1. 50 Years of Growth, Innovation and LeadershipThe Role of Social Network Analysis in Data-CentricVertical Markets: How KXENs InfiniteInsight Social is Paving the Wayin the Use of Social Relationships to Drive Cross-Industry Marketing Results A Frost & SullivanWhite Paper Saverio Romeo www.frost.com

2. Frost & Sullivan1. EXECUTIVE SUMMARY ...........................................................................................................42. ANALYZING DATA-CENTRIC VERTICAL MARKETS WITH SOCIAL NETWORKANALYSIS .................................................................................................................................. 5A Brief Introduction on the Role of Social Data in Various Vertical Markets.................................5An Introduction to Social Network Analysis .................................................................................5The Use of SNA in Vertical Markets .............................................................................................6Boosting Predictive Power with SNA ............................................................................................ 63. INFINITEINSIGHT SOCIAL SNA SOLUTION BY KXEN ................................................... 7Overview of InfiniteInsight Social ..............................................................................................7The Main Features of InfiniteInsight Social ...............................................................................8The Benefits of InfiniteInsight Social ...................................................................................... 84. SNA IN THE COMMUNICATIONS INDUSTRY ......................................................................... 10The Adoption of SNA in the Communications Industry ................................................................. 10The Applications of SNA in the Communications Industry ............................................................ 11InfiniteInsight Social for the Communications Industry ............................................................. 115. SNA IN THE BANKING AND FINANCE INDUSTRY ................................................................ 13The Adoption of SNA in the Banking and Financial Services Industry ........................................... 13The Applications of SNA in the Banking and Financial Services Industry ...................................... 13InfiniteInsight Social for the Banking and Financial Services Industry ....................................... 146. SNA IN THE RETAIL INDUSTRY .............................................................................................. 15The Adoption of SNA in the Retail Industry .................................................................................. 15The Applications of SNA in the Retail Industry ............................................................................. 16InfiniteInsight Social for the Retail Industry........................................................................... 167. CUSTOMER CASE MONOTARO SEGMENTING AND TARGETING CUSTOMERS WITH INFINITEINSIGHT SOCIAL .................................................................. 17Overview of MonotaRO................................................................................................................. 17MonotaROs Challenges with a Growing Customer Base ............................................................... 18InfiniteInsight Changed MonotaROs Approach to Customers ................................................... 19InfiniteInsight Social for Enhancing Customer Segmentation and Product Recommendations ... 20Conclusions ................................................................................................................................... 208. CUSTOMER CASE THE SUCCESSFUL CASE OF MOBILINK USING INFINITEINSIGHT SOCIAL IN EMERGING COMMUNICATIONS MARKET ........................................................... 20Brief Overview on Mobilink ........................................................................................................... 20Why Mobilink Needs Social Network Analysis ............................................................................... 21How Mobilink Uses InfiniteInsight Social ................................................................................... 21Conclusions ................................................................................................................................... 229. CONCLUSION ........................................................................................................................... 