Tech briefing: Close relations
Roy Rubenstein
This article originally appeared in Total Telecom magazine [Issue: 56]
01 November 2007
Operators need to take more advantage of software solutions to help them retain customers and get ahead of the competition. Despite growing levels of churn among both fixed and mobile customers, operators are only beginning to use sophisticated software tools to tackle the problem.
"Most service providers aren't taking advantage of the software and all the things it can do," says Larry Goldman, co-founder and senior analyst at telecoms software market analysis firm, OSS Observer. "The technology is ahead of the service providers that use it."
Operators increasingly will need to look to software to help them better understand their customers and their value as they introduce bundled services. Such software, coupled with sound service bundling, promises better customer retention and services, enabling operators to steal a march on their competitors.
The bad news is that experts say telcos have a long way to go before they can combat churn. "It is a problem," says Wim Brouwer, solutions and portfolio director at LogicaCMG Telecoms and Media. "We are at the starting point as to how far we go in understanding customers."
For mobile operators the problem can be severe. "Churn [in the mobile market] has always been a big issue," says Alastair Brydon, chief executive of Sound Partners. "Ten years ago it was about 20-30% and it's some 20-30% per annum now."
It might be a costly business, but there are attractive incentives to implementing better solutions. Essentially, software will enable better decision-making by operators, and better decisions will mean better margins. "Look, you can drive churn right down by giving away free stuff," says Goldman. "No amount of software will overcome that. But software lets you say that you don't have to give stuff away; you can be more discriminating."
Operators face several challenges when it comes to adopting such software, say experts. For example, customer relationship management (CRM) systems are designed to hold key customer data from orders, deliveries and cancellations, as well as retail environment activity. They have analytics to evaluate the data to identify the relative value of customers, as well as trends and success of campaigns.
"The problem is that much of the data that represents customer behaviour in telecoms does not come directly to the CRM system," says Goldman at OSS Observer. "It is collected by other systems that have been in place and serve other purposes." The service providers' challenge is to identify that data, associate it with customers and their services, and then take advantage of inherent CRM capabilities to make better decisions.
"Over time, the guys that really get this will get better yield and be more profitable, and can then be even more aggressive in their offerings," says Goldman.
Graham Carey, director of product solutions for Oracle Communications, says business intelligence software will quickly tell operators which new service mixes they introduce make good revenue sense.
Immediate usage feedback comes from analysing the product catalogue and accounts receivable data. Historic data from similar services and customer segments can be used for predictive analysis. "In a fully working system a mix of both would provide the contributing information to make such business decisions," says Carey.
But again, while business intelligence software for such analysis exists, the data to feed such applications hasn't been available because systems need to be integrated. "Ideally one needs a single master source for all customer data-a customer data hub and a similar source for product data."
Carey says the benefits of doing that are clear. "It will allow them to make business decisions-pricings and offers-as they try out new services to smaller market segments." So far operators that are addressing billing and CRM say they are seeing improved customer retention. CRM systems company Aperio CI, for example, claims it has helped one European telco reduce mobile customer churn by a double-digit percentage figure in a year.
Aperio CI's software enables an operator to assess its tariffs against competitors. "We can price an operator against every other operator in its market," says Paul King, president and COO. "We build all the rate plans so that an operator can do price analysis of bundles and see how close its plans are to the optimal price."
So far customers have mainly been mobile operators, but it is seeing increased interest from fixed-line players as more triple-play services are rolled out. "Such services drive higher complexity and therefore increase the need for careful analysis," says King.
The incumbent that reduced its churn wanted to keep more of its mobile customers who called in to end their contracts following the introduction of number portability. "They wanted to be very aggressive, but what they lacked was formal analysis," says King.
Aperio CI's software now provides the operator's staff with a customer's payment details and history, as well as details of an appropriate better service package.
"Churn is about customer service more than anything," says Tony Wilson, operations director of Martin Dawes Systems. "If bills are accurate, if customers are informed about the latest and greatest and when existing plans no longer suit them, you have happy customers."
Billing itself is becoming more complex with the advent of service bundling and fixed-mobile convergence. Martin Dawes Systems' software tackles billing accuracy by ensuring that only one copy of a customer's details exist, offering a single unified view of service usage and pricing.
"All the units consumed are correlated in the same place," says Wilson. A unit can be a downloaded movie, any form of data, fixed line and mobile voice, as well as SMS and text. MDS' Dise3G software is also designed for converged services. And corporates have a number of self-care options including subscriber tariff selection and activation, and tariff comparisons.
Vodafone Business Solutions has adopted Dise3G to replace 11 legacy billing and CRM systems for fixed and mobile services. According to Wilson, benefits have included being able to view group account details, not possible previously, and reduced billing errors compared to when customer details were spread across multiple systems.
But some developments enable corporates and operators to drill down even further to better understand the way telecoms services are consumed.
Business intelligence techniques are enabling more sophisticated ways of evaluating customers as part of strategies to improve retention. "Operators can use traditional criteria such as average revenues per user (ARPU) and customer profitability, but we can expand the analysis by building customer models," says Brouwer at LogicaCMG.
His company is using standard business intelligence tools, deployed as an add-on to its Bridge-it system, to assess customers in terms of their social circles. For example, a user may receive calls from several groups-social groups or work contacts-while their outgoing calls may be limited. Judged on ARPU alone, such a customer would be classed as having limited value by many operators; but being a hub for several social groups could mean the user has a strong influence on others. "It offers the ability to go a level deeper in understanding a customer," says Brouwer.
In many instances new bundling strategies, themselves designed to better tie in subscribers, are the catalyst for operator interest in software to improve the day-to-day management of customers. "Adding more services means the complexity of services is much greater, and the way to handle consumers needs to be more sophisticated," says Carey at Oracle. "That drives the need for integrated applications, not just at the data level but at the process level."
About Aperio CI
Aperio CI is regarded as a leading provider of advanced analytics solutions that empower service providers to maximize revenue and profitability. Aperio CI applies proprietary software applications and techniques to a client"s complete transaction records, creating a detailed view of customer usage and/or purchasing behavior. By integrating that model with a comprehensive database of market and competitive intelligence, Aperio CI enables its clients to develop and execute innovative and targeted marketing programs that acquire new customers, retain existing ones, increase customer satisfaction and ensure more profitable performance. Aperio CI is based in the New York area, and maintains offices in New Jersey, Atlanta, San Antonio and has an affiliated entity in the United Kingdom. For more information, please visit www.AperioCI.com.
For more information, contact:
Lynn McAuley
Aperio CI
+1 (631) 468-4014
lynn.mcauley@aperioci.com
Glen Zimmerman
Netezza
+1 (508) 382-8267
gzimmerman@netezza.com