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Knowledge Management & Intranet Solutions - Conference & Exhibition

 Cover Story

Making connections
in telecoms
Campbell McCracken reports.

After years of being a monopoly, telecoms is now a commodity product. It is as easy to change supplier as it is to change brands of soap powder. In fact it is so easy that mobile users are no longer required to register with their supplier - they can simply buy a phone and start using it immediately.

This is giving the telcos a headache as they fight to stop the 'churn' in their customer base. One of the weapons that they are using to stem the flow of defectors is Customer Relationship Management (CRM) - using all the information that they have in their various databases on the customers to try to predict which customers are likely to churn, and to create more attractive pricing packages for them.

"The main aim of telcos is to provide better services with less costs," says Dror Pockard, president of Clarify, the newly formed CRM division of information solutions providers Amdocs. But before they can do that, the telcos need the right tools. "You have to provide assistance to enable the operators to retain as many clients as possible." This includes tools that allow the operator to score the probability for customer churn.


LEFT: Netonomy's director of worldwide product marketing, Andy Holcombe
CENTRE: John Thomson, WhiteCross’s vice president of worldwide marketing
RIGHT: Dror Pockard, president of Amdocs' newly formed Clarify CRM division

  Case study
Whitecross at ntl

Ntl is an amalgamation of franchises in the UK. Over the years these companies have been bought out by one company, resulting in different billing systems and different information and management systems. Usually all of these systems have different standardisation of data, and it becomes very difficult to get one true picture of the whole group.

Ntl took the CDR data for one month (about 300 million records) from all the different billing systems and found none of it matched up. "It was all in different formats," says ntl's Hopewell. "Things were missing from it, some did time duration, some did the time in seconds and minutes, different people put different leading numbers on the telephone numbers - all sorts of things."

The second month was more successful. Ntl wanted to interact more with the data so they got Whitecross - a provider of business and customer intelligence solutions ­ to put it on to its server, which allows very fast processing of the information. "We could take all the call records and say 'If we want to change the pricing to offer a better pricing to an international destination, what would the impact to the business be?'" says Fraser Hopewell.

Whitecross and ntl also did a data mining exercise where they took every call and every customer and plotted this information against a number of parameters including the hour the call was made, what period (day, evening, weekend), where they called, the duration and the cost. "We did it for eighteen parameters," says Hopewell. "We put parameters around each of the points in the database to cluster them together. What we came out of it with was this database with profiles of our customers which is self-generated from the sorts of calls they make.

"In a simple example, we might get a group of customers who make a high percentage of their calls to an international destination. Once we know we have callers with a high percentage of their calls to an international destination we can promote our international calling to them so that they take up the call plan, get cheaper rates and generate more revenue because they're phoning more."

The data mining exercise generated about a dozen profiles and ntl was able to design tariffs and promotions and incentives to target those specific segments. This saved the cost of doing a shotgun approach to mailing and got a much higher response rate because they were telling the customers about something that they were actually interested in.

Ntl also ran programs to measure the accuracy of their billing systems. "We could look through and see where we were undercharging our customers," says Hopewell. "That was usually through a mistype in the billing engine or it was an old tariff which hadn't been updated. So what we were able to do was to clean up our billing process a lot and make the billing a lot more accurate and make sure we brought people on to the right tariff."

"We did some churn analysis - we looked at how customers were spending on a monthly basis by call type (local, national, international) and how that changed from month to month." What ntl found was that there was a large drop in the amount of revenue we got from local calls. It contacted some of the customers to find out why they were leaving ntl and found they were leaving to use one of rival BT's talk together packages which gives them free local calls. "So we were very quickly able to reduce the churn on the issue, and reduce the numbers of those customers we saw leaving."

The positive effect of using the analytical systems and services from WhiteCross exceeded ntl's expectations. "Our bottom line results have improved since we have been working with WhiteCross," says ntl's Hopewell. "Our calculations have shown that £40m of that improvement is directly attributable to the business-critical information provided to the management of ntl by WhiteCross. There's lots of areas where the money was saved, including reducing churn, more effective targeting, by ensuring that we charge the right rates to the right customer, and ensuring that we have the right customers on the right tariffs."