23CONTENTS 3. Frost & Sullivan1. EXECUTIVE SUMMARYData is like a river that continuously expands as it is constantly fed by numeroustributaries. The increasing complexity and volume of data evident today is driven bya variety of events happening across a broad range of industries - mobile phonecalls, credit card swipes, website clicks and retail purchases are some of thethousands of data points that are growing at an exponential rate. In addition, theastonishing growth of social networks has empowered word of mouth, making thedata held by organisations inherently social. Today, marketers in almost everyorganization recognize the social value of their data in terms of understandingconsumers behaviour and identifying new business opportunities. Social NetworkAnalysis (or SNA) is an advanced technique that enables companies to analyzesocial data and make sense of it.During the 1950s and 1960s, SNA was almost exclusively used in academicenvironments to research the behavior of specific social groups. But it was onlywith the advent of digital social networks - and the astonishing developments of therealm of data computing that the value of social network analysis became evidentoutside the academic environment. The communications industry started tounderstand the value of social network analysis. But, today, SNA extends far beyondits telecoms routes, being used by companies such as banks, retailers, and onlinegaming providers. In general, every industry characterized by large event streams,and therefore rich of customer and transaction data, can benefit from using SocialNetwork Analysis.This paper explores the use of Social Network Analysis in vertical markets throughthe experience of KXENs SNA solution, InfiniteInsight Social. KXEN launched itsfirst Social Network Analysis solution in 2009. KXENs approach to SNA gainedimmediate traction in various verticals, notably communications, banking, and retail.Today, KXENs InfiniteInsight Social solution offers an intuitive and effective wayof building and analyzing social networks.InfiniteInsight Social rapidly builds social networks independently of the size ofthe data. Once the social network is built, InfiniteInsight Social creates a numberof social attributes such as: Social position of a node Network roles of the node (for example, bridge, leader, local leader) Social pressure Social influence Community profiles Diffusion simulationIn combination with KXENs leadership in predictive analytics and their flagshipproduct, InfiniteInsight, these attributes are then used to describe and predict thebehaviour of customers.InfiniteInsight Social has been used successfully in communications providers,banks, finance organizations, on-line retailers and traditional retailers for a varietyof purposes such as churn management, product recommendations, and frauddetection.4 frost.com 4. Frost & SullivanThis whitepaper illustrates two case studies of KXENs customers, MonotaRO andMobilink, using the solution successfully. These two case studies show that KXENs Today, marketers insolution is a user-friendly, rapid, and efficient tool and its native integration to theany organizationcompanys predictive capabilities powerfully enhance the analysis of customer base recognize the socialbehavior. value of their data for understanding2. ANALYZING DATA-CENTRIC VERTICAL MARKETS WITH SOCIALconsumers behaviorNETWORK ANALYSISand spotting businessopportunities. SocialA Brief Introduction on the Role of Social Data in Various Vertical MarketsNetwork Analysis(SNA) is an advancedIn a famous interview, Hal Varian, professor of Information Sciences, Business and technique that enablesEconomics at the University of California and Googles chief economist, said: I keepcompanies to analyzesaying that the sexy job in the next 10 years will be statisticians. The amount of social data and makedata available in the economy and society is tremendous. Its growth is exponential. sense of itIts value is unimaginable. The ability to extract this value, process it, interpret it,deliver it and use it for strategic decisions is the big challenge for any businesstoday and in the future.Statisticians have coined the term big data to describe the explosion of hugeamounts of data that various types of organizations are dealing with. The termdescribes data sets that are becoming increasingly complex and difficult to manageand analyze. The complexity of big data is driven by a variety of events happeningin different industries, such as mobile phone calls, credit card swipes, website clicksand purchases in stores and virtual shops. In addition to that, big data has a strongsocial nature.The astonishing growth of social networks and digital communications devices andapplications has extraordinarily empowered the word of mouth makingorganizations data inherently social. Today, marketers in any organization recognizethe social value of their data for understanding consumers behavior and spottingbusiness opportunities. Social Network Analysis (SNA) is an advanced techniquethat enables companies to analyze social data and make sense of it.An Introduction to Social Network AnalysisSocial network analysis is used to analyze customer base behavior and spot revenueopportunities. It is based on the concept of social networks, a set of relationshipsbetween entities (consumers, products, etc.). The social network is representedthrough a graph of nodes and links. Each node represents a customer or entity.Links represent the relationships between customers or between entities.Once the social network is built, social network analysis uses graph theoryalgorithms to detect and interpret social ties between nodes