hpmc12: celcom using analytics for excellent customer lifecycle management

High Performance Marketing Conference 2012

Using Analytics for Excellent

Customer Lifecycle Management

Andreas West Senior Vice President - Customer Value Management

Celcom Malaysia

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Customer Lifecycle

Discover

Join

Sign-Up Activate

Use Request Support

Use Service Bill & Pay

Reconsider

Make Contact

CLM Actions to Drive Greater Lifetime Value

Resolve Issue Revaluate Terminate /

Extend

Customer Lifetime

1. Make customers profitable faster through Targeted

Acquisition and Full Service Take-Up

Pro

fita

bili

ty Downward

Migration

2. Intervene to reduce Costs-to-Serve and Drive

Margin

3. Intervene to Up-Sell / Cross-Sell and Drive

Revenue

5. Extend Revenue through Proactive

Retention Treatments

With CLM

Range of Customer

Profitability Scenarios -

Without CLM

4. Intervene to Minimize number of Unprofitable

Customers

6. Life-stage and profile based treatments to match customers needs and increase loyalty

Customer Lifecycle Management (CLM) is to drive profitability earlier in the lifecycle, increase the margin of customers as they mature and extend the tenure of profitable customers

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Customer Lifecycle Management shifts the focus from “To Whom can I sell this ?” to “What is relevant to You ?”

Traditional Marketing

“I have an offer …” “…let me find the best group of people to tell about it.”

Traditional Batch Campaign

“I have a customer …” “… let me find the best relevant treatment for this customer at the moments and channel he prefers.”

CLM Marketing

Event Based Campaign

(…)

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http://www.getty-images.com/source/Search/21','1','


High

AR

PU

(R

M)

Tenure (Months)

Low (Bubble Size = Segment Count)

CS04

CS05

CS07

CS06

CS03

CS01

CS02

Understand customers’ behaviour is the fundamental of Customer Lifecycle Management

CS04 – East Malaysian Chinese Churners • High Revenue Loss

per month • Old Price Plan • No Call Bar

CS05 – Loyal Old Folks • Mid Revenue Loss

per month • Age 58 to 108 • Northern, Malay • Low SMS

CS06 – High Value 1+5 • Low Revenue Loss

per month • Malay • LOS 3 to 29 months • Child Account • Call Barred > 3

New joiner Loyalist

Customer Segmentation

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Continuous Connection

Discipline Pushing the boundaries

Playing around

Time out from the world

Maintaining

Pleasure Seeking

Pimping

Routines Exploring

Life management

Acceptance Driving change

Availability Keeping up

Being in the loop

Holding on

Bonding

Unleashing

Rewarding

The World In My Hands

System & Strategies

Thrill of the New

In addition to behaviour, customers’ needs drive the design of customer lifecycle management

Source: HuNeedsTM model, mext 5


The World In My Hands

System & Strategies

Thrill of the New Continuous Connection

Discipline Pushing the boundaries

Playing around

Time out from the world

Maintaining

Pleasure Seeking

Pimping

Routines Exploring

Life management

Acceptance Driving change

Availability Keeping up

Being in the loop

Holding on

Bonding

Unleashing

Rewarding

Control & Bonding

Keeping Up

Power Players

Progress Managers

Socialites

Based on customers’ needs, five telecommunication market types are derived

Source: HuNeedsTM model, mext 6


A/B Testing

What is A/B testing?

• Samples from 2 or more customer-group are given the same offer

• A metric defines success

• The group exhibiting more success is selected for real-world use

1. Putting human photos on a website increased conversion rates by as much as double

Examples

2. Adding “It’s free” increased the clicks on the sign-up button by -%

3. Simply changing the color of the sign-up button from green to red increased conversion rate by -%

Source: The Ultimate Guide To A/B Testing, Smashing Magazine http://www.smashingmagazine.com/2010/06/24/the-ultimate-guide-to-a-b-testing/

• Provides data-based insights

• Non-differentiable by customers

• Low risk & cheaper test approach

Benefits:

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Intelligence gained out of A/B testing campaigns was built into future campaigns to generate higher response rates

March’10 Bonus Campaign – Reload & Use RM -

Take Up Rate by ARPU bands

Campaign Take Up Control Group Take Up

Response in the two phases was studied:

• ARPU < - – The campaign has positive impact

• ARPU - - - – The campaign is not effective

Campaign Mechanics:

