NBS showcase (2005-2010)

Tudásbánya Kft www.tudasbanya.hu

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Corporate Needs-based Segmentation

(CNBS)

Tudásbánya Kft.

July, 2006


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Corporate Needs Based Segmentation (CNBS) was considered as a competitive advantage by our customers.

We delivery CNBS to 4 different countries in EU to Mobile Service Providers in 2005-2010

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The telecommunication industry is generally changing – Strategic level

Customer Needs

Uniform Highly Differentiated

CustomerValue

Uniform

Highly Differentiated

MobileMobile 3G

FinancialServices

Gas Stations

FMCG/Retail Pharmacies

Book stores

Insurance

ConvergentTelco

The telecommunication industry was generally changing, fulfilling more diverse needs, that generates highly differing profits

From voice service to the field ofIPTV (broadcasting) and mobile payment.


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The telecommunication industry is generally changing – On the operational level

In 1999 In 2006~5 handsets~10 tariff plans~10 value added

products~ 3 tariff options

~30 handsets~25 tariff plans~200 value added

products~ 20 tariff options

4-5 minutes toserve

4-5 minutes toserve

Needs based segmentation is to establish customer groups that has the same (similar) 4P characteristics


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How churn prediction and customer value calculation segmentation scheme can be improved?

HighMediumLow

Churn probabilityTop

Value

Medium Value

Low Value

TopValue

Medium Value

Low Value

Existing segmentations raise additional questions and challenges:

•Why the top value segment become profitable?•How can we increase profit on the low value customers?

•We know who are the customers with high churn probability, but how can we keep them?•How to reach customers with Medium churn probability?

Existing (usual) segmentations can be improved easily with NBS information


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What is needs based segmentation

To determine for each customer, the classic 4P-s of the next possible step of the provider towards that particular customer.

• Product• Place• Promotions• Price

The ultimate goal is: Fezorg Ltd.:Next action:- 3 new 3G handsets for 2 years contract- Propose over call center, confirm it after 4

days, try it no more then 2 times- Provide detailed description- List price, then

-Apply loyalty discount-Apply volume discount

Assign customers into groups with approximately the same characteristics (4P). Then treat each customer according to the group generally, but apply rules for individual customers

The practice: Fezorg Ltd.:Generally:- High value customer – High purchasing

power- No negotiating power (discounting)- Internet user, innovative for new products- Prefers CC, do not prefer shops- Price sensitivity is medium

Needs based segmentation is to establish customer groups that has the same (or similar) 4P characteristics


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Usage of NBS…strategic samples Strategic segmentation for customer management

Segment planning Segment performance management

Campaigning (inbound and outbound) Basic targeting enabler Up-sell/Cross-sell

Product development Needs to fulfill

Customer service Different segments can be served differently (reducing service time,

increasing satisfaction) Channel routing/optimization

Commission / Incentive management


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Some samples….

Large mobile operator tailors the loyalty program according to the need of churners.

Bank call center tries to short customer calls according to needs based segments

Mobile operator promotes new products according to the „explorers” media consumption


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Questions to answer

Contract period (12-36 months) Ratio to invest into better (more expensive) handsets

(subsidy optimization) Tariff structure (mass, customized, specialized) Discounting Next best offer … …


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Segment Card - „Son and Father”

Different Needs-based customer groups can be proposed and served differently, products and services can be priced differently.

1. Segment description# of companiesshare to total corporate# sim-cards

2. Average company size: 1-5 employee, 2-5 temporaryTypical location: small, medium citiesAverage company income: XXXXX

3. Average bill size: XXXXXXAverage CV: XXXXCV-within group: X1%CV-within RM: X2%CV-International: X3%CV-Fix X4%CV-VAS: X5%

4. Traffic descriptionavg number of smsavg number of mmsavg number of minutes per direction

1. Handset descriptionavg age of handsetavg # feature os handsets

2. Avg # of monthly fee product usedMMS penetration3G penetrationetc.

3. Contractual descriptionsavg discount rateshare of customized contractsshare of specialized contractsavg # of committed days

4. Service KPI-s5. Trend KPI-s

Increase in MMS penetration Quarter over Quarter


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„Rainbow Mobile (RM)”Corporate NBS

Concept


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Establish RM Needs-Based segmentation framework

The RM Framework for CNBS will be established on workshops and on Tudásbánya best practices. Tudásbánya proposes 5 aspects (see above) for NBS.


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Data acquisition

RM data warehouse

1. Availability check of measures, variables (according to the NBS framework)

2. Designing NBS data store (data mart) for measures and variables (dimensional design)

3. Develop SQL/PLSQL scripts to read data from RM data warehouse and write it to NBS data store (Existing ETT tools can be utilized)

4. Fine tuning of data model and scripts

Tudásbánya will develop SQL and PL/SQL scripts to access RM data warehouse for the input variables to the needs-based segmentation


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Analysis and statistical description

Aspect 1

Aspect 2

1. Measures will be transformed into unified dimensions

2. Dimensions will be statistically described and documented (standard)

3. Segmentation target variables will defined and set

4. Correlation and Factor analysis will be conducted and documented

5. Aspects will be verified for segmentation power6. Framework will be reviewed with RM7. Cluster analysis will be performed (K-Mean,

Two-Steps, etc.) to get the first set of micro-segments

Number of statistical methods will be used for clustering


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First cut of micro-segments1. Statistical methods are usually generating large number of micro-segments

2. Micro-segments will be described statistically over standard telco KPIs (ARPU, MOU, # of sms sent, etc.) This will give the primary indication of the profile of each segments

3. Similar micro-segments can be merged

4. Segmentation target variables are used for guidance

NBS Data Store

Statistical profiling and KPI calculations

Segmentation issatisfactory

No

Yes

Non input variables will be used for initial profiling of the micro segments


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Concept…..

