mikaili lilly

Copyright © 2006 Accenture All Rights Reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.

Driving High Performance for a Large Wireless Communication Company Through Advanced Customer InsightAccenture Consulting – CRM Customer InsightPresenters: Ramin Mikaili and Lynette Lilly

2Copyright © 2006 Accenture All Rights Reserved.

In saturated competitive markets, the economics of acquisition and retention becomes painfully obvious and requires a shift in the marketing mix from using the 4 Ps to the 4 Rs. 1

1. James G. Barnes book "Secrets of Customer Relationship Management" McGraw Hill copyright 2000, page 22-23

Why Customer Insight?

4 Ps

Price

Product

Promotion

Place

4 Rs

Relationships: effective communication, trust, commitment, understanding customer needs

Retention: targeted incentives, rewards, loyalty programs for specific segments

Referrals: value selling, Communication

Recovery: strong win-back programs, product and service development

Acquisition determines how fast a company can grow. Retention determines whether a company will survive over time.


Levels Of Insight

Retention, up-sell, or service

Acquisition, capital investments

■ Mass media buys■ Corporate Branding■ M&A/Alliance Strategy■ Corporate Strategy■ Price Plans/Bundling■ Capital/Technology

Investment Strategy

Corporate Direction ■ Network Build■ New Market Entry■ IT project prioritization■ Supply Chain Strategy■ Promotions■ New Business/Growth

Strategy

■ Acquisition campaigns■ Network decisions■ Retail Strategy■ Channel Strategy■ Product prioritization■ POS technology

■ Store design/inventor■ Accessory mix■ Alliance prioritization■ Marketing:

■ The “P’s R’s”■ Bundles

■ Retention offers■ Cross sell of value

added services■ Differentiated

customer service

■ Telesales calling lists

■ Web site personalization

■ Lifecycle communication plan

5-10 Segments

50-100 Cells

Millions of Customers

Illustrative Business DecisionsLevel of Insight

Various analysis types are employed to make sound decisions about corporate direction, acquisition and capital investments, retention, ups-sell or service.


ApproachAccenture implemented a phased approach for a successful Customer Insight Revenue Generation program.

-20%

0%

20%

40%

60%

80%

100%

% o

f P

ote

nti

al

Va

lue

Ca

ptu

red

Insight Obtainment

Insight Application Develop tactical targeting

tools Apply test and control

methodology to examine/generate hypotheses

Identify the customer data requirements for enhancing the effectiveness

Develop optimal campaign program plan

Develop long term road map

Sustained Customer Insight Institutionalize insight throughout the

organization Ingrain new processes in the organization

ILLUSTRATIVE

Insight Services Extend/expand

the scope of revenue growth strategy to include other channels, customer base

Infrastructure Develop

technology based capabilities

Value CaptureValue CaptureValue TargetingValue Targeting

Phase 1 Phase 2

Leverage Results to Entire Base

Leverage Results to Entire Base

Phase 4

Results Tracking & Monitoring

Results Tracking & Monitoring

Phase 3

Establish Growth Strategy

Prove Effectiveness

Improve Efficiency

• Identify growth opportunities

Develop a case

Establish benefits

Prioritize initiatives


Client Situation■ The Lifecycle Group is responsible for maximizing the

lifetime value of the customer base■ Their traditional focus has been retention. Team has

had significant success reducing churn and increasing the portion of the base under contract

■ As these churn programs have matured, focus turned to proactively growing the revenue of existing customers

■ However, the carrier lacked key infrastructure and capacity to launch a comprehensive cross sell/up sell program

Significant increases achieved for pilot, base, and lifetime incremental revenue

Significant increases achieved for pilot, base, and lifetime incremental revenue

Value Targeting:− Identify, profile and analyze the segments− Assess market and identify opportunities− Develop portfolio of cross-sell and up-sell pilot opportunities

Value Capture:− Select opportunities and develop business case− Create pilot launch plan and identify key metrics− Prepare channels and launch pilots − Monitor pilots and create summary report of results

Leverage Results to Entire Base− Design campaigns based on pilot results− Create launch plan and business case for campaigns− Launch campaigns

