Evaluating customer value management (CVM), where business try and understand the overall profitability of a client now or into the future, is paramount to success in the highly competitive world of telecommunications. But when companies adopt a “fail fast” mentality, exactly how far these companies can drill down into the many indicators of CVM, leveraging as much automation as possible, is fairly impressive.
That’s the story of one Teradata partner, a telco company with a footprint in nine countries, billions in revenue and millions of subscribers. The company does everything it can imagine to try and analyze its customers and its market.
To drive these insights, the telco has parsed out its customers into many market segments to understand their propensity to spend more, tell others about their service or churn. The company currently breaks up its customers into eight behavior-based segments: premium customers, traditional customers, loyalists, sociable customers, labor (blue-collar workers), texters, data junkies and sleepers (customers that aren’t active). The challenge here is watching out for segment migration, customers that were premium one month but then are traditional the next month. If they can detect that in advance through analytics, the company can perhaps incentivize customers to stay more loyal or engaged, or they can prevent downward migration using marketing campaigns and offers.
They also do role-based segmentation, where customers have a specific set of characteristics that can be leveraged to drive activities. They break customers up into segments like alpha users, followers, communities or bridges, each noting how that customer interacts on behalf of the brand with others. For instance, if an alpha user switches products, and perhaps tells everyone about it on social media, then their community will jump with them, meaning those customers have a higher CVM. Social media analysis helps the company examine key relationships between its customers. It tries to determine non-trivial relationships between customers, like family members, friends and business relationships, through social channels. The company also does traditional value-based segmentation.
All these moves have enabled the telco to switch from focusing on key performance indicators (KPIs) set around revenue to KPIs focused on earnings before interest, taxes, depreciation and amortization (EBITDA). This means the telco now focuses on profit per customer over time versus a revenue-based customer view.