and groups of nodes.Typical analysis includes detection of specific communities and their structure aswell as identification of different roles within the network and communitiesanalysis. This information can then be used to optimize operational activities thatcan lead to cost reduction and new revenues streams. frost.com5 5. Frost & SullivanFigure 1: The Social Network is a Set of Nodes and LinksSource: KXENThe Use of SNA in Vertical MarketsDuring the 1950s and 1960s, social network analysis was almost exclusively used inacademic environments to research the behavior of specific social groups. But, onlywith the advent of digital social networks and the astonishing development of datacomputing did social network analysis become known outside academicenvironments.The communications industry, and primarily the mobile communications industry,started to understand the value of social network analysis. Mobile networkoperators data is naturally social. SNA has been used to understand the structureof the networks of mobile users and uses this analysis to re-design marketing andcustomer churn campaign. As the results in the communications industry revealedthe power of SNA, other verticals have started looking at SNA for analyzing theircustomer base.Today, the applications of SNA have gone beyond telecoms and are used in banks,financial organizations, retailing organizations, online gaming organizations, andgovernment, mainly in the areas of security. In general, every industry characterizedby large event streams, and therefore rich of customer data and transaction data,can use SNA.Boosting Predictive Power with SNASocial network analysis does not just enable a more powerful understanding ofsocial networks and communities, but it also empowers predictive models. SNAenables marketers to predict behavioral changes of communities, and also toidentify specific communities of interest. The output of SNA, made of differentsocial variables and aggregates of variables, is used to empower predictivemodeling. For example, SNA can help mobile network operators predict the viraldiffusion of churn, detecting the likelihood of customers to be influenced by recentchurn behavior in their communities.6 frost.com 6. Frost & Sullivan3. INFINITEINSIGHT SOCIAL SNA SOLUTION BY KXENOverview of InfiniteInsight SocialKXEN launched its first social network analysis solution in 2009. KXENs approachto SNA got an immediate traction in various verticals, including communications,banking, and retail. Today, InfiniteInsight Social, largely relying on that experience,offers an intuitive and effective way of building and analyzing social networks.InfiniteInsight Social rapidly builds social networks independently of the size ofthe data. Once the social network is built, InfiniteInsight Social creates a numberof social attributes, such as: Social position of a node (centrality measures) Network roles of the node (bridge, leader, local leader) Social pressure and influence Community profiles Diffusion simulationThese attributes are then used to describe and predict behavior of customers andcommunities of customers. The InfiniteInsight Social workflow is illustrated inFigure 2.Figure 2: InfiniteInsight Social WorkflowSource: KXEN frost.com7 7. Frost & Sullivan1. The user specifies the various network filters (SMS, voice, off-peak networks, etc.).2. The corresponding filtered transactional data (CDRs or else) is loaded and social graphs are produced.3. The user decides which interesting attributes to produce.4. The user can run queries on the produced networks, modify them.5. The corresponding variables are joined to the existing customer information, and a predictive model analyzing all attributes (including social ones) can be built with InfiniteInsight Modeler. InfiniteInsight has been successfully used in diverse industry contexts, from communications to banking, and retail.The Main Features of InfiniteInsight SocialSocial network analysis is largely based on graph theory. Its complexity hashistorically affected the speed of adoption of SNA outside academic environments.KXEN has developed InfiniteInsight Social with the aim to make SNA simple andaccessible to professionals without a specific and detailed knowledge of theunderlying mathematics. InfiniteInsight Social offers a very intuitive user interfacefor building and analyzing social networks.Despite this, the solution also presents various modules for advanced users of SNA.For example, InfiniteInsight Modeler and its best-in-class predictive technologyenhances the value of InfiniteInsight Social, as it is able to quickly build predictivemodels based on a large number of social extra-variables. The idea is simple, butpowerful. The combination of the two software modules does not only enable theuser to identify the influencers present in that moment in the network, but to usethat information to predict the influence that they will have on their communitiesbehavior, as well as to predict individuals who are about to become influencers.The Benefits of InfiniteInsight SocialThe features of InfiniteInsight Social have clear benefits for the users: Powerful predictive