"The biggest one going forward will be us developing tariffs against cluster segments, against customer clusters. That will probably be our biggest revenue generator because we can offer a specific tariff to a specific customer, which will make it highly more attractive to take up the package."

"We're going to design tariffs for ethnic minorities, based on their calling profile so that when our sales people go and knock on someone's door they can say 'Do you call (wherever)? If you do, I've got a tariff that exactly suits you.' Just by doing that you suddenly get your take-up rates increasing by 30% - 40% straight away, because you're offering something the customer actually wants rather than a generic flat tariff where we've tried to capture everything."

Customer Detail Records
The data that the tools need to work on is available in abundance - the Call Detail Records (CDRs). "When everybody makes a phone call they generate a CDR," says ntl's head of telephony, Fraser Hopewell. "That CDR tells us what number they were from, what number they dialled, the duration of the call, when they made the call, and the cost." Ntl enlisted the help of a provider of business and customer intelligence solutions, Whitecross, to process their records (see Case Study - 'Whitecross at ntl').

Amdocs’ databases for customer churn and profitability not only uses CDRs but will use all available information. "We are running a data warehouse concept to bring data in from various systems - whatever systems are available," says Amdocs' Pockard. "We don't only need to use Amdocs systems or billing systems."

Other pieces of information that could be used to predict churn include the customer's address and his employer - if there are employees working for the same corporation who have churned already then there is a higher probability that the customer will churn. "Even calls to another operation's call centre," says Pockard. "If you see such a call happen, it's a red flag."

Churn Prediction
Once telcos forecast that a customer, or cluster of customers, is likely to churn, they will want to do something about it. This means moving the customers on to a pricing plan that is both attractive to them and profitable to the telco. "We run 'what if' analyses against the database and a number of new pricing schemes," says Whitecross's John Thomson. "We're looking to meet that double condition of a point where we can save money for the customers and increase the margin to the telco." This can be achieved by discounting calls that are made at times, and to locations, that suit the telco and help the telco get maximum throughput on its infrastructure.

"It's all based around the question: what are the infrastructure costs at this time? Is it cheaper for people to be making calls to Brighton, or do [the telcos] have international deals with other international carriers where it's cheaper for them to provide the service to Australia in the middle of the night?" explains Thomson.

Amdocs has solutions to suggest pricing plans for customers too. Its Campaign Manager software uses the same database as the churn analysis software to propose plans that will fit the client. Telcos can use this to produce as many new plans as they need. "The biggest number of call plans I've seen is 40,000," says Amdocs' Pockard, "But to be rational it's somewhere between 500 to 2,500."

The Future - Customer Managed Relations
As the mobile telecoms market matures, a complementary process to CRM is emerging - Customer Managed Relations (CMR). "What we let the customers do is manage their accounts without the need to contact the call centre," says Netonomy's director of worldwide product marketing, Andy Holcombe. "We believe that looking after yourself entirely as a customer is far more effective than putting a call centre in charge."

Netonomy has found that the more times you get someone to interact then the more loyal they become. That remains true even if the a problem is being dealt with, provided it its resolved. "Every time you talk to the service provider, providing they are helping you in some way, you're locking yourself in for a greater amount of time."

CMR is not an alternative to CRM - the two processes are complementary. CRM is about understanding the customer; CMR is about empowering the customer and letting them take charge.

In the future, as the third generation of mobile services (3G) becomes established, we'll see the two processes working together more and more. Some 3G service providers expect that customers will use CMR to manage their relationships around 10 times per week, which is almost 100 times more often than the average customer today. That means more information will be available to feed into CRM databases, which in turn means that the service providers should be able to get a better understanding of their customers and increase their retention rates.





© 2001 Bizmedia Ltd under licence from Learned Information Europe Ltd

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