Dan Baker and Lorien Pratt, Technology Research Institute
05/01/2004
If an eye to profitability is key to a provider’s future, then spending money to retain and cultivate good customers may be just as wise as rolling out a new network service. Among the biggest challenges will be simply accessing all that customer data across the telecom organization.
Integrating customer data into a common logical location is turning out to be a tough nut to crack. And you can’t just throw a new “integration black box” at the problem, such as EAI, J2EE or Web services. The solution requires a much broader integration of people, organizations, processes and technology.
Several external factors are driving a renewed interest in customer care and assurance:
• Global Competition—There are so many telecom carriers these days that customers increasingly perceive price as the main differentiator separating one operator from another.
• Government deregulation in the form of initiatives like wireless number portability have stoked up competitive fires and forced carriers to take proactive steps to stem churn.
• Wall Street is paying more attention to telecom customer retention. In the past, investors used subscriber growth as the key measure of a provider’s financial health. Today’s investors know that profits per subscriber are what drive value.
• Customer practices pioneered in other industries such as Web self-care, sophisticated speech recognition, and “concierge” services like airline miles have raised the customer expectation bar for providers.
• Sophisticated selling models that were first developed for e-commerce applications are gradually entering the practices of providers today.
The Customer Assurance Imperative
While the term customer care may lack the currency of buzzwords like CRM and analytics, it has stood the test of time.
But just as the term gained wide acceptance around the time of telecom divestiture, a new paradigm took hold—customer relationship management (CRM). CRM centered on customer knowledge. By feeding customer intelligence to CSRs, salespeople and direct marketing campaigns, CRM became a valuable way to win, up-sell, and retain customers.
Service providers invested heavily in CRM in the late ‘90s, but when the telecom bubble burst in 2000, it was time for a reality check. Carriers discovered that CRM alone wasn’t enough. Customer cultivation often misses the larger issue of whether or not the customer is actually profitable for the business.
When CRM efforts are combined with a complete profit assessment of a customer base and then aligned with data warehouse, credit-scoring, collections and other customer-facing systems around the goals of the enterprise, these combined efforts could be better described as customer assurance (CA). CA functions in a three-layer framework whose levels are as follows (see Figure 1, p. 44):
• Infrastructure: Includes the many human and automated systems that support CA success. Examples include mediation systems, a data warehouse, the organization structure and CRM systems.
• Control: This level monitors and checks on customer assurance systems. Examples include call center quality monitoring and data integrity initiatives.
• Activities: This level is where the core CA work gets done including customer acquisition, retention, billing, cross-sell campaigns and many others.
To better understand customer assurance trends and opportunities, Technology Research Institute (TRI) conducted a research study of a few dozen carrier and vendor executives involved in customer assurance. Among other things, a healthy global market for customer assurance software and consulting services already exists. It reached $1.2 billion in 2003 with projected growth to $1.7 billion in 2008. The business and technical factors that our carrier survey respondents identified as driving the need for better customer assurance are outlined in Figure 2, p. 46.
Customer Relationship Management
Not surprisingly, CRM remains the biggest telecom customer assurance component overall, accounting for almost half the market, with Siebel Systems being the market share leader.
Live interaction—by voice or in person—is still the most powerful way of convincing someone to buy. If this weren’t true, the airline business would shrink by two-thirds, salespeople would no longer need to travel, and eBay would be bigger than Wal-Mart.
But how do you leverage the latest CRM tools? How do you present a relevant offer to a customer instead of the mere “special of the day”? And in a corporate setting, how do you quickly sift through dozens of ordering options and get a contract into the customer’s hands to sign? Some carriers are testing dozens of innovative ways to solve these problems.
Some have special “save desks” or departments that only work with high-value customers. Sophron Partners, a U.K.-based CRM consultancy, worked with one European operator to pilot a program in which CSR talk time was measured, but not limited. The idea was to learn as much about the customer as possible. As a result, the operator saw a 143 percent increase in up-sells.
