Thoughts Oct2012

8/13/2019 Thoughts Oct2012

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thoughts,

Greenwich Consulting

reections and analysis for the telecom, media and utilities industry. October 2012

Customer Base Management:

Moving to industrialization


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thoughts, reections and analysis for the telecom, media and utilities industry from Greenwich Consulting.

In most markets, telecom operators are facing a slowdown in customer acquisitions and a decline in ARPU.

The rise of multi-equipment, acquisition of lower revenue customers, and erce competition combine to drive

ARPU down and force operators to create more sophisticated marketing and pricing strategies, especially in

emerging markets where prepaid consumers frequently represent over 95% of the base.

Customer Base Management (CBM) has been developed in this context to enhance an operators main asset:

its customer base. It consists of stimulating the base with targeted below-the-line offers and promotions in

order to drive usage increase ARPU and reduce churn.

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Many operators have started to implement such below-the-line actions. Some of them have been able to

achieve promising results, increasing the ARPU of their targeted customers by 5-10% and decreasing their

churn rate by 10-15%.

However, fullling CBM potential is a challenge and launching targeted offers requires signicant work

that takes time and requires developing specic marketing and IT tools, creating a dedicated organization,

and implementing advanced organization processes.

The purpose of this white paper is to provide operators with a clear vision of the challenges that Greenwich

Consulting faced when working with some of its customers through those operations.

The analysis and feedback gathered through these projects, together with interviews with industry leaders,

has allowed us to build a positioning scorecard and to specify the main actions required to achieve the

advanced CBM level which we discuss herein.


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Customer Base Management hasbeen developed to meet MNOsnew challenges on their respectivemarkets.

In emerging markets, gross adds are slowing downand churn is increasing. ARPU is also decreasing dueto the rise of multi-equipment and value dilution inthe customer base. Moreover, heavy emphasis on

Above the Line (ATL) promotions has led to price warand value destruction in many telecom markets.

Faced with those challenges, telcos were looking fornew strategies:

Maintain pricing and promotionattractivenesswhilst avoiding price wars

Stimulate the usage of each individualsubscriberwith a more segmented approach

Increase customer base value, by having

targeted retention actions, usage stimulationoffers, and acquiring a larger share of the walletin the offer portfolio

Ensure the Return On Investment (ROI)ofevery promotion addressed to the customer base

Strengthen and personalize customerproximity

In this context, a lot of operators have begunto deploy CBM toolsand started to stimulate theircustomer base with tailored offers and promotions.

These actions tend to prove that there is roomto increase prots by having a structured CBMapproach. Hence, there is a need for a multi-layerimplementation of a CBM strategy. CBM requires amarketing strategy denition, followed by a specicorganization, processes, and implementation.

Results achieved using CBM:

In a North African country,CBM allowedan operator to stimulate the customer base,contributing directly to an increase of 3-5% ofthe operators global revenues.

In another emerging market, CBMincreased ARPU from 5% to 8% on targetedsubscribers and reduce prepaid churn by 15%.

In the UK market, CBM allowed an MNOto reduce churn by 5% to 8%, while increasingrevenues from 2% to 5%.

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Customer Base Management has provento be a key lever in boosting the business

performance of Telcos


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thoughts, reections and analysis for the telecom, media and utilities industry from Greenwich Consulting. 4

Customer Base Management is aboutcontacting the right client at the right time

with the right propositionCustomer Base Management consistsof addressing the customer base withspecic below the line offers (BTL).

Compared with above the line offers (ATL), thisprovides the operator the ability to address specicobjectives on targeted customers, in order to increaseglobal customer base value.

On the operators side, the benets ofimplementing CBMas a complement to ATL offerscan be summarized in four points:

Recurring contactwith customers (from 2 to 6direct points of contact per month)

Offer personalization (one to one offer,adapted to customers prole)

Increase in the promotions take up ratedue to customized offers

Steering of the generated value with closefollow up and reactivity in launch and withdrawalof offers

While a MNO ATL portfolio relies on three to six

price plans and up to 10 to 12 promotions a year,CBM creates 20 to 50 offers annually and providesthe ability to dene micro-segmented promotions.Micro-segmented offers present limited risk ofcannibalization to value offers since they target onlycertain proles (e.g. not targets for ATL promotions).