Value Targeting:− Identify, profile and analyze the segments− Assess market and identify opportunities− Develop portfolio of cross-sell and up-sell pilot opportunities

Value Capture:− Select opportunities and develop business case− Create pilot launch plan and identify key metrics− Prepare channels and launch pilots − Monitor pilots and create summary report of results

Leverage Results to Entire Base− Design campaigns based on pilot results− Create launch plan and business case for campaigns− Launch campaigns

BI Offerings Solution Results

Company Description■ A leading US provider of fully integrated, wireless communications services. ■ Focuses its products and service towards Business Customers■ Leads the Industry in Customer Retention

Increase RevenueIncrease Revenue

Case I: Revenue Generation for a Major Wireless Company


Case I: Growth Segmentation Analysis Framework

Rate Plan - Price Point 1

-10% +10% Unstable Trend

Separates customers to limit “noise” in trend analysis

H

M

L

1 2 3 Undefined/Error

H1 H2 H3

M1 M2 M3

L1 L2 L3

Ave

rag

e S

ub

scri

ber

Ch

arg

e

Subscriber Charge Trend

6 Month

6 month subscriber average of key charges.

Forecast change in revenue over 6 months based on a regression of monthly subscriber charges to smooth month to month variations

Cut-offs chosen to show significant trends in the movement of revenue and to split the base roughly into three parts

Cut-offs chosen to split the base into roughly three parts

1

2

3

4

5

The Revenue Change matrix is the tool we use to analyze the base

Rate Plan - Price Point 2

Identify & Profile segments


The wireless industry is exhibiting the telltale signs of a maturing and potentially unhealthy market.

Note 1: Includes Consumer Post-Paid, Business, Resellers and Pre-Paid Subscribers.Source: CTIA, Morgan Stanley, Client estimates

■ $80B industry with revenues with 12% Cost of Acquisition■ New products and services still compelling in value■ Bundles are becoming increasing important ■ Convergence is bringing new opportunities to the market■ Market is at an inflection point■ Focus is shifting from revenue growth to profitability

The Good News:

■ Declining new subscriber growth■ Saturation of high profitability wireless users ■ Market inefficiencies and gap between customer marketing and sales is

adding to declining margins■ Largest remaining sources of growth are lower end■ Switchers out number new entrants by 2:1■ LWNP is not an “if” but a “when”■ Spectrum and network constraints abound■ Untraditional entrants are shifting the value chain■ Bottom-line economics are deteriorating

The Bad News:

Rev./User1 $46 $45

Churn 2.6% 2.7%

CPGA $286 $294

Min. of Usage 188 249

Revenue

Cost

Attrition

Decreasing Customer Value

$46

3.1%

$340

343

Yield2 $0.24 $0.18 $0.13

Annualized Subscriber Growth

Ann

ualiz

ed G

row

th R

ate

June 85 June 01

0%

50%

100%

150%

200%

250%

Case Study II: Insight Driven Customer Strategy


Case Study II: Business Issues

• Which new products are most likely to have fastest, profitable uptake and by which customers?

• Which new products will attract new customers that look like our most profitable cells?

• How do we launch a new product to maximize adoption?

• Which handsets are best for our bottom line (by customer)?

• How do we determine inventory and store shelf to best meet the

needs of local customers?

• How do we better deploy Network capital to improve service and loyalty?

• What geographic areas should be our priority in rolling out?

• Where can we invest to turn around profitability issues?

• How do we maximize new product adoption?• How should we route calls and handle an individual

customer contact?• How do we respond to a competitor price change? • Can we institute a customer loyalty

program to reduce churn?• How do we handle Increasing volumes

into the call centers?• What is the likely reason thus

customer is calling and how can we best serve profitably?

• How do we prioritize IT infrastructure development to optimize customer experience

and our bottom line by segment?

• Which potential alliance partners’ support our customer strategy?

• Which alliances are most likely to attract and retain the “best” customers? On what terms?

Sales

Customer Service

Information Technology

Supply Chain

AlliancesProduct

Development

Network

Customer Insight

In this saturated market, the company was facing many key business questions that now can be answered with strong analytical support.


