ANALYZE ACT AND ADAPT. Analytics Suite: Loyalty And Churn Analytics

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1 ANALYZE ACT AND ADAPT Analytics Suite: Loyalty And Churn Analytics

2 Introduction Increasing market saturation means everyone is struggling to keep their customers and attract someone else s. The competition is fierce and churn rates are high from 10 percent in mature markets through to 67 percent in areas dominated by pre-paid subscribers 1. The impact on revenue is huge, representing as much as 40 percent of communication service providers total revenue. The survival of any business, therefore, is based on its ability to retain customers. Taking a reactive approach to churn is not the answer. Success rests in investing in the most valuable customers and gaining their loyalty by delivering the specific experience they expect. Our Loyalty & Churn Analytics module has been developed from research of more than 70 communication service providers worldwide assessing 200 loyalty programs. It is a key tool for developing deeper customer insight from the wealth of data available in your network and using this knowledge to create the right campaigns delivered to the right customer, time and time again. We use an end-to-end framework that brings together churn and loyalty analytics, and campaign and promotion management. It reuses your existing investment in business support solutions and can be integrated with existing data sources for charging, device and demographic information. AnalyticsSuite supports you in: >> Analyzing the vast amounts of data you have >> Acting on this information with targeted activities for the right customers >> Adapting and following-up your strategies to continually improve results. You can therefore answer the key questions: Who are my most valuable customers? Who is about to churn? Which campaigns are successful? How did a customer s behavior change during and after a campaign? Are we maximizing our marketing spend? Our solution has a roadmap-driven development that uses leading innovation in the field of analytics while protecting your existing investments. This release, using Loyalty & Churn Analytics with support from Campaign & Promotion Management, builds on the previously released Service Analytics module that uses a customer-centric approach to gain deeper customer understanding to better influence behavior to build revenue. 1 Wireless Matrix, Merrill Lynch, 2009 Ericsson Analytics Suite: Loyalty And Churn Analytics 2

3 Market overview Churn is one of the biggest challenges facing the market; one that can have a dramatic impact on profitability. As many as three-quarters of customers signing up for new telecoms contracts have churned from another communication service provider. Industry retention surveys have shown that while price and product are important, most people leave a service because they are not happy with the way they are treated. Lack of rewards for contract renewal and limited discounts top the list of reasons. To address this, communication service providers are largely providing initiatives towards broad customer segments, encouraging subscribers to spend more, either on existing services or by signing up to new services. These loyalty programs can loosely be divided into three categories. > > Transactional programs based on rewarding specific customer behavior, for example, send 20 MMSs get five free. They have a short-term benefit > > Relational programs focusing on building long-term relationships for ongoing benefits. These include tier programs (bronze, silver, gold) that both reward loyalty and encourage greater spending > > Targeted programs based on specific segmentation criteria, targeted activities are directed at key customers to prevent churn. These include exclusive offers that are not tied to any specific threshold or require any specific behavior. Despite the heavy investment in preventing churn, there is still room for significant improvement. Figures from Routes to Revenue research, conducted by InfoPrint Solutions Company, show that more than 50 percent of marketers feel they do not have good insight into retention rates, customer profitability and the lifetime value of their customers. Further, that just 15 percent of marketers believe their companies are doing an extremely good job of integrating disparate customer data sources and repositories. An Ericsson study further reveals that 40 percent of marketers do not have the capability to follow-up their campaigns and promotions, and therefore do not know the impact of their activities on customer behavior. There are several loyalty management solutions available today from different vendors focusing on specific steps of the offering lifecycle analytics, campaign management or loyalty management rather than covering all areas. Ericsson Analytics Suite: Loyalty And Churn Analytics 3

4 Key capabilities Know your customer to increase revenue Knowing what your customers like and dislike is key to building customer intimacy and therefore keeping them spending in your network. The Loyalty & Churn Analytics module has the functionality to analyze the customer base and segment subscribers according to a broad range of parameters, in numerous combinations. It takes customer data from both network elements and related sources such as charging, customer device, and demographic information, to provide a complete picture of the user. AnalyticsSuite can identify your most valuable and influential customers or identify who is about to churn. Knowing your customers, however, is a long-term project, one that needs constant attention. The tagging at the heart of AnalyticsSuite ensures you can keep track of your micro-segments both during a campaign or promotion and after it concludes. The lessons we have learned from years of working with the pre-paid market are built in to AnalyticsSuite. It can dig in to spend and refill behavior, service mix and usage patterns and even device choice to give a better understanding of this highly changeable market. End-to-end approach to loyalty management Combining Loyalty & Churn Analytics and Campaign & Promotion Management with business support solutions gives you a complete, end-to-end process to address the key reasons customers seek new providers while building the intimacy they are searching for. Our framework provides a never-ending process to analyze, act and adapt, eliminating the need to duplicate previous actions every time a new campaign is developed. The result is a better return on investment while prolonging the customer lifecycle. It is based on three core components: Loyal & Churn Analytics: to analyze customers according to multiple parameters, such as demographics, device type, usage and expenditure, to create micro-segments as the basis for targeted activities. It is also crucial to follow-up campaigns and promotions to determine their success and how best to adapt them. Campaign & Promotion Management: to design and market campaigns to reach selected customer micro-segments over multiple channels such as , IVR and SMS. Reuse of business support solutions: the business support solution contains and executes the loyalty program that has been set up for each customer segment. Data from the business support solution is fed directly into Loyalty & Churn Analytics for ongoing analysis of the program. Ericsson Analytics Suite: Loyalty And Churn Analytics 4

