Editorial: From Customer Intelligence to Operational Impact

At telcos around the world, CRM is the greatest enterprise improvement technology that never got fully implemented. To be fair, many telcos didn’t quite understand CRM. They thought they were buying a software package and merely hiring an integrator to hook it to their legacy. But CRM is a “software package” only if you cast it in very narrow terms—as an efficiency booster, better order entry machine, glorified contact manager. On that score, CRM partially did deliver on its promise.

Although software is a vital element of CRM, it’s not sufficient for getting the job done, and the business case for CRM is much broader than efficiency alone. It’s about organizational effectiveness: gathering and analyzing enough customer intelligence so you can increase your ARPU, steal market share from a competitor or make more profit.

Simply collecting data or inventing a new retention campaign doesn’t do those things. It’s only when you can operationalize those insights that you earn an ROI. And it’s on this operationalizing front where so many telecom CRM projects failed.

So where are current successes taking place?

SAS Institute has made a successful business of teaching companies how to make CRM and analytics technology habit-forming. Now, SAS is a software company. It’s built a proprietary set of churn and profitability algorithms just like any other CRM and analytics ISV. But here’s the difference: it rests its laurels on its operational skills, not its mathematical models. What SAS is good at is integrating its algorithms with enterprise data sources, then distributing knowledge and best practices throughout large organizations.

Five years ago, long before Nextel was acquired by Sprint, marketers at Nextel figured they were smart segmenting customers into age, income and geographic sectors, then targeting the people who lived in the “wealthy” zip codes. In the process, though, they missed some dynamite segments. Independent taxi cab drivers, for example, are great cell phone customers. The cell phone is absolutely essential to their businesses, but if you screen out people who are not “high income” or do not run their businesses in high-income locations, you may not target taxi drivers.

The way to discover such profitable niches is to comb through big data volumes and let the analytics data create the opportunity categories for you. Adopting SAS’s approach, Nextel’s senior managers learned to use good CRM and analytics principles in pricing, too. Instead of reluctantly following their competitors’ endless price cuts—as they’d done so often in the past—when profitability and customer value statistics said to hold prices steady, they stuck to their guns and went against conventional wisdom.

As a result, Nextel dropped from 3.5 percent churn to 1.6 percent in two years’ time, then held onto that low churn level for two years while maintaining one of the highest ARPUs and profitability levels in the U.S. wireless market.

While Convergys has never been known for its CRM software per se, when you operate 65 contact centers around the world, certain aspects of CRM become second nature.

Given its heritage, it’s not surprising that the “propeller heads” at Convergys have become good at analyzing contact center interaction data. Using a technique called “forensic data analysis,” Convergys analyzes live or recorded calls, sorting through as many as 200 unique attributes in a single research case. The information gleaned can sometimes lead to a dramatic uptick in retention, profits or operational effectiveness.

At one carrier Convergys traced a major churn problem to a particular type of cell phone. The research revealed the main problem was that customers couldn’t figure out how to use a particular class of handset. Using this intelligence, the carrier had the ammunition to lean on its handset suppliers to ensure that their phones were user-friendly.

One of the biggest obstacles CRM consultants face is transforming great ideas into company practices. For example, a consultant might define a marketing campaign that optimizes interactions with a certain class of customers. The marketing idea could be absolutely brilliant, but unless the consultant and company can find a way to operationalize the strategy into an executable analytics solution, the idea will go nowhere.

One company that has done a stellar job of operationalizing CRM principles is Synchronoss. It offers nothing especially new, except its ability to tie various CRM threads together—real-time analytics, customer self-service and customer order management—and deliver solutions to Cingular and other wireless carriers.

Of course, a potent web-based solution comes none too soon for wireless operators who struggle to manage hundreds of new service offerings, handsets and other options. By bringing customers in through the web channel, Synchronoss helps wireless carriers lower their cost per gross add (CPGR), traditionally in the $300 to $450 per subscriber range.

Synchronoss also acquires customers in a “smarter” way, accessing terabytes of customer profile data to generate personalized recommendations in real time. On the back end, Synchronoss performs all the required order management tasks, too, such as service availability, credit and fraud checks, address verification, number port and phone inventory database dip.

Synchronoss does not provide a portal or user interface facade of its own. It merely provides the underlying process and analytics framework for the telco to build its own.

Despite the disappointment of early CRM implementations, the good news is that vendor innovation is alive and well and that telcos have merely scratched the surface of ways they can profitably leverage their knowledge of customers, operations, services, networks and salespeople.

Dan Baker is the research director of Dittberner’s OSS/BSS KnowledgeBase.