Sales Force Automation
Some of the best CRM success stories these days are on the sales force automation side.
Nextel, for instance, felt a desperate need to boost the productivity of its sales team. The company’s consumer-friendly TV ads notwithstanding, the residential consumer market is of only secondary importance. Business accounts are still 90 percent of its business.
To pull through its business accounts, Nextel uses a dedicated sales force. But the company was challenged in two ways: It had trouble getting sales leads to its reps in near real-time, and it had no way to interactively process complex sale orders.
Nextel’s salespeople struggled to get quick answers to business questions. So partnering with PeopleSoft, Nextel implemented an end-to-end sales solution. It takes the order all the way from an “I think I’m interested in your push-to-talk technology” inquiries to pushing the sales lead and background information to the rep in less than 2 hours and finally interactively answering questions and taking orders via a PDA or laptop.
The system went live with the full 2,500 person sales force in 2003.
Profitability & Customer Segmentation
In today’s competitive climate, customer profitability is the guiding light of a telco’s marketing and customer care programs. However, getting a handle on customer profitability is quite a challenge. In fact, the toughest telecom customers to measure are usually the most important of all—the large corporate accounts.
Consider a telco with a customer that’s a large conglomerate like Disney, for example. Each of its businesses has its own telecom contract with unique terms and conditions to monitor. So merely assembling these silos of information in one place is a challenge.
Until a single financial and business-risk view of these large corporate customers is compiled, there is no accurate way of knowing if an account is profitable or not.
Once a carrier has its profitability house in order, it can begin grouping customers into market segments for promotion. Segmentation techniques range from sophisticated predictive analytics techniques to rather simple slicing and dicing. For instance, a teenager’s wireless call pattern is recognizable: Calls are 2-5 times longer than other segments and are localized within 7-10 cells. By comparison, a homemaker’s calls might cross only two cells, a taxi driver’s calls go to 25 cells, and a salesperson might talk to 250.
Segmenting customers and analyzing the underlying causes of their behaviors is designed to identify cross-selling opportunities.
Real-Time Campaigns
Decision support and analytics used to be glacially slow. Usage would be collected once a month, analyzed by experts, then the results would be rolled up for a marketing campaign 6 weeks later. However, providers no longer have the luxury of waiting that long. Companies like Unica are automating the analytics cycle, compressing the gap between data collection and marketing campaign to near real-time. Working with a European wireless carrier, Unica’s solution automatically drives messages to customers over SMS, direct mail, call center and email channels. Messages are triggered by events such as service cancellations, new product purchases, service inquiries and billing issues—all driven off the customer’s profile. The effect greatly reduces the number of ineffective customer interactions, dramatically improving the cross-selling hit rate.
A Single View of the Customer
It’s a mighty effort for a telecom to get a single view of its large corporate customers. Corporate reorganization, mergers and acquisitions of recent years have made account visibility a never-ending challenge.
Many carriers have struggled to produce a single view and failed. Indeed, one high profile CIO, Hossein Eslambolchi, has launched a massive single-view campaign at AT&T in recent years.
And if dogged persistence is the key to success here, Belgacom’s CRM implementation story is a fitting poster child.
From the outset of its CRM initiative, Belgium’s incumbent carrier refused to settle for the short-sighted economy of letting its divisions implement CRM on their own.
In Belgacom’s view, that approach would defeat the whole purpose of CRM. The only way to achieve that was to have a universal customer account that synchronized transactions across the enterprise.
This is a big project involving nothing less than a multi-year migration of all customer-facing applications into a single multi-channel platform covering customer service, repair, direct sales, point of sale, the dealer network and self-care.
The idea is to avoid the many stores of data created by disparate applications. If the customer orders something online, 10 minutes later the call center should know about that order and be able to talk intelligently with the customer about it.