Figure 1: Typical ATL/BTL articulation principles and main benets


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Different and complementary businessobjectives can be addressed with CBM throughve major types of campaigns:

Stimulation of top ups: customers tend to

save their remaining phone credit in case ofan emergency. Through CBM, it is possible toincentivize them to top up and restart theirnatural consumption.

Stimulation of usage: CBM provides customerswith opportunities to spend their remainingcredit on bundles or special promotions.

Revival of inactive accounts / win-back: Reviveinactive accounts by giving special offers totargeted customers, according to their level ofreachability and the calculated risk of leaving.

Loyalty actions: Trying to secure high valuecustomers can prove difcult on prepaid andno contract offers. Proposing targeted loyaltyoffers tend to reward loyal customers andenhance customer satisfaction.

Migration to better suited offers stimulation:Ensure customer satisfaction and increasecustomer lifetime.

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Figure 2: The three steps path to Advanced CBM

Operators have started to implement CBMactions but there is much to do to reach

advanced industrializationIn many mature and emergingmarkets, MNOs have startedconducting CBM experiments, andsome are even deep into the processof industrialization.

Operators can be classied into three categoriesregarding their maturity level in the CBMindustrialization process: CBM Initialisation,

Intermediary CBM, and Advanced CBM.

This scoring is based on the accuracy andexhaustiveness of their CBM initiatives regarding therelevance of their methodologies, processes and tools

Many operators have begun to implement CBM andare currently at the CBM initialisation step.

They have started testing some isolated CBMcampaigns but have neither the vision nor strategydened. Operators have created BTL offers to addressat risk customers and sustain ATL communicationstrategy.

The industrialization of CBM actions must besupported by a dedicated organization that will be

in charge of the launch and the management of BTLoffers.

Once industrialization processes and organization areimplemented, operators may succeed in raising thenumber of CBM campaigns.


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The CBM implementation withina MNO organization needs to becarefully planned. Several tasks thatneed to be conducted:

Analyze the customer base to understand thedifferent consumer segments

Dene CBM objectives for each customer segmentand come with the best campaigns to reach suchobjectives

Get the right IT tool to execute each objective

Industrialize CBM processes relying on IT toolcapabilities

Implement CBM culture within the organization

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Segmentation of the customer base

CBM requires segmenting the customer base in orderto set objectives per segment. A good segmentationstrategy will help to reach the following points:

Know the business indicators and the usageprole for each segment

Prioritize objectives for each segment, allowingthe selection of the most relevant campaignsin order to improve business indicators and

stimulate usage per segment

Optimize the budget allocation per customer.

CBM implementation relies on fve keysuccess factors

Figure 3: Detailed objectives, examples of associated campaigns and essential analyses to be conducted

1.


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Design of CBM campaigns

CBM campaigns have to be shaped in accordancewith operators local market positioning andcustomers interest. In particular, BTL offers must t/

complement ATL guidelines.

A ready to use campaign portfolio, with reliablebusiness case for each BTL offer planned, will increaseresponsiveness.

An iterative methodology with a ROI analysis step(discussed below) will allow selecting the campaignswith the most positive impact on the customer base

Getting the right IT solution

When implementing CBM strategy, MNOs should relyon either non-specialized CRM system or dedicatedCBM tools.

A dedicated CBM tool will help optimize the integrationwith the MNO environment and put a strong emphasison real time campaigns while a CBM module from aCRM tool will have more date mining functionalitiesand can accommodate multiple objectives.

