The Telecommunications Act of 1996 has changed the face of the telecom industry. To excel in this competitive market, telecommunications companies have had to compete in a new way, taking advantage of their most valuable asset: information. This information, however, is worth nothing if it does not drive critical business decisions.
Data warehousing helps telecommunications companies harness the data contained in their legacy systems and transform it into information that supports effective management systems. It shows them how to better leverage their information about customers, products, channels and various market segments. This leverage helps them improve their bottom line through revenue enhancement and cost reduction.
Data warehousing can help a telecom company examine how successful a proposed product offering will be throughout its life cycle. Not only can it indicate how well received an offering will be by its customers, but it can help project possible pricing scenarios and revenue gains, critical in an industry where accelerated technology innovation can mean short-lived product leadership.
As the market becomes more fragmented and commoditized, telecoms are finding it more difficult to capture market share using traditional marketing techniques. Where price was once the primary competitive asset, broad mass marketing and advertising campaigns are no longer as effective as they once were because companies cannot be sure they are reaching the audience they are targeting. For example, many new market entrants are concentrating on residential and small business opportunities, focusing on a single customer in an unprecedented manner. They offer a customized product or service not easily provided by larger, global firms.
How do these companies know which customers will be interested in these offerings? They categorize groups of customers with common characteristics for the purpose of delivering a targeted marketing message. Once the carrier has defined its segments, it will develop a campaign targeted at one or more of the segments. This process is entirely dependent on data.
A customer database can contain a list of prospective customers, existing customers, customers who have recently defected or a combination of all of these. The segments and other information are used to identify and "score" the customers most likely to accept an offer.
Data warehousing enables companies to improve their customer relationships while also improving profitability. By analyzing patterns in connects, disconnects, minutes of use, changes of service and actual complaints, a company can reduce customer defection. In addition, they can implement advanced churn analysis programs to identify customers who may be at risk for switching their service, enabling a proactive response, thus reducing turnover and lost customers.
Data warehousing enables companies to not only more selectively target new prospects, but helps determine opportunities for cross-selling. It can also help marketers plan, manage and track targeted campaigns to realize a tangible change in customer/prospect behavior. In fact, an integrated system can support all the steps of a comprehensive marketing campaign, including customer segmentation and campaign planning, execution, evaluation and refinement.
Several years ago, a long distance carrier designed a promotional campaign by populating its data warehouse with the first three digits of prospective customers' social security numbers which identified where those prospects were born. The data warehouse also included the current area codes of the prospects which identified where they live and demographic information such as their approximate income level. By analyzing this data, the company was able to determine which prospects were most valuable: those who had a certain income level and who no longer lived in the state where they were born. This scenario indicated that the prospect might have family or friends in the previous state, making them a prime target for a long distance program.
Similarly, telecoms can use "propensity to buy" algorithms to promote mobile, pager and cellular services to the customers most likely to purchase those products and services. In addition, companies can use the information to focus resources in the most appropriate locations, marketing channels (telephone, direct mail, Web, etc.) and delivery channels (switches, satellite, cable, etc.).
Data warehousing can be used for all four types of customer relationship management:
- Win-back or save/win-back: The process of convincing a customer to stay with the carrier at the point they are discontinuing service or convincing them to rejoin once they have left.
- Prospecting: The effort to win new, first-time customers.
- Cross-sell/up-sell: Also known as "increasing wallet share," it identifies complementary offerings a customer would like.
- Loyalty: Loyalty is the hardest of the four categories in which to gain accurate measure. The carrier is trying to prevent customers from ever leaving.
As the industry continues to change, telecommunications companies have an incredible opportunity to establish long-term, mutually beneficial relationships with their customers. By developing a "customer-centric" marketing view and fully understanding their customers, these companies will be poised to move into the new era of communications.
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