Quarterly calculatedsegments.

Verifying segments twice in a year with survey.

Periodicallyrepeatedsegmentation Source data

is from RM data warehouse

RMData warehouse

OperativeStaff

Opeartor can check theNBS value for each customer and can acton it effectively

Result of segmentation

loaded to the RM datawarehouse


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How can we establish needs-based segments – project concept

Definition

2. Benchmarks and best practices

3. RM Needs-based segmentation framework

Data collection

• Data model for input variables

• Data acquisition

• SQ/PLSQL script development

2. Statistical Analysis of dimensions

3. Defining target variables

4. Statistical segmentation

Analysis and statistical description

2. Survey design and development

3. Survey execution

4. Survey evaluation

5. Segment profiling

Market survey andprofiling

• Quick wins

• Medium (within

1 year) term actions

• Long term(over a year) actions

Recommendations andbusiness utilization

2. Benchmarks and best practices

3. RM Needs-based segmentation framework

Post production support andmaintenance

Tudásbánya is proposing a 17 weeks project to establish needs-based segmentation with account planning at RM Slovakia


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How does this work?


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Segment Card - „Son and Father”

Different Needs-based customer groups can be proposed and served differently, products and services can be priced differently.

1. Segment description# of companiesshare to total corporate# sim-cards

2. Average company size: 1-5 employee, 2-5 temporaryTypical location: small, medium citiesAverage company income: XXXXX

3. Average bill size: XXXXXXAverage CV: XXXXCV-within group: X1%CV-within RM: X2%CV-International: X3%CV-Fix X4%CV-VAS: X5%

4. Traffic descriptionavg number of smsavg number of mmsavg number of minutes per direction

1. Handset descriptionavg age of handsetavg # feature os handsets

2. Avg # of monthly fee product usedMMS penetration3G penetrationetc.

3. Contractual descriptionsavg discount rateshare of customized contractsshare of specialized contractsavg # of committed days

4. Service KPI-s5. Trend KPI-s

Increase in MMS penetration Quarter over Quarter


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Segment „X” - Trend

S e g m e n t d e v e lo p m e n t

17683

15725

16908

2004Q1 2005Q1 2005Q4

95927796 7980

2004Q1 2005Q1 2005 Q4

7,22

10,6 9,8

2004Q1 2005Q1 2005Q4

A R P U ( F t )A v e r a g e C V ( F t ) C h u r n R a t e ( % )

3,64,2

5,1

2004Q1 2005Q1 2005Q4

0,82 0,891,1

2004Q1 2005Q1 2005Q4

18,6

27,2 26,9

2004Q1 2005Q1 2005Q4

A v g . N u m b e r o f S IM / C u s t o m e r

D a t a A R P U / A R P U ( % ) M o n t h ly f e e / A R P U ( % )


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571473

3 759

801741

618 230

2 884

2 554

2 656

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1Group Corp Part TMO Other Mob. Fix Intern. Messaging Other VAS Monthly Fee Interconnect

Segment size11%

Average company size3.1

Customer Value increase YoY11%

Within network Other network

165 min.

51 min.21 min

Top_4Top_3Top_2Top_1

Voice

Value creation - „Son and Father”


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Focus by segments

Segment / Focus „A” „B” „C” „D” „E” „F” „G”

Acquisition

Up sell (SIM)

Cross sell(services)

Retention

Increase revenue

Cost reduction


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Segment Planning – Segment „X”

SegmentFocus

Current period Plan Period Brief actions

Increase data usage Data Usage: 1787 kbyte

Data Usage:1900 kbyte

Retention X% Churn Y% Churn 1. Propose 32 months contract instead of 24 for customer with completed contracts

2. Offer 32 months contract after 12 months in current contract

Action Detailed description

Direct Effect on Segment

Other effect

Propose 32 months contract instead of 24

Monthly campaigns Avg. contract days will increase to 300 days

…


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Execution on single account level

Account

Name Tax Id Representative

CorporateNBS

Avg. Bill Size Avg. CV # of active

SIM

SuburbanBank

XXXXX PeterOravecz Blue chips 131000 26200 31

I t e m V a lu eRegion CentralSize Category Large enterpriseFirstDescriptor

4 SIM cards has significant outgoing international traffic to USA.

First Offer For 20 monthly fee international package should be recommended, that covers calling 20% discounted international for 1 selected country.

Second Descriptor Monthly fee includes 20 SMS, that are used only 40% of the SIM cards

Second Offer Monthly fee can be reduced by 30 - 0 SMS included for 24 months, for the SIM cards using SMS an sms-package should be recommended.


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Appendix


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Result – Sample segment profile

Profile based on survey data•Good economic situation•Strong hope for growth

Profile based on internal data(ARPU: 30257, CV:27812, Churn-red:18%)

Highest MOU 2912 in +1015 out International MOU: 157 min

Innovation score 8.48 (twice of the average)

„BestVoice” tariff plan (42%)

Generic conditionsMOU < 10000

Number of contacted phone numbers < 1000

Pricing

Service

Offer

Channel

2086

2,94

0

2000

4000

Méret db Méret %

0

5

10

Dedicate partner

International package*Favorite country*Corporate Relax**


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Thank you for your attention

Questions, Comments

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NBS showcase (2005-2010)

Business

Transcript of NBS showcase (2005-2010)