ACHIEVING A COMPETITIVE EDGE Through Business Discovery How User-Driven BI Enables Telecommunications Providers to Increase Customer Retention and Reduce Costs A QlikView White Paper October 2012 qlikview.com
Table of Contents Executive Summary 3 Cost Reduction vs. Customer Experience 4 Business Discovery 6 Conclusion 8 End Notes 9 Achieving A Competitive Edge Through Business Discovery 2
QlikView s Top Telecommunications Concerns Cost reduction Improving customer experience Product differentiation Reducing churn Monetizing data Managing big data Social media engagement Threat of OTT providers Exploiting M2M opportunities Low growth in developed markets Executive Summary The telecommunications industry is shifting into an unfamiliar landscape. Texting has overtaken talking in the UK, machine-to-machine technologies present new revolutionary possibilities and the generation of vast volumes of data offer unprecedented insights into consumer behavior. This white paper focuses on two competing priorities cost reduction and creating positive customer experiences. Both are critical factors for success, but they can also innately contradict each other. The paper explains that it is possible to achieve both by providing customers with self-service (which is rapidly gaining popularity as the customer s favourite method of engagement). However, self-service is only effective if it creates a real sense of customer empowerment through ease of use and powerful functionality, delivering a level of service superior than that of a call center. Key to user-friendly self-service applications is Business Discovery software. Through its flexible architecture and intuitive visualizations, users are able to effectively manage their own accounts and reveal new insights about their usage. But Business Discovery goes much further for telecommunication companies; it unites disconnected silos of data across the enterprise, improves operational performance, aids decisions on financial performance and improves sales, all through increased intelligence and insight. Achieving A Competitive Edge Through Business Discovery 3
Margins are under pressure and could drop from the current figure of 35 40% to as low as 15% within five years. Aurthur D. Little Cost Reduction vs. Customer Experience It is a challenging time for the telecommunications industry. This year alone has seen Alcatel abandon profit targets after posting losses of 40million euros and Nokia Siemens Networks shed 17,000 jobs worldwide. 1 Overall, Forbes has predicted global growth of the telecommunication services market to shrink from 7% in 2011 to 4% in 2012. The pressures and threats behind this drop come from a multitude of sources: fierce competition from over-the-top providers, the erosion of traditional revenues in fixed voice and SMS services, the 25-fold increase in data volume being met with only a 2-fold increase in revenue, massive investment requirements for increased network capacity, EU regulations to cut roaming costs and unwavering shareholder pressure. It is then no surprise that cost reduction has become a major theme for the telecommunications sector. Rivals are now sharing networks to minimize costs such as in the case of Orange and T-Mobile, Bell Canada and Telus, and Vodafone and Telefónica. According to research company Ovum, Vodafone s and Telefónica s venture could produce combined savings of more than 1bn by 2015. 2 Outsourcing is another way companies are seeking to reduce expenditure. The American operator Sprint handed over the day-to-day running of its network to Ericsson, transferring 6,000 of its employees to Ericsson in the process. 3 Against this difficult, ultra-competitive backdrop, customer support would stand to be a likely casualty of such cost cutting measures. However, delivering an excellent customer experience is arguably just as important as reducing costs, and comes at a time when customers are at their most fickle and demanding. Not only is customer experience a means of differentiation in a crowded marketplace, but it is also a vital aspect to increasing revenue. Bain and Company research revealed that a 5% improvement in retention rates can yield as much as a 75% increase in profits for companies across a range of industries. 4 It is no coincidence that some of the best performing companies such as Apple are renowned for their high levels of customer satisfaction. Business Week highlighted how Rackspace, a cloud hosting company, is able to thrive against established giants such as Amazon by delivering what it terms as Fanatical Support. This dedication to customer service includes 24/7 365 support, unmatched expertise and no scripted answers. For example, when Amazon s cloud server crashed, customers received a two-week credit and an apology letter. When Rackspace s server went down, its employees called thousands of customers personally to apologize. Rackspace has also been known to deliver pizzas to customers working late and sing Happy Birthday via speakerphone. 5 Achieving A Competitive Edge Through Business Discovery 4
Losing ownership of the client was ranked as the telecoms sector s top business risk in 2008 and 2010. Ernst & Young As well as improving customer retention, there are also a host of other benefits for providing an outstanding customer experience. Pleased customers can turn into brand promoters, advertising the benefits by wordof-mouth or social media, and can provide valuable insight and feedback into new product innovations. Furthermore, retaining customers through good customer experiences is a far more efficient method of protecting revenue than by winning new ones; new customers require costly market research, advertising and promotions. TM Forum identified numerous advantages of renewals over new customers: Less price sensitive Require less education Easier to forecast Account management costs decline over time More likely to buy ancillary products 6 But just as there are great benefits to providing an excellent customer experience, so are there severe punishments for failure. For example, RIM was forced to offer compensation to mobile operators when its systems went offline for three days across many parts of the world and gave many users more than $100 worth of free applications 7 (incurring significant brand damage in the process). So although cost reduction is critical, customer service failure can end up being more expensive. So the question for telecommunication providers is how best to marry the two interdependent challenges of cost reduction and customer service. Self-service has emerged as a particularly persuasive answer. Not only is it a cheaper mode of customer support, but evidence suggests that it is actually preferred by younger demographics. The article by Annie Turner Is self-service the answer to better customer experience? stated: Allowing customers to serve themselves should be a big win-win for service providers and customers it s cheaper than complaints via a call center and, if done properly, increases customer satisfaction. The savings are potentially massive. One operator providing unstructured supplementary service data (USSD) based self-care services has generated annual savings of over $40million on interactive voice response (IVR) costs alone. 