capabilities User-friendly interface Very low computational time when building social networks and rapidly creating social attributes Detailed community detection and analysis8 frost.com 8. Frost & SullivanBut, InfiniteInsight Social users can gain more insights. They can easily create sub-networks by setting filters in the interface. They can set various conditions for linkInfiniteInsightcreation and different modes to explore social graphs. Some of the key features ofSocial is a fast,InfiniteInsight Social are listed below: scalable and dynamicsoftware product withpowerful visualization1. InfiniteInsight Social has powerful visualization capabilities capabilities and Offers both bottom-up and top-down graph exploration combined with the best-in-class KXEN Switch to Community mode and depicts customer roles in the networkpredictive technology provides a large Superimpose social graphs and pinpoint the differences in the graphspectrum of social evolutionnetwork capabilitiesfor understanding andpredicting social2. InfiniteInsight Social is fast, scalable and dynamic influence across Takes 20 minutes to load 16M nodes with 59M linksdiverse customer communities Scales up with several million nodes and links, billions of CDRs rows3. InfiniteInsight Social identifies influencers for specific business problems witha patented methodology4. InfiniteInsight Social detects hidden links in your data and links individualsusing multiple identities5. InfiniteInsight Socials unique approach is to combine SNA and predictivetechnology, using InfiniteInsight Modeler The targeting accuracy is improved (usually by 50 percent-plus in the first decile)6. InfiniteInsight Social is a software product, not a piece of software on top of aservice; no out-sourcing of data or knowledge is requiredIn conclusion, InfiniteInsight Social provides a spectrum of social network analysiscapabilities so that you can understand social influence and behaviors across yourcustomer communities.frost.com 9 9. Frost & Sullivan4. SNA IN THE COMMUNICATIONS INDUSTRYThe Adoption of SNA in the Communications IndustryThe increasing penetration of communications networks and devices has driven theuse of social network analysis (SNA) in the communications industry. Thisphenomenon has principally emerged in the mobile communications industry, wherecustomer data has an explicit social nature. SNA was first employed intensively indeveloped mobile communications markets, including Western European and NorthAmerican, where the number of mobile subscribers per head of population istypically more than 100 percent. Today, almost all Mobile Network Operators(MNOs) in Europe and North America have either introduced SNA or haveconsiderable experience in the use of SNA.The European and North American experience of SNA underlined the power ofsuch solutions for mobile network operators, prompting the larger Asian MNOs tointroduce SNA into their data analytics suites. Asiaparticularly the Far Eastisnow a rapid adopter of social network analysis.Figure 3: SNA in Communications State of AdoptionConsolidatingGrowingEmerging Source: Frost & Sullivan 10 frost.com 10. Frost & SullivanThe Applications of SNA in the Communications IndustryInfiniteInsightWith mobile communications markets becoming highly saturated, mobile networkSocial puts the poweroperators started to observe ARPU declines and a migration of subscribers towardof social networksrival operators and service providers. The immediate desire of MNOs was to have analysis in-housea better understanding of their customers behavior in order to reduce the impactof these negative developments. Jaroslaw Kosinski,Corporate ProjectManager, TPSAMNOs have used a range of analytical tools for predictive purposes for some time. Poland.However, the accuracy of these models was largely unsatisfactory and,consequently, the churn management techniques were not effective. Social networkanalysis introduced the community perspective to the existing churn preventionmethods. Using Call Detail Record (CDR) data, SNA detects and interpretscommunities of subscribers. This, in combination with predictive models, vastlyimproved churn management activities.The use of social network analysis with regards to churn management remains thekey application within the communications industry. However, as mobile networkoperators experience of using SNA has evolved, the applications of SNA havemoved toward different directions. MNOs are able to analyze specific churnmanagement problems such as rotational churn. They are also able to performdetailed customer segmentation, community behavior analysis, detection of specificcustomers (i.e., multi-SIM users) and identification of community leaders orinfluencers. All of this has been used to design and optimize viral marketingcampaigns for new products and services, refer-a-friend campaigns, and to detectfraud. The overall result is that an MNO can use SNA to both prevent revenuedecline and spot new opportunities for ARPU growth.InfiniteInsight Social for the Communications IndustryKXEN is a key provider of social network analysis solutions for the communicationsindustry. KXEN combines