Copyright © 2005, SAS Institute Inc. All rights reserved. A Holistic Approach to Customer Lifecycle...

Copyright © 2005, SAS Institute Inc. All rights reserved.

A Holistic Approach to Customer Lifecycle Management

Name: Ken KingTitle: Industry Strategist - TelecommunicationsCANTO – June 2005


The long-Term Challenge for Wireless Operators

According to McKinsey:

To justify [today’s stock] prices, the typical carrier will need, by 2008, to simultaneously:

Limit ARPU erosion to 1% annually

Reduce Churn by 9%

Reduce Acquisition costs by 20%

Reduce Service costs by 20%

Source: Deutsche Bank; Morgan Stanley; McKinsey analysis The McKinsey Quarterly 2003 number 4


Agenda

Key Metrics in the Wireless Market

What theses Metrics reveal about Performance

Case Study

Managing Churn

Measuring Customer Profitability

Fully Integrated Customer Lifecycle Management across the enterprise


This chart looks at:ARPU, CCPU, CPGA, Churn, WACCSource: Lehman Brothers Q1 2005 Earnings Reports

Payback Period

-$800.00

-$600.00

-$400.00

-$200.00

$0.00

$200.00

$400.00

$600.00

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Months

Nextel Cingular Sprint T-Mobile Verizon Wireless Alltel US Cellular

Keeping a customer vs. getting a new onePayback Period on Customer Acquisition


This chart looks at:ARPU, CCPU, CPGA, Churn, WACCSource: Lehman Brothers Q1 2005 Earnings Reports

Customer Lifetime Value

-$1,000.00

-$500.00

$0.00

$500.00

$1,000.00

$1,500.00

$2,000.00

$2,500.00

1 3 5 7 9 11 13 15 17 19 21 2 2 2 2 31 3 3 3 3 41 4 4 4 4 51 5 5 5 5 61 6 6 6 6 71 7 7 7 7 81

Months

Nextel Cingular Sprint T-Mobile Verizon Wireless Alltel US Cellular

Customer Lifetime Value


Nextel Case Study – Phase 1 Proactive Churn management

Business Challenge• Segment customers by profitability and reduce churn among the

most profitable segments

• Mandatory Implementation of number portability in November 2003

Solution• Nextel Customer LifeCycle division executed a multi-year strategy

incorporating advanced customer analytics

Business Benefit• Nextel’s use of advanced analytics led to a churn rate reduction from

2.6% down to 1.5%

• Cost per save reduced by 50%

• Customer claims more than $1B additional earnings


Nextel Case Study – Phase 2Nextel Case Study – Phase 2 Proactive Campaign Management

Business Challenge• “Getting the Right Message to the Right Customer at the Right Time”

• Increasing speed to market of all campaigns

• Reviewing and approving development of campaigns online

• Providing optimization of all campaigns

• Tracking of customer communication history

• Coordinating multi-channel, multi-touch campaigns

• Automating campaign management capabilities as current programs were manually supported with internal, agency and IT resources

Solution• Marketing Automation and Marketing Optimization solutions afforded

Nextel the ability to segment customers, build models with all data points, and keep track of customer actions. The solutions will automate every existing marketing process and optimize customer segments by ARPU, LTV, likelihood to respond, etc.


Churn Types & Reasons

Voluntary

Involuntary

Deliberate

Incidental

Fraud

Non-payment

Under-utilization

Economics

Quality

Social

Technology

Convenience

Major Life Changes

Location

Finance

New Technology

Features

Handsets

Subscription

Activation

Per Minute

Friends/Family

Experimenting

Image

Retail Channels

Internet

Billing

Customer Service

Call Quality

Coverage

Reasons

Types

(customers’ choice)

(operator initiated)Source: Telecom Churn Management, The Golden Opportunity

Rob Mattison


Customer Lifecycle can be leveraged

Intensify Retention Termination& Recovery

- $

+ $

$ 0

Stages

cashflow(Before)

AcquisitionCost

More efficientacquisition

Better cross- and up-selling

more effective customer retention


Profitability may not correlate to Revenue

Ranking Customers

0

50

100

150

200

250

300

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Most Profitable Customers Least profitable Customers

Cu

mu

lati

ve

Pro

fit


Analyst Validation

Carriers.. Will develop matchless competitive advantage if they choose to build the organizational, channel, and IT capabilities needed to identify and capture opportunities to raise their customers’ lifetime value.

McKinsey, 2003


Vision – Decision Centric BI for ICM

Transactional PlatformProcesses: Billing, CRM, Ordering, Collections, Network, PRM…

Business Intelligence Platform

Data: Revenue, Cost, Customer, Product, Usage, Partner…

Extract, Transform, Load

Contact Center Optim.

Customer Profitability

/ CLTV

Retention/ Churn

Revenue Assur.

Cross/Up Sell

Inte

gra

ted

An

aly

tics

Technology: Reporting, OLAP, Data Mining, Dashboards, Alerts…

Segmen-tation

RatePlanOpt.

ServiceProvision

Optim.

Collect-ions

Optim.

Channel Perform-

ance

Copyright © 2005, SAS Institute Inc. All rights reserved. A Holistic Approach to Customer Lifecycle...

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