8 However, self-service can only generate cost savings and enhance customer experience if it is correctly implemented and meets customer requirements. Achieving A Competitive Edge Through Business Discovery 5
Business Discovery Self-service applications need to be intuitive, accessible and visually engaging. QlikView s Business Discovery platform is designed to be all of these. Its clear and intuitive dashboards invite users to analyze their phone usage, and its flexible architecture enables them to investigate numerous scenarios and different permutations instantaneously to reveal new insights. Listed by Gartner as a leader in the 2012 Business Intelligence Platform Magic Quadrant, QlikView technology is utilized by some of the biggest names in telecommunications, including T-Mobile, Vodafone, Canal Digital and Telstra. One major global operator uses QlikView in its self-service application to provide corporate customers with a complete view of their global, local and individual mobile costs. Users can get an overview of usage and spend without running any reports and run standard and bespoke reporting. QlikView s mobility also means it can be remotely accessed from anywhere in the world with total security. This represents the best of both worlds Business Discovery creating great customer experiences and lower support costs for the operator. However, QlikView goes beyond self-service applications to provide intelligence across the entire business. It helps increase efficiencies and identifies potential areas of cost savings by: Creating a single version of the truth through fast, flexible executive dashboards KPIs covering areas such as P&L analysis, cash flow optimization and cost center analysis Improving call center performance by offering a complete view of agent and team performance by combining data from multiple sources Providing cradle-to-grave analytics of the customer journey Reducing downtime by enabling transactional network alerting information to aid the understanding of communication trends, allowing for proactive prediction of network availability Providing onsite network engineers with real-time information, fed straight to their smart phones The functionality that enables users to conduct Business Discovery in such an easy-to-use and flexible manner lies in the architecture. Through Associative Experience, Global Search and Comparative Analysis, users are able to swiftly realize previously unseen relationships and opportunities. Achieving A Competitive Edge Through Business Discovery 6
Telecommunication Organizations that use QlikView saw an average increase of 17% in customer satisfaction IDC, the leading market intelligence company Associative Experience Associative Experience is similar to Google s Instant Search providing instant results as the user types. By managing association among data sets, e.g. customer revenue and geographical area, at the engine level and not the application level, it increases flexibility. It also doesn t need to be reconfigured to answer new questions, enabling ad hoc cost analysis and reporting, vastly speeding up the querying process independent from IT. Global Search Traditional BI can only provide insight into a limited number of fields at a time, meaning users have to manually switch to different parts of their application and keep re-running searches. Global searches enable users to search every field simultaneously, highlighting available matches for immediate access and therefore increasing search certainty. It provides the ability to locate data in structured and unstructured fields, allowing the user to drill down to identify trouble spots. Comparative Analysis Comparative analysis is used when contrasting multiple data sets similar to stock performance analysis. By comparing the performance of two or more groupings of products, over measures such as time or region, data relationships can be spotted along with opportunities and threats. Achieving A Competitive Edge Through Business Discovery 7
Conclusion Scalable and easy to use, Business Discovery is the means to meet customer expectations and lower costs. By turning unwieldy and disconnected data sources into intelligence, it empowers telecommunication providers to better understand their own service performance, identifying the most profitable customers and areas of possible cost savings. In an industry characterized by competition, complexity and uncertainty, it allows users to extrapolate intelligence with ease, creating a greater market knowledge and insight that can then go on to become a competitive advantage. I regularly hear from customers about the ease with which QlikView was deployed across their entire organization, and the range of new analyses it created over their traditional BI solutions. I always recommend that prospects download the free personal edition so they can see for themselves how simple and powerful Business Discovery can be. Michael Foster, QlikView Global Market Development Achieving A Competitive Edge Through Business Discovery 8
End Notes 1 Financial Times, Alcatel shares slide after profit warning 2 Cited from Financial Times, Vodafone and Telefónica to share networks 3 CNET, Sprint outsources network to Ericsson 4 Loyalty Rules! Frederick F. Reichheld, Bain and Company, Inc. 5 Business Week, How Rackspace beats the behemoths 6 TM Forum, Exploiting analytics 7 Financial Times, Angry O2 customers demand compensation 8 www.comviva.com cited in The Convergys report, When self-care is the best care Achieving A Competitive Edge Through Business Discovery 9
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