True business intelligence is vital throughout the life cycle of any mobile telecommunications company - from a newcomer trying to gain customers to a mature telco focusing on customer profitability.
Whether trying to pinpoint service weaknesses, or work out which customers to target with retention campaigns, mobile operators need software to analyse all the raw data they accumulate, transforming it into real intelligence that can be used for strategic decision-making.
"A decade ago, when South Africa's first two mobile operators were launched, their major focus was market penetration," says Bruce Jones, general manager: Commercial Sector at SAS Institute SA, leaders in business intelligence. "They then started competing with each other, particularly as the first tranche of two-year customer contracts drew to a close. Their focus turned to retention and competitive pricing."
He believes that for MTN and Vodacom, their major emphasis should no longer be on gaining market share or customer retention for its own sake.
"The current focus should be on customer profitability, retaining the right customers, product differentiation and improved service levels," he says.
Mature mobile telcos need to understand what their customers are actually costing them, and to discover true profitability per customer.
"To do this, they need to segment the customer base into different user types, and then apply activity-based costing principles to establish the true cost of individual customers," he says. "The next step is to work out the revenue they generate, at which point their true profitability can be assessed."
Once true profitability and usage per customer is understood, the telco can then cross- or up-sell appropriately to that customer.
"The information can be used to sell additional value-added services, such as business- or bulk-SMS and wireless applications, or to move the customer to a more appropriate, or profitable, package," he says.
Even relative newcomers to the mobile telco market, like Cell C, cannot ignore customer profitability, even while they are focused on customer growth.
"New companies have additional infrastructure costs that will reduce as they mature and move from a capital to an operational expenditure mode," says Jones. "They still, however, have to focus on profitability per customer, as merely increasing customer numbers does not necessarily translate into increased profitability."
Jones notes that once telcos really understand customer profitability, they can start paying attention to tariff optimisation.
"Telcos have traditionally found it difficult to price packages optimally," he says. "If they understand true customer costs, they can work out what pricing should be more easily - based on market demand and actual costs. This ensures they do not carry unprofitable customers. Analysis of the customer base and cost structure enables them to understand their customers better, introduce true tariff optimisation, and identify current and prospective profitable customers."
Telcos are also now starting to look more carefully at how they can differentiate their products, another area in which sophisticated analytics can help.
"The mobile telco industry is one of the few that began by selling commodities, and has moved into product differentiation," says Jones. "The opposite is true for many other industries, such as computer hardware vendors."
Telcos are now focusing on adding value like specialised SMS services, different packages for different needs, and - a fast growing area - relationships with wireless application service providers (WASPs) like ring tone providers.
The single biggest gripe from mobile telco customers, however, concerns service levels.
"Customers do complain about pricing, but they get furious about downtime or dropped calls," says Jones. "Customer service levels are therefore another major focal point for telcos today.
"They need to analyse usage patterns in conjunction with spatial analysis," he explains. "They must understand where the demand is at any specific time in order to boost the network, or employ mobile masts, where necessary. By combining internal customer usage data with external data, such as a calendar of major sporting events, and applying advanced spatial analysis, they can obtain real business intelligence on which to base strategic decisions like where they need to boost their networks."
The abundance of electronic data that telcos already have is making analysis easier, provided they use the right business intelligence tools.. "The business is driven electronically, so they have all the data they need for sophisticated analysis," says Jones.
SAS's major strength is in the business intelligence and advanced analytics field, and its leading solutions are being used successfully by telcos throughout the world to increase return on investment and profitability.
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