social network analysis and predictive analytics to explainthe social structure of the mobile network and uses its dynamics to better predictcustomer behavior and specific roles in the network. frost.com 11 11. Frost & SullivanInfiniteInsight Social brings that concept into the hands of communicationsproviders, enabling them to:InfiniteInsightSocial has been usedin a large number of Reduce churncommunications Identify specific roles in the social networkproviders across the Pinpoint influencersworld reaching Optimize the viral adoption of new products and servicesexcellent results in Acquire new customerschurn reduction and Segment customersviral adoption of new Detect rotational churnersproducts and services Identify and profile multi-SIM users Gain insight on competition Track past churnersInfiniteInsight Social has performed the above tasks in a large number ofcommunications providers across the world, reaching excellent results, such as inthe example in Figure 4.Figure 4: InfiniteInsight Social Identifies Influencers in a Community ofMobile SubscribersThe software built a social network of 14 million nodes in one hour. Using these results, the company was able to identify influencers with the potential to adopt new products three to seven times better than before using SNA .Source: KXEN 12 frost.com 12. Frost & Sullivan5. SNA IN THE BANKING AND FINANCE INDUSTRYThe Adoption of SNA in the Banking and Financial Services IndustryFraud detection has been the initial driver of adoption of social network analysis inthe banking and financial services industry. Initially, the solution was tested in NorthAmerican and Western European banks, where the cases of fraud from credit cardsand debit cards were more frequent. However, the use of social network analysisrapidly spread in other financial organizations, such as money transfer companies,not necessarily located in the Western world, but also in Africa, Latin America, andAsia.Today, it can be said that the value of social network analysis for fraud detection isrecognized almost worldwide. However, the use of social network analysis for otherbusiness purposes has gained momentum in the past three years, particularly inNorth America, Europe, certain Asian markets and wealthy Middle East countries.Figure 5: SNA in Banking and Finance State of AdoptionSpread and usingSpread andSNA for different exploring Emergingpurposesdifferent usages Source: Frost & SullivanThe Applications of SNA in the Banking and Financial Services IndustrySocial network analysis can be beneficial for banks and financial organizations inmany activities of their business. Money transfers, check transactions or credit cardpurchases are the links building such social networks.As seen, fraud detection is an important application of SNA, but applications incustomer relationship management (CRM) and risk management are gainingtraction. frost.com 13 13. Frost & SullivanIn the area of CRM, banks can use SNA for acquiring new customers, improvingcustomer retention techniques, and cross-selling activities through viral marketing.InfiniteInsightSNA can identify networks of non-existing customers that are connected withSocial can rapidlyexisting customers. This knowledge can optimize acquisition campaigns. In cross-selladdress different tasksactivities, communities of customers and relative roles, from influencers tofor banks and otherpotential buyers, can be detected and their behavior can be predicted in order tofinancialoptimize new product marketing campaigns. As in the communications industry,organizations such asSNA can help financial organizations reduce churn rates by combining the analysiscustomer relationshipof the social networks with the power of predictive models.management, riskmanagement andfraud detection InfiniteInsight Social for the Banking and Financial Services IndustryInfiniteInsight Social can rapidly and easily address different tasks for banks andother financial organizations. Using transaction data, the KXEN solution buildssocial networks based on direct linksbank transfers and check transactionsandon indirect linkslinking customers to products purchased and agencies. Thesenetworks are then analyzed for addressing problems in customer relationshipmanagement, risk management and fraud detection.InfiniteInsight Social has successfully enabled banks and financial companies to: Optimize new customer acquisition campaigns like refer-a-friend Detect communities of interest for new product launch and communities of risk for churn prevention Identify customers with high potential for purchasing new products Identify customer with high potential of churning Identify influencers Detect and predict potential credit defaults Identify fraudsters and communities of fraudstersFigure 6: InfiniteInsight Social Identifies High Communities of Fraud The chart shows communities of merchants linked by credit cards. The bigger thecommunity is in this graph, the more merchants are in it; the closer it is to red, themore fraud there is in it.Fraud! Source: KXEN 14 frost.com 14. Frost & Sullivan6. SNA IN THE RETAIL INDUSTRYThe Adoption of SNA in the Retail IndustryThe