Telco Customer Profitability Management

In Customer Management we looked at how 80 percent to 90 percent of Teleco profits come from 20 percent to 40 percent their customers. We also looked at the value having an accurate view of costs to attract, service and retain customers on an individual customer level.

Customer Profitability builds on that business intelligence. It assists telecommunications companies to analyze customer profitability as a foundation for analytical customer relationship management [CRM].

Customer Profitability has been termed the collision of Revenue Assurance and CRM.

A complete set of CRM components includes:

• Analysis of marketing campaign effectiveness
• One-to-one marketing programs through customer profiling
• Customer service tracking
• Sales trend analysis
• Customer loyalty measurement

Most often, Telcos base their profitability calculations on averages and assumptions derived from general ledgers. This method does not accurately assess what is driving the bottom-line value of their customers, products, services, or channels. Revenue and expenses are totally out of line. This leads to failure of many services and campaigns to provide an acceptable return on investment.

It is not uncommon for Telcos to realise, after implementing Customer Profitability Solutions that the segmentation of their customer base was highly inaccurate. No wonder campaigns failed to pull the results expected, and prices wars loom as the most commonly used competitor tactic.

Use accurate customer information to:

• make decisions about where to invest marketing dollars
• develop new pricing strategies
• determine the best opportunities and greatest challenges

Profitability impacts can be significant.

SAS Customer Profitability for Telecommunications

Using activity-based costing methodologies, a customer profitability solution allows users to assign costs to specific work activities and then align those activity-based costs with customers, products, services, channels and price plans.

Detailed analysis across different subscriber attributes helps Telcos:

• Understand the combinations profitability drivers - behaviors, cost and revenue
• Assess the cost to acquire and retain subscribers
• Identify the true costs to deliver services to each customer group
• Recognize profitability bands that possess the best cross-sell and up-sell potential
• Develop demographic profiles of profitable and unprofitable subscribers
• Track the transition of subscribers across profitability bands.

SAS Customer Profitability for Telecommunications

SAS Customer Profitability for Telecommunications is one component of SAS Telecommunications Intelligence Solutions. Its strengths are in its proven, pre-built processes, techniques and models. This supports rapid implementation and user adoption, leading to more significant returns within months, rather than years.

Teradata Profitability Analytics Solutions

Teradata Value Analyzer [TVA] is a robust, scalable, and enterprise-wide profitability analytic solution that provides Telcos with a view of profitability across multiple dimensions. Supported by a single customer data store, this enables Telcos to make accurate, informed decisions based on detailed data from across the entire enterprise.

TVA extends beyond traditional methods of measuring value toward a behavioral approach to profitability that better relates to real-world business problems. Key strengths of the Terradata solution are the rapid analytics utilising the power of Active Data Warehouse and the consulting expertise within Teradata to help Telcos optimise use of their solution.

Total account analysis factors for Teradata Value Analyzer profitability intelligence includes operational revenue, net interest revenue, direct expense, indirect expense, risk provision, capital, and allocated balances. Teradata can show you how to build a better business by converting a combination of your customer data and your business methodology into profitability intelligence - just as it did with RBC.

Typical Outcomes of Customer Profitability and Value Analysis

Profitability and Value Analysis capabilities helps support Telcos:

• Win the price and technology wars - service convergence and bundling based on accurate price plan analysis
• Targeted acquisition - using intelligence driven marketing
• Get answers beyond mass marketing - match customer profile with creative marketing bundling
• Segment the customer base - best practices in acquiring customer data to build accurate profiles and segments
• Use brand values, custom services and precision marketing to engender loyalty
• Avoid and identify fraudulent customers
• Support a successful churn campaign - effective churn analysis and prediction
• Formulate effective CRM strategies - Overcome limitations in the implementation of CRM strategies and give customers what they want versus what you can offer
• Customer segmentation and profiling - utilise profiling and segmentation to reduce prepaid churn
• Personalize web-based self service - through insight into driven customer service
• Integrate loyalty programmes
• Successful cross and up-sell - gain a single view of the customer

Next: Customer Retention

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