• Reload and use RM- – Get -% bonus on next reload

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Intelligence gained out of A/B testing campaigns was built into future campaigns to generate higher response rates

English Chinese

SMS Text Language

Take Up Rate by SMS Language

Target Base Take up Take Up Rate

Test Campaign on Chinese Subs • Daily, 888th customer to reload RM30 to win Ang Pow

(Jackpot) worth RM888

• Promotion around Chinese New Year

• SMS broadcast in English & Chinese

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(RM’000 000)

Incremental Value (Losses) From Loyalty Program

Traditional loyalty program, given all customers via ATL, impose high financial burden to Telco operators, with low ability to address churn

Phone Only Redemption

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Predictive modeling improves the accuracy of target identification, thus reducing the wastage of campaign funds

Wastage (WithModel)

Wastage (WithoutModel)

Savings(RM

‘000

)

Model Effectiveness on Reducing Wastage

As a result, the scoring model reduces campaign funds wastage by -%

The scoring model correctly identified -% of churners versus only -% without model

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Churners With Model Without Model

Co

un

t

Model Effectiveness on Identifying Churn


Offer matrix is used to optimize customer’s investment based on both their historical lifetime value. This allows us to invest more money in ‘good’ high-value long-tenured customers and reduce investment in ‘bad’ low-value high churn risk customers.

Value Segments combining value & behavior

Tenure bands E.g. Postpaid High-Risk Offer Matrix

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Rank Top 10 Adspend by Brand (Ranked by Feb’11)

Feb’11 (RM’000)

1 Celcom -

2 KFC -

3 McDonald’s -

4 Maxis -

5 Maybank -

6 Digi -

7 Canon -

8 Wall’s -

9 Sunsilk -

10 TM -

The mobile operators top the rank of Ad Spend in Malaysia, but…

Source: Nielsen Advertising Information Services (AIS) http://www.aaaa.org.my/resources/2011resources_002.html 13


This advertising arms race have proven to be a zero sum game; market shares by revenue and profit have remained stagnant

Source: Ovum

Maxis Celcom Digi

2007 2008 2009 2010

Mar

ket

Shar

e (%

)

Market Share by Revenue (RM)

2007 2008 2009 2010

Mar

ket

Shar

e (%

)

Market Share by EBITDA (RM)

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This is caused by the fragmentation in the media as the channels exploded in the recent years

15


2008 2009 2010 2011 2012 2013 2014 2015

Mo

bile

Ind

ust

ry A

RP

U (

RM

)

Mo

bile

Pen

etra

tio

n R

ate

(%)

Malaysia Mobile Penetration Rate and Industry ARPU

No of Mobile Phone Subscribers/100 Inhabitants Mobile Industry ARPU

This is further hampered by the market saturation and declining ARPUs

Source: Business Monitor International Malaysia Telecommunications Report Q2 2010 16


Mobile operators tried to mitigate the impact of declining ARPUs through increased acquisitions, only to find falling growth rates

2009 2010 2011 2012 2013 2014 2015

Gro

wth

(%)

Co

nn

ecti

on

s (‘

000

)

Growth of Prepaid/Postpaid Connections

Prepaid Connections Postpaid Connections Connection Growth

Source: Ovum 17


Consumers trust their friends & relatives the most, out of all the available channels and information sources

Source: Nielsen Trust and Advertising Global Report July09 http://blog.nielsen.com/nielsenwire/wp-content/uploads/2009/07/trustinadvertising0709.pdf 18


Social network is used to drive the adoption of iPhone in a large Norwegian mobile operator

Figure 2. Time evolution of the iPhone adoption network

The data showed that -% of the iPhone users communicated with at least one other iPhone user, which speaks of the social nature of technology consumption.

Figure 1. iPhone Q4 2007 adoption network

Source: Product adoption networks and their growth in a large mobile phone network, IEEE ASONAM 2010 http://www.sundsoy.com/asonam_product_spreading.pdf 19


Executive Summary

1. Use Customer-Segmentation to identify their needs (Customer Centric vs. Product Centric Marketing)

2. Test, Test, Test !!! Do lots of A/B testing to refine your campaigns, offers, channels, language etc.

3. Use Analytics to optimize your investment

4. ATL vs. BTL - Traditional vs. New Market Model (There is need for analytical CMOs)

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What does it look like in the future


Q & A

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Andreas West SVP Customer Management Celcom Axiata Berhad Email: [email protected] Twitter: A4XRBJ1

mailto:[email protected]