The first step was to create a 360-degree view of the customer that incorporated factors from all key areas.

Component of Segmentation Variable Category

Charges from the billing system

Minutes of use – used as a proxy for cost to serve

Minutes of use

Channel preferences

• Access Charges• Overage Charges• Roaming Charges

Plan

Sample of Fields

• Channel (retail, agent, etc.)• Distribution (internet, etc.)

• Product group• Product subgroup• Price plan

Profitability

~40 variables

Behavior

~130 variables

• Call Detail All Minutes• Call Detail Home

Minutes• Minutes of Use - Air

• Call Detail All Minutes• Call Detail Home

Minutes• Minutes of Use - Air

Demographics

~400 variables

Demographics• Age• Income• Ethnicity• Marital Status• Occupation

Lifestyle• Golf• Boating• Gardening

Case Study II: Approach


Case Study II: Strategic Segmentation

Top Level Strategic Segments

Population MultipleSeg C

Segment D

Seg B Seg A

SegE

Value Factors

Be

ha

vio

r F

act

ors

(Average)

This analysis yielded five strategic segments and the decision was made to further analyze the cells below these for insights in many key decisions areas.

Sources: Customer Data


Case Study II: Market Research Results

SegmentMore Likely to

HaveLess Likely to

Have

Product Features1 Expressed Interested in the Following Data

Products2

A

B

C

D

E

• International LD• Cellular Insurance• Mobile-To-Mobile• Enhanced Voicemail• Wireless Data

• Email• Instant Messaging• Internet Gaming• File Transfer• Internet Shopping

• News• GPS

• Cellular Insurance• Mobile-To-Mobile• Wireless Data

• Email• Instant Messaging• Internet Gaming• File Transfer• Internet Shopping

• News• GPS

• Cellular Insurance• Wireless Data

• Not Interested in Data Products

• Cellular Insurance• Mobile-To-Mobile

• Email• News• GPS

• Roadside Assistance • Cellular Insurance• Mobile-To-Mobile• Enhanced Voicemail• Wireless Data

• Not Interested in Data Products

1 Source: Client Data. Segments were at least 20% different from average to exhibit listed behavior.2 Source: 2001 Convergence Audit. Segments were at least 20% more likely than average to exhibit listed behavior.

Using primary research already performed, we were able to determine key product areas for top segments.


Case Study II: Market Research

Market Share Leader in Segment

Note 1: Includes carriers such as Nextel, Rural Cellular, US Cellular and respondents who did not indicate a carrier.

Note 2: Adding values may not total exactly 100% due to rounding.

SegmentCompany 1 Company 2

19%

22%

22%

21%

Company 3 Company 4 Company 5

11%

12%

18%

17%

20%

14%

13%

16%

18%

16%

11%

14%

7%

10%

3%

3%

23%17% 14% 7% 4%

Others1

Total2

19%

23%

26%

21%

29%

100%

100%

100%

100%

100%

A

B

C

D

E

Company 6

6%

4%

7%

8%

7%

Market Share By Segment

Source: 2001 Convergence Audit. Data is from response to question about, “who is your wireless carrier?”. Market versus Client comparison is made using Claritas data and should be used for relative comparison only. Data does not exactly reflect Client’s base.

In highly competitive industry with high churn rates, it was critical to identify the addressable market in each area, and to find out where those customers were if they were not in our base.


What is Customer Insight?

Customer Insight is a capability that requires the integration of business processes to drive actionable strategies and tactics.

From our perspective, Customer Insight provides a holistic platform for the management, analysis, and application of information to drive business decisions across a corporation.

Integrated View of the Customer

Adaptive Campaign

Management and Execution

Intelligent, Insight Driven Interactions

Gather & Manage DataGather & Manage Data Apply InsightApply InsightAnalyze Data/Draw InsightAnalyze Data/Draw Insight

Profiling and Propensity Modeling

Segmentation and Value Analysis

Close the loop so customer responses are quickly incorporated into future analytics

Customer Insight

Customer Insight Framework

Data Enrichment

and Refinement