retail industry has different sources of customer data. These can take the formof credit card transactions and information from locality programs in traditionaloutlets and stores to digital communities data in online shopping environments.Social network analysis helps retail companies make sense of all this data for betterunderstanding their customer base and for better satisfying their purchasing habitsand desires. In fact, customer segmentation and product recommendation are areaswhere social network analysis is used. This is happening primarily in Europe, NorthAmerica, Australia and part of Asia, such as South Korea and Japan.Figure 7: SNA in Retail State of AdoptionIncreasing use of SNAEmerging use of SNA Source: Frost & Sullivanfrost.com 15 15. Frost & SullivanThe Applications of SNA in the Retail IndustryInfiniteInsightSocial enhances The key aim of using SNA in the retail industry is to understand which productsproduct interest customers the most and which is the best way to recommend theserecommendations byproducts. Searching a product from numerous choices and then making a decisionintroducing product can become a tough task. Retail companies have used different recommendationcommunities as aagents to make that easier for customers. However, many of these agents do notbuilding block of the take into consideration the social nature of the shopping. In the recommendationrecommendation rules. context, the interest of two friends tends to be related and, therefore, theirpurchasing modes can be similar. Social network analysis is able to detect patternsof relationships between individuals and between products and individuals, and allthis information can improve recommendation techniques.InfiniteInsight Social for the Retail IndustryInfiniteInsight Social aims to enhance product recommendation by introducingproduct communities as a building block of the recommendation rules. The analysisof these communities can reveal relationships between products that were notpossible to detect with other techniques. In addition to that, the analysis of thesecommunities can identify influential products, but also highlight other types ofproducts such as the not-so-frequent products. Recommendation rules can then bebuilt around influential products, but also around other types of products andentities relevant for the retailer (bridge products, for example). All this can bedone in a scalable way and faster than any other method. In addition to that,InfiniteInsight Social visualizes the rules, and this appears to be extremely helpfulfor companies.The overall approach of InfiniteInsight Social to the development ofrecommendation rules is the following: Two products are linked because they share some common features clicks, purchases, bids, tags and others The software analyzes these links and then creates rules It then identifies communities of products Finally, personalized recommendations are built using the community of interest each authenticated customer belongs to (see graph below) 16 frost.com 16. Frost & SullivanFigure 8: InfiniteInsight Social Detects Communities of Interest forProduct Recommendations InfiniteInsight Social is increasingIf the number of customers purchasing product A is greater than the average, then that stickiness on ourcommunity of customers is called the community of product A. Therefore, product A website bycan be recommended to all of the community. personalizing dynamic movie recommendations. For us it is the best choice we made this year. Frdric Krebs, COO Allocin France.Source: KXENInfiniteInsight Social has been successfully used for the generation ofrecommendation rules in various retail contexts, but its power also has beendemonstrated for identifying influencers for detecting habits of shoppingcommunities.7. CUSTOMER CASE MONOTARO SEGMENTING ANDTARGETING CUSTOMERS WITH INFINITEINSIGHT SOCIALOverview of MonotaROMonotaRO was established in 2000 with the aim to become a leading player in theJapanese market for direct marketing of indirect materials and consumable itemsfor enterprises through the Internet, fax, and the phone. Since then, the marketgrowth of the company has been exceptional. At the end of 2010, the total revenueswere 22bn Yen, e.g., about 300mln US$. MonotaRO is also publicly quoted on TokyoStock Exchange. frost.com17 17. Frost & SullivanThe number of SKUs (items) available for MonotaROs clients has growncontinuously over the years, reaching 1,500,000. These items are grouped in 60categories, and they are available for 640,000 customers. The growth rate in termsof new customers is also astonishing: 10,000 new customers per month. This pacehas made the customer growth rate almost exponential, as shown in the chart.Figure 9: MonotaRO Customer Growth Over The Period 2002-2011 700,000 600,000 Number of Customers 500,000 400,000 300,000 200,000 100,0000 1Q 1Q 3Q 002 1Q 002 3Q 003 1Q 003 3Q 04 1Q 004 3Q 005 1Q 005 3Q 06 1Q 006 3Q 007 1Q 007 Q 008 1Q 008 Q 009 1Q 009 Q 010 10202020222222222222222333Time Source: MonotaROMonotaROs Challenges with a Growing Customer BaseAs the customer base was rapidly growing, MonotaRO started to face thechallenges to