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Figure 4: Pros and Cons of dedicated CBM tool and modules of CRM tool

Process industrialization

New CRM tools allow conducting selected tasks suchas control group selection, exclusion rules, or eveningpost mortem ROI analysis. Full CBM process, as

detailed below, will include four steps: Plan, Design,Execute, and Analyze.

a) Plan

The CBM Manager has to:

Dene the rules of CBM use

Coordinate ATL and BTL roadmaps

Dene business objectives to reach and actions toimplement.

Segment the customer base to get the appropriatereporting in the analysis step

b) Design

CBM organization denes targets and propositions,validates the technical feasibility, designs thecampaign workow and validates the customerlevel of solicitation, assesses the business case ofeach proposition and redacts the customer brief forexecution.

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c) Implement

The CBM Manager has to ensure a high level ofinformation circulation between the CBM marketingteam and the communication and IT ofcers.

We recommend using a tree-level validation process:IT department validation, CBM Manager validation,and getting the marketing managers nal validationbefore execution.

d) Analyze

In order enhance the CBM process, operators have toconduct systematic analysis on the results from BTLoffers.

Best practice when implementing CBM is to dispose offollow up tools in order to steer created value duringthe campaign, of an analysis canvas allowing fast postmortem analysis and of a repository in order to ndevery single results of previous campaigns.

Figure 5: The four steps of a CBM implementation

Case Study: Operators who have launched CBM initiatives are extending the reach ofsuch programs and ne tuning the approach based on the results of the rst campaignsconducted (test and learn process). They are then implementing an organized CBMapproach:

Sub-segmenting the customer base to increase the take up rate and maximize relevance to

consumers

Fine-tune the targeting to give the appropriate level of incentive that meets the customersinterest in order to maximize ROI

Specify the KPIs assigned to the CBM perimeter

Rene the sequencingof CBM actions and coordinating CBM actions ran on the same customer

Develop new customer solicitation tactics,to improve the efciency of the CBM campaignscatalogue and to reduce the risk of clients optimization


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Figure 6: CBM organization is steered by the marketing department,involving many players in the organization

A cross-function CBM organization has to beset up

CBM implementation requires dening new roles inthe Telcos organization. Marketing managers willhave to be incentivized on CBM initiatives and a

CBM manager has to be in charge of the overall CBMprocess.

Setting up CBM processes needs to be accompanied byan organization framing in order to achieve businessobjectives settled to CBM.

The CBM process and organization have to be underthe direct control of the marketing director. This willensure the necessary coordination between the ATLand BTL roadmaps and actions.

A CBM Manager will be responsible for motivating allthe people involved in the process. In his day-to-daybusiness, he will have to be in constant contact withmany departments in the operator organization:

Business lines, market intelligence department

and pricing department during the planningphase

Pricing, market intelligence, IT andcommunication during the denition of thecampaigns phase

IT implementation and customer care informationduring the execution phase

Market intelligence during campaigns resultsanalysis

5.


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Case Study : a North African operator has implemented an advanced range of CBMcampaigns both to reactivate inactive customers and to stimulate to-up and usage ofactive customers

Inactive customers have been targeted with specic retention offers, allowing reducing churn by 10% to20%

A consistent CBM roadmap has been built on a monthly basis to push alternatively top-up and usagestimulations campaigns, based on an advanced value based segmentation.


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Conducting a test plan is a best practice in order tovalidate rst hypothesis and ne-tune the valueproposition to customers. Such a test plan will help toachieve several objectives:

Validate customer attitude hypothesis

Benchmark reachable value creation

Dene objectives to assign dedicated CBM and

resources

Implement targeted organization and setorganization standards

Frame the customer base management processneeds and dedicated tools to deploy

Make an inventory of feasible offers

Having all this information in his hands, the CBMManager will then move on to the IntermediaryCBM step.