Chasing the Ideal Data Warehouse
Reports on the death of the data warehouse have been greatly exaggerated. The original vision of a data warehouse was an enterprise repository for knowledge about customers, services and network data—in short, a one-stop shop for data to drive a customer care or marketing program.
Trouble is what most call a data warehouse is a functionally oriented “data mart” centered around a siloed business, market or network. So the limited breadth of these systems often fell short of the “one version of the truth” theme that’s the hallmark of the ideal data warehouse.
But the ideal, more comprehensive model is beginning to see the light of day. At SBC, the perennial problems of warehouse reliability and integration of far-flung databases are no longer a major concern. All told, the warehouse manages 35 terabytes of raw data with an estimated 20,000 users on the system—the largest telecom warehouse in the world.
Today, all churn, winback and campaign management programs are run through the warehouse. And the latest trend is to do “active warehousing,” a code word for queries based on near real-time updates. This is especially important for monitoring competitive behavior and the sudden loss of customers.
Web Self-Care
For years we’ve known that Web self-care can deliver huge costs savings over the call center. So why haven’t providers delivered on it?
Well, in certain pockets, Web self-care is already a modest success, particularly in mobile markets. For example, AT&T Wireless now has 4.1 million customers out of 22 million enrolled for self-service. And T-Mobile’s rate is close to 30 percent for self-care and e-billing combined.
The good news is that providers are now confident enough of their capabilities to actively promote their sites to users. Customer Web sites have matured greatly in the past few years. Broadband deployments are growing. And companies like edocs supply turnkey self-care solutions.
As new waves of multimedia handsets get delivered to wireless customers, the last thing carriers want is a flood of call center inquiries asking for technical details.
Credit Bureaus Push the Analytics Envelope
A credit check is an essential first step for wireless operators signing on a new subscriber. Supplying this vital customer intelligence—and more—are credit bureaus like Lightbridge, Equifax and Fair Isaac.
Eager to expand beyond their traditional niche, credit bureaus are helping wireless operators pick the right calling plans and dipping into magazine subscription, bank, house rental—even number portability—databases in their intelligence gathering efforts.
One promising approach to analytics is to use a subset of customers to test a new retention, bundling or marketing campaign. When applied to collections, each subscriber receives a risk score, indicating the likelihood they will default on their contract.
Say you decide that customers with scores under 610 should get a telephone call encouraging them to pay their bills. Finding the right score can have a big impact on an operation. If the mark is set too high, your call center gets overloaded and your collections program becomes too expensive. But if the score is adjusted too low, you could end up making too few collection calls, so your bad debt goes through the roof.
So the solutions is to try the new number on a small group of customers and see how it goes. After a few months you’ll have enough data to know if this is a better strategy. If so, then you can extend the strategy to a larger subscriber base.
Customer Assurance Through Better Data
Having good data integrity is not just a matter of cost efficiency, say eliminating duplicates from a mailing list or trimming a telemarketing list of bogus phone numbers.
Data integrity is at the heart of the decision making process. If your data is wrong, you may be promoting services to the wrong people. Or your winback campaign will fail because the outbound sales reps don’t have an accurate picture of the services customers are subscribed to.
So carriers these days are paying much attention to enterprise data cleansing.
At one carrier, for example, revenue assurance vendor Connexn fed its data cleansing corrections directly into the customer contact system to guide up-selling efforts. The data cleanup determined whether a subscriber was over-billed for DSL, perhaps paying the fee for high-speed DSL instead of the low-speed DSL originally ordered.
Using that information, an outbound rep can call the customer, apologize for the billing mistake and promise a credit for the overbill. The customer is often pleasantly surprised that the telephone company has called to graciously offer a refund. And in the glow of that moment, the salesperson convinces her that signing up for the higher speed DSL service is a prudent move.
Dan Baker and Lorien Pratt are research analysts at Technology Research Institute (TRI). They can be reached at 570-620-2320 or www.telecomOSS.com.
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