cope with a large customer base and a vast product portfolio. Themain concern regarded the risk to misinterpret or miss customers needs. At thattime, MonotaROs customers chose their products from the catalog, but there werenot appropriate marketing tools in place for advising customers about new items.MonotaRO needed a systematic marketing approach for providing customers withpersonalized recommendations without being invasive and inappropriate.In 2005, MonotaRO introduced a data analytics system based on IBMs SPSS. The aimwas to identify customers lists for specific marketing activities. However, theapproach soon appeared to be time consuming and difficult for a company that didnot employ any statisticians. The only activity MonotaRO could do was identifygroups of customers for delivering catalogs once a year. Clearly, the timeline wasnot satisfactory. 18 frost.com 18. Frost & SullivanInfiniteInsight Changed MonotaROs Approach to CustomersMonotaRO decided to introduce InfiniteInsight in May 2008. The impact wasimmediate. It took just three months to deploy, and in August 2008, MonotaROstarted its daily operations with the predictive analytics solution. First off,IntiniteInsight was easy to use. MonotaRO did not need any employees with astatistics background. Existing MonotaROs employees were in charge ofInfiniteInsight, and they became familiar with software without major difficulties.Today, MonotaRO is able to produce 42 propensity models in a month, practically arevolution.One of the first effects of this revolution was the creation of specific catalogs forspecific groups of customers. Before the introduction of InfiniteInsight,MonotaRO had only one catalog with nearly 1,700 pages. InfiniteInsight enabledMonotaRO to segment their customer base per interest and create several catalogs.Currently, MonotaRO develops seven catalogs for a total of 4,000 pages. Thecustomer segmentation also enables MonotaRO to target specific customers withadvertising materials on new products and new offers.Figure 10: MonotaROs Catalog ShiftSafety, cleaning, Tool, measuring, FA, machinematerial handling welding parts previous big catalog 1700PAutomotive partsConstruction Laboratory itemsSource: MonotaRO itemsIn 2009, the predictive analysis introduced by InfiniteInsight was combined withUNICA, a campaign management tool. This combination makes the marketing cycle,from planning to measurement, short in time and almost entirely automatated.frost.com 19 19. Frost & SullivanInfiniteInsight Social for Enhancing Customer Segmentation and ProductRecommendationsMonotaRO is able tobuild better productcategorization four In 2010, MonotaRO introduced InfiniteInsight Social to empower its marketingtimes faster and define cycle with the use of Social Network Analysis (SNA). SNA has enabled the companyproduct to improve the detection of communities of customers who purchase commonrecommendation rulesproducts and communities of products which tend to be purchased by similarthat are relevant for customers. This information has enabled MonotaRO to improve customercustomers.segmentation and create associate rules for recommendations.ConclusionsInfiniteInsight has played a critical role in the growth of MonotaRO. It hastransformed the way the company analyzes and engages with its customers. Today,MonotaRO detects communities of customers, designs marketing campaigns andmeasures their effects on a daily basis. With the use of SNA, MonotaRO hasintroduced another level of refinement to their customer base analysis, improvingrecommendation rules.8. CUSTOMER CASE THE SUCCESSFUL CASE OF MOBILINK USING INFINITEINSIGHT SOCIAL IN EMERGINGCOMMUNICATIONS MARKETBrief Overview on MobilinkIn April 2011, the number of mobile subscribers in Pakistan reached 108 million,bringing the mobile penetration in the country close to 60 percent, one of thehighest penetrations in the South Asian region. The market is expected to furthergrow rapidly, creating opportunities for the large competitive landscape. In fact, thenumber of mobile network operators in Pakistan is surprisingly high: six GSMoperators, three CDMA providers and also WiMAX providers. In this crowdedlandscape, Mobilink is the undisputable market leader, with 32 million customers.Two key features of the subscriber base in Pakistan justify the high number ofmobile network operators in the market. The subscriber base is highly volatile. Theymove across operators looking for better deals, leaving a mobile network operatorand coming back to the same one when there is a good offer in terms of serviceand pricing. Therefore, the churn rate is very high. The other relevant feature is themulti-SIM phenomenon (whereby a customer will have multiple phones, typically totake advantage of new customer pricing with each purchase). Pakistan mobilemarket is estimated to have between 30 percent and 40 percent subscribers withmulti-SIM. 20 frost.com 20. Frost & SullivanWhy Mobilink Needs Social Network AnalysisIn the complex mobile communications market described previously, understandingthe behavior of the subscriber base becomes essential for reducing churn, betterserving customers and