Copyright © 2005, SAS Institute Inc. All rights reserved. A Holistic Approach to Customer Lifecycle...
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Transcript of Copyright © 2005, SAS Institute Inc. All rights reserved. A Holistic Approach to Customer Lifecycle...
Copyright © 2005, SAS Institute Inc. All rights reserved.
A Holistic Approach to Customer Lifecycle Management
Name: Ken KingTitle: Industry Strategist - TelecommunicationsCANTO – June 2005
Copyright © 2005, SAS Institute Inc. All rights reserved.
The long-Term Challenge for Wireless Operators
According to McKinsey:
To justify [today’s stock] prices, the typical carrier will need, by 2008, to simultaneously:
Limit ARPU erosion to 1% annually
Reduce Churn by 9%
Reduce Acquisition costs by 20%
Reduce Service costs by 20%
Source: Deutsche Bank; Morgan Stanley; McKinsey analysis The McKinsey Quarterly 2003 number 4
Copyright © 2005, SAS Institute Inc. All rights reserved.
Agenda
Key Metrics in the Wireless Market
What theses Metrics reveal about Performance
Case Study
Managing Churn
Measuring Customer Profitability
Fully Integrated Customer Lifecycle Management across the enterprise
Copyright © 2005, SAS Institute Inc. All rights reserved.
This chart looks at:ARPU, CCPU, CPGA, Churn, WACCSource: Lehman Brothers Q1 2005 Earnings Reports
Payback Period
-$800.00
-$600.00
-$400.00
-$200.00
$0.00
$200.00
$400.00
$600.00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Months
Nextel Cingular Sprint T-Mobile Verizon Wireless Alltel US Cellular
Keeping a customer vs. getting a new onePayback Period on Customer Acquisition
Copyright © 2005, SAS Institute Inc. All rights reserved.
This chart looks at:ARPU, CCPU, CPGA, Churn, WACCSource: Lehman Brothers Q1 2005 Earnings Reports
Customer Lifetime Value
-$1,000.00
-$500.00
$0.00
$500.00
$1,000.00
$1,500.00
$2,000.00
$2,500.00
1 3 5 7 9 11 13 15 17 19 21 2 2 2 2 31 3 3 3 3 41 4 4 4 4 51 5 5 5 5 61 6 6 6 6 71 7 7 7 7 81
Months
Nextel Cingular Sprint T-Mobile Verizon Wireless Alltel US Cellular
Customer Lifetime Value
Copyright © 2005, SAS Institute Inc. All rights reserved.
Nextel Case Study – Phase 1 Proactive Churn management
Business Challenge• Segment customers by profitability and reduce churn among the
most profitable segments
• Mandatory Implementation of number portability in November 2003
Solution• Nextel Customer LifeCycle division executed a multi-year strategy
incorporating advanced customer analytics
Business Benefit• Nextel’s use of advanced analytics led to a churn rate reduction from
2.6% down to 1.5%
• Cost per save reduced by 50%
• Customer claims more than $1B additional earnings
Copyright © 2005, SAS Institute Inc. All rights reserved.
Nextel Case Study – Phase 2Nextel Case Study – Phase 2 Proactive Campaign Management
Business Challenge• “Getting the Right Message to the Right Customer at the Right Time”
• Increasing speed to market of all campaigns
• Reviewing and approving development of campaigns online
• Providing optimization of all campaigns
• Tracking of customer communication history
• Coordinating multi-channel, multi-touch campaigns
• Automating campaign management capabilities as current programs were manually supported with internal, agency and IT resources
Solution• Marketing Automation and Marketing Optimization solutions afforded
Nextel the ability to segment customers, build models with all data points, and keep track of customer actions. The solutions will automate every existing marketing process and optimize customer segments by ARPU, LTV, likelihood to respond, etc.
Copyright © 2005, SAS Institute Inc. All rights reserved.
Churn Types & Reasons
Voluntary
Involuntary
Deliberate
Incidental
Fraud
Non-payment
Under-utilization
Economics
Quality
Social
Technology
Convenience
Major Life Changes
Location
Finance
New Technology
Features
Handsets
Subscription
Activation
Per Minute
Friends/Family
Experimenting
Image
Retail Channels
Internet
Billing
Customer Service
Call Quality
Coverage
Reasons
Types
(customers’ choice)
(operator initiated)Source: Telecom Churn Management, The Golden Opportunity
Rob Mattison
Copyright © 2005, SAS Institute Inc. All rights reserved.
Customer Lifecycle can be leveraged
Intensify Retention Termination& Recovery
- $
+ $
$ 0
Stages
cashflow(Before)
AcquisitionCost
More efficientacquisition
Better cross- and up-selling
more effective customer retention
Copyright © 2005, SAS Institute Inc. All rights reserved.
Profitability may not correlate to Revenue
Ranking Customers
0
50
100
150
200
250
300
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Most Profitable Customers Least profitable Customers
Cu
mu
lati
ve
Pro
fit
Copyright © 2005, SAS Institute Inc. All rights reserved.
Analyst Validation
Carriers.. Will develop matchless competitive advantage if they choose to build the organizational, channel, and IT capabilities needed to identify and capture opportunities to raise their customers’ lifetime value.
McKinsey, 2003
Copyright © 2005, SAS Institute Inc. All rights reserved.
Vision – Decision Centric BI for ICM
Transactional PlatformProcesses: Billing, CRM, Ordering, Collections, Network, PRM…
Business Intelligence Platform
Data: Revenue, Cost, Customer, Product, Usage, Partner…
Extract, Transform, Load
Contact Center Optim.
Customer Profitability
/ CLTV
Retention/ Churn
Revenue Assur.
Cross/Up Sell
Inte
gra
ted
An
aly
tics
Technology: Reporting, OLAP, Data Mining, Dashboards, Alerts…
Segmen-tation
RatePlanOpt.
ServiceProvision
Optim.
Collect-ions
Optim.
Channel Perform-
ance
Copyright © 2005, SAS Institute Inc. All rights reserved.Copyright © 2005, SAS Institute Inc. All rights reserved.