Moving to the next CBM level can be ac-hieved in 10 key actionsWhen implementing CBM, the CBM Manager needsto answer the following questions: what can I achievewith CBM? Which customers do I have to stimulateto reach specied objectives? What offers can I useto motivate them while still creating value? How do I

10 key actions to be completed to start with CBM:

Conduct advanced customer base analysis, based on KPIs per product line and per segment

Rene customer base segmentation with a double value/usage segmentation criteria

Dene CBM campaign objectives and identify the most relevant campaigns to achieve business

Launch test campaigns

Collect and analyze ROI from the test plan, keeping the most impactful campaigns and takingcorrective actions on the least impactful campaigns

Dedicate one marketing resource to CBM

Educate marketing teams (marketing managers) to CBM

Enable a rst level of manual process (validation of the campaigns, targeting, )

Evaluate the feasibility of using existing IT tools (CRM) for CBM

Launch a RFQ for a dedicated to CBM IT tool if necessary

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3.4.

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6.7.8.9.

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compose my team and what are the tools that I needto implement?

Here are the 10 rst actions to be completed, in orderto start with CBM.


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10 actions to be completed to move to Intermediary and Advanced CBM:

Analyze results of CBM actions conducted to date and dene new KPIs to segment the customerbase

Test new offers / new campaigns and assign new objectives to CBM (test and learn)

Rene customer base segmentation based on behavioral/interests criteria

Develop an analysis repository for conducted campaigns allowing a fast market launch for the10-20 most effective campaigns

Build a detailed CBM roadmap on a weekly basis and coordinate CBM campaigns with the ATLmarketing plan

Create a catalog of offers and promotions dedicated to CBM

Conduct CBM actions in all lines of business and set CBM objectives to marketing managers

Select and implement an IT tool to industrialize the targeting, the execution and the RoI analysisof CBM campaigns

Develop and implement advanced CBM capabilities: churn scoring, automated exclusions,interest scoring, etc.

Automate main campaigns that have to be run every day (retention campaigns for inactive)

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Greenwich Consulting helps MNOs har-ness the full potential of CBM, fasterGreenwich Consulting has a wealth of experience in Customer Base Management, having worked with severalMNOs on this topic in emerging and developed markets.

Based on this experience, Greenwich Consulting proposes several options to support mobile operators toimplement or enhance their CBM methodologies and organization.


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Benjamin Ferrand,Senior Consultant atGreenwich ConsultingFrance

[email protected]

[email protected]

For more information please contact:

Greenwich Consulting is a leading strategy and management consulting rm focused on the Telecom, Media& Utilities industries, providing its clients unique sector based expertise, with the support of 150 consultantspresent in more than 35 countries.

Greenwich Consulting has developed strong expertise on key telecom issues in Emerging and Mature Marketsthrough market analysis, strategic planning, and by delivering numerous C-level business consultingassignments for leading regional players.

Greenwich Consulting has worked with over 15 global operators in implementing and industrializingCustomer Base Management practices, both in emerging and mature markets.

For more information, please visit www.greenwich-consulting.com

All rights reserved. Copyright 2012 Greenwich Consulting Group

Vincent Douin,Director atGreenwich ConsultingFrance

Fabien Bouskila,Partner atGreenwich ConsultingFrance

About Greenwich Consulting

Greenwich Consulting Group has reinforced its skills and expertise by creating Greenwich Statistics, anentity specialized in data modeling and quantitative analysis to help our customers supporting their businessdecision-making

Dedicated team of 10 seasoned researchers and PhDs in mathematics and statistics to handle dataanalysis and develop innovative and complex models for Customer Value Management (churn, loyalty,etc.) and Quantitative Risk Analysis (credit risk, scoring, etc.)

Collaboration with the business consultants of the Group to provide to our customers pragmatic andworkable solutions

We strongly believe that Greenwich Statistics has the ability to best support telcos in conducting quantitativeanalysis and operational segmentation of their customer base.

Greenwich Statistics extensive experience in similar projects and the methodology it has developed is aguaranty of quality and time efciency (more than 15 successful contributions on Greenwich projects in thelast 18 months).

About Greenwich Statistics

Thoughts Oct2012

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