200 and more than 100.

Mass: Mass customers are whose ARPU is less than 300 and more than 200.

High usage: These customers have ARPU greater than 300.

The above distribution has been done according to the usage, the increasing usage puts the

customer from Marginal to Fringe to Mass and then to High usage.

Age on Network (AON): The age on the network is used to provide offers to the

customers as per their age on the network. For e.g. the customers with AON < 30 days

are offered different products than those with AON > 30 days.

Maximum Denomination:This is used to offer the next best product according to

maximum usage value to the customer. For e.g. the customers with maximum

denomination of INR 700 are provided with a product nearing INR 700.

Active / Inactive: This is used to according to the customer, whether he/she is active

or inactive on the network, and then according to that products are floated for these

customers.

Days of Dormancy: The days of dormancy lets u know the time period from when

the customer is inactive in the network. Then the products are made to retain these

types of customers.

Week on Week Drop (Wow Drop): This is used when the usage of a customer drops

by more than 30 % from the previous week.

COMPANY ANALYSIS

• COMPANY NAME: MTS

• ADDRESS: A-194 Okhla Industrial Area, New Delhi

• WORK: Providing Telecom services

• BUSINESS UNIT: Usage and Revenue (U & R)

Sistema Shyam TeleServices Ltd. (SSTL) is a venture, involving equity

participation by Sistema Joint Stock Financial Corporation of Russia (“SISTEMA

JSFC”), the Russian Federation and the Shyam Group of India. Sistema JSFC is

the majority shareholder in the Company.

MTS India is an Indian subdivision of Russian Mobile Tele Systems

Telecommunication Company headquartered in New Delhi, India. It provides

wireless voice, broadband Internet, messaging and data services in India. MTS

India is a subsidiary of Russian conglomerate Sistema and operates across India

with over 16 million customers.

Marketing Structure in MTS

Network presence[edit]

At its peak, MTS operated services in 21 out of 22 telecom circles of India. However, MTS has shut services in 13 circles and currently operates in 9 circles.

Delhi Gujarat

Karnataka Kerala

Kolkata Rajasthan

Tamil Nadu

Mr.Debajyoti Mal(Marketing Head)

Mr.Saurav(Voice and Data Product Head)

Mr.Pranay Handa(Prepaid Voice)

Mr.Tirtha Ganguly(Postpaid)

Mr.Anuj Jain(Prepaid Data)

Mr.Kamal(Data Support)

Mr.Shailesh(Data Support)

Mrs.Nidhi Sharma(Smartphones and

postpaid voice)

Ms.Aparna(Marcom and Brand Head)

Mr.Gaurav Sharma(Brand)

Mr.Sandeep(VAS Head)

Ms.Rekha

Uttar Pradesh  (West) (includes Uttarkhand)

West Bengal  (includes Sikkim and Andaman and Nicobar Islands)No longer operates

Assam Andhra Pradesh

Bihar Himachal Pradesh

Haryana Jammu and Kashmir

Madhya Pradesh Maharashtra  and Goa

Mumbai North East

Orissa Punjab

Uttar Pradesh  (East)

National Telecom Award[edit]

MTS, the mobile telephony brand of Sistema-Shyam Teleservices (SSTL) has been conferred National Telecom Award [16] for being the fastest growing data operator in India. Mr. Vsevolod Rozanov, CEO, Sistema Shyam TeleServices Ltd. received the award on behalf of the company from Mr J S Sarma, Chairman, Telecom Regulatory Authority of India and Mr P J Thomas, Secretary, Department of Telecom, Government of India. The award is recognition of MTS establishing itself as a fastest growing data operator in the market. MTS has close to one lakh mobile broadband subscribers in less than six months, for its high speed mobile broadband service, MBlaze. Within a short span time, the company has launched its services in 15 telecom circles (UP East and West is the latest circle) across the country and has already achieved an overall subscriber base of 80 lakh customers.