identifying new revenues. Understanding the attitude of thesingle subscriber is not enough. Instead, gaining insights on the relationshipsbetween subscribers is extremely valuable. In fact, information and analysis aboutthe social sphere of subscribers provide insights on how these subscribers areinfluenced by others, if they feel the pressure from other subscribers and if theyinfluence other subscribers in adopting a new service and purchasing a newproduct. This information helps Mobilink retain customers, acquire new ones, andpromote new products. Mobilink soon realized that social network analysis is theonly tool that enables the development of such detailed knowledge about thesubscriber base.How Mobilink Uses InfiniteInsight SocialMobilink started using InfiniteInsight in 2007. The initial aim was to segment thecustomer base and develop predictive modeling on those segments. Soon, Mobilinkappreciated the flexibility and usability of the KXEN software solution and it hasrecently looked at the combined use of social network analysis with predictivemodeling using InfiniteInsight Social.The use of InfiniteInsight Social has enabled Mobilink to address two key businesschallenges: increasing the accuracy of prediction models for churn and betterpromoting the adoption of value-added services. In the case of churn, Mobilink canpredict that within the top 10 percent of subscribers, 50 percent of them arepotential churners. The improvement in accuracy is shown in the chart below.Figure 11: Comparing SNA-Based Churn Model with Other ModelsRandom Inactivity Based ModelNextGen Perfect100Cumulative Churn Percentage 90 80 10% Base - 50% Churners 70 60 50 16% Base - 28% Churners 40 30 20 1000 1 02 03 04 0 5 0 6 0 7 0 8 0 9 0 1 0 0Percentage PopulationSource: Mobilink frost.com 21 21. Frost & Sullivan In the case of the adoption of value-added services, the results show that for each targeted influencer, you could bring four potential adopters.Mobilink has seen aneight-fold increase incampaign responseDespite the positive results, the implementation of SNA in Mobilink is just in therates using predictive beginning stages. The market leader in Pakistan has at least three clear objectivesanalytics from to achieve in the near future.InfiniteInsight. Itexpects those numbersto increase when 1. Using insights on the subscriber base for acquiring critical users and likelycombined with the use influencers from competitors.of social variablesderived from 2. Preventing the churn of influencers from Mobilink network.InfiniteInsightSocial. 3. Stimulating influencers in the area of value-added services with newcontent, products and promotions in order to enable virality in thecommunities. Conclusions Mobilink is strongly aware that subscriber data is a key competitive asset for managing a volatile subscriber base. The market leader also recognizes that exploring the social sphere of subscribers is more insightful than just analyzing behavior of single subscribers. In light of all this, Mobilink has adopted InfiniteInsight Social for looking into communities of subscribers for preventing churns, identifying influencers and enabling product virality. The company has seen an eight-fold increase in campaign response rates using predictive analytics from InfiniteInsight. It expects those numbers to increase when combined with the use of social variables derived from InfiniteInsight Social. For Mobilink, this is just the beginning of a valuable journey in the power of social network analysis. 22 frost.com 22. Frost & Sullivan8. CONCLUSIONWe live in a data-centric world. Data describes business processes, and individualand community behaviors. The analysis of this data is fundamental to makingbusiness operations more efficient and more profitable. Social network analysis isan intelligent tool that looks inside user behavior and communities, and incombination with predictive analytic techniques, allows businesses to identifypatterns and predict trends, regardless of context. InfiniteInsight Social fromKXEN is a software product that makes this possible in a user-friendly, rapid andefficient way, and its native integration to the companys predictive capabilities is aunique and powerful solution.frost.com 23 23. LondonOxford Silicon Valley4, Grosvenor Gardens, 4100 Chancellor Court331 E. Evelyn Ave. Suite 100London SWIW ODH,UKOxford Business Park Mountain View, CA 94041Tel 44(0)20 7730 3438 Oxford, OX4 2GX, UKTel 650.475.4500Fax 44(0)20 7730 3343 Tel: +44 (0) 1865 398600 Fax 650.475.1570Fax: +44 (0) 1865 398601 +44 (0)20 7730 3438 enquiries@frost.com http://www.frost.comABOUT FROST & SULLIVANFrost & Sullivan, the Growth Partnership Company, partners with clients to accelerate their growth. The companysTEAM Research, Growth Consulting, and Growth Team Membership empower clients to create a growth-focusedculture that generates, evaluates, and implements effective growth strategies. Frost & Sullivan employs over 50 yearsof experience in partnering with Global 1000 companies, emerging businesses, and the investment community frommore than 40 offices on six continents. 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