5 Key capabilities (Con t) Easy to understand, easy to use Loyalty & Churn Analytics and Campaign & Promotion Management are built on user-friendly interfaces that allow the user to identify a micro-segment, tag it for targeting, apply the right promotion or campaign, and then follow-up the result. A series of pull-down menus make it quick to build up a profile or analysis, but just as quickly adjust or redefine the boundaries if the desired result is not obtained. By simplifying and automating the processes and giving you real-time control over your campaigns, AnalyticsSuite presents an effective tool for providing and managing point systems, allowing you to realize the full potential of this in-demand loyalty generator. This ease of use, along with an interactive dashboard, key performance indicators and reports, can be customized to generate user-specific information, ensuring AnalyticsSuite can be operated in-house with the right information for the right people. Reduce your costs Combining analytics, campaign management and business support solutions into one integrated solution is cost-effective from both an investment and operational perspective. The easy-to-use interfaces that link each stage of the framework greatly simplify the analysis and marketing processes, eliminating time-consuming procedures and the vast amount of manual handling previously associated with collating data from disparate sources. For the same reason, AnalyticsSuite can be operated completely in-house, by your own staff. AnalyticsSuite has been designed to leverage your existing business support solutions, by reusing functionality and key loyalty features, ensuring you can act on customer insight without having to reinvest. AnalyticsSuite is pre-integrated with Ericsson s Charging System, further reducing your costs. 5 Ericsson Analytics Suite: Loyalty And Churn Analytics

6 Executive summary After studying more than 70 communication service providers worldwide and analyzing 200 loyalty programs, we can confidently say that better customer segmentation, adequate profiling, targeted promotions strategies and structured follow-up, will greatly improve customer loyalty and ultimately your market share. But the reality is many communication service providers (as many as 40 percent) simply don t have the tools, resources or expertise to adequately follow-up their marketing activities to fully understand the impact they have on customer behavior. A recent survey by the CMO Council revealed that more than 50 percent of the respondents had fair, little, or no knowledge of their customer demographic, behavioral, psychographic and transactional data, while only 6 percent said they had excellent knowledge of the customer. Ericsson s AnalyticsSuite unlocks the value of the large amount of network and data assets that you have, giving you the opportunity to use analytics to build knowledge about your customers and boost your business. Our loyalty and churn module is built on a framework that combines analytics, campaign management and your business support solution. With accessible, reliable and accurate data, you can identify your most valuable customers, and follow-up results from targeted actions to improve the result of the next campaign and avoid cannibalization of other offerings. In other words analyze, act and adapt. Using our unique telecom experience and charging data knowledge, Ericsson provides a unique end-to-end approach to analytics. Our integrated solution, combined with detailed systems integration experience and experienced business and technology consultants, helps cut time-to-market, simplifies deployment and reduces integration hassles. The end-to-end approach of the offering lifecycle framework gives you ongoing value, in direct contrast to the more common approach of a one-off service consultancy. Just as importantly, it gives you the information you need to address not only post-paid customers, but previously mostly anonymous pre-paid subscribers, who are the more likely customer segment to churn. The solution s future-proof roadmap will evolve in line with related technology, for instance the Ericsson Charging System, and every release will ensure backward compatibility to protect your investment. Ericsson Analytics Suite: Loyalty And Churn Analytics 6

7 Complete Solution Loyalty & Churn Analytics together with Campaign & Promotion Management puts you in control. With a flexible and rich suite of analytics tools adapted to your business you can identify and stimulate your most valuable customers with efficient, targeted promotions and keep your budget under control. An end-to-end solution framework analyze, act, adapt our solution has been developed to empower you with pre-configured programs, advanced customer analytics and tools that enable management and follow-up of the whole offering lifecycle. You don t have to do it alone. Ericsson s business consultants can work with your marketing department to assess the success of your current activities and develop new strategies, as required, aligned with your business objectives. Together you can define your operational needs and determine the most efficient and cost-effective way of achieving them. Ericsson has carried out more than 700 business consulting projects, ensuring that networks in 175 countries can deliver reliable services to more than 2 billion customers. At the same time, we have more than 100 managed services contracts where we manage part or all of a communication service provider s business contributing to a wide base of knowledge and best practice that we can share with you. With more than 1,000 integration projects each year, Ericsson s capabilities in systems integration ensure your solution works effectively and efficiently from the start, eliminating costly delays and downtime and that it is implemented according to your budget. Ericsson also provides the right long-term support to help you stay ahead of the game. By working side-by-side with your staff and with our tailored training services, efficient knowledge transfer and better use and interpretation of dashboards and reports is achieved. AnalyticsSuite is built on our end-to-end competence in networks and charging systems, so you will be prepared for the future. Ericsson Analytics Suite: Loyalty And Churn Analytics 7

8 Ericsson is shaping the future of Mobile and Broadband Internet communications through its continuous technology leadership. Providing innovative solutions in more than 175 countries, Ericsson is helping to create the most powerful communication companies in the world. Ericsson AB Bahrain Al-Moayyed House Seef District PO Box Manama Kingdom of Bahrain Telephone: Ericsson AB Jordan Fountain Plaza, Sweifieh PO Box Amman Jordan Telephone: +962 (06) Ericsson AB Oman Assrain House Building 65, Al Khuwair PO Box. 1945, PC 112 Ruwi Oman Telephone: Ericsson AB Kuwait Telephone Equipment & Service Behbehani Complex, Sharq City PO Box 5979 Safat Kuwait Telephone: The content of this document is subject to revision without notice due to continued progress in methodology, design and manufacturing. Ericsson shall have no liability for any error or damage of any kind resulting from the use of this document Ericsson AB SE Stockholm, Sweden Telephone: EN/LZT R1A Ericsson AB 2010