British Telecommunications plc (BT) uses sophisticated business intelligence (BI) to deliver strategic insights, predict customer communications behaviour, and identify opportunities for encouraging customers to increase their level of consumption with the telco giant.
BT's new vision, "Connecting your world - completely" heralds its intention to be the UK's first choice provider of communications - not only voice telephony and Internet, but a whole range of other communications products and services, like broadband, entertainment, computers and mobile phones.
The organisation needed to create new customer segmentation to allow it to develop accurate insights into the needs and preferences of its customers and prospects. The telco giant chose SAS Enterprise Miner to provide the necessary statistical modelling.
"The solution enables us to segment our customers, and then study each segment in depth to develop a detailed understanding of them to identify marketing opportunities," explains Martyn Johnson, data miner for BT, who addressed delegates at the SAS International Forum on business intelligence. "We do this both for our traditional, fixed-line market, and for the new markets we want to penetrate."
The results are used mainly by the telco's marketers and product developers, and are enabling BT to move away from being product-centric to developing an understanding of customer needs.
To achieve its marketing goals, BT constructed a multidimensional segmentation plan using entirely new thinking.
"We called it the micro-segmentation approach," says Johnson. "SAS Enterprise Miner was used to build several standalone segmentation solutions, each addressing a discrete area of the communications market. These were then fused into a single segmentation entity that we called Total Communications Segmentation.
"This has been integrated into BT's marketing and has proved to deliver excellent strategic insights, and to be highly predictive of communications behaviour.
"The use of SAS Enterprise Miner as an in-house solution was highly cost-effective, saving BT up to half a million pounds, compared to what we would have spent on external consultants to develop this segmentation," he adds.
This approach allowed BT to study each segment in depth to develop a detailed understanding of its customers and examine opportunities for marketing.
BT's data comes from three main sources. It faces an unusual problem, in that although its traffic and billing data is the most useful, this is heavily regulated, and the organisation is sometimes prohibited from looking at all its own data.
It also buys lifestyle and household data, with approximately 500 variables into which it can delve to find relevant information. It can tie this information to approximately 80% of its customers at a household level.
"This is a really useful data set, as we obtain ages, numbers of people per household, jobs, income, hobbies and interests," says Johnson. "We can tell if people prefer bingo or skiing, or whether they own shares."
BT also makes use of data collected from a large consumer study it conducted two years ago. Responses from 1.2 million customers filled in gaps in BT's knowledge, including in areas like Internet, mobile phone and TV usage.
"With the Internet, for example, we wanted to know how long customers spent on the Internet, what they accessed and how they paid for it," Johnson explains.
"We developed four separate microsegmentation systems: fixed-line telephony, Internet, mobiles and TV channels. The most important attributes of each of these were used to construct our Total Communications Segmentation.
"We also constructed a demographic segmentation to help us to understand the 'personality' of each segment
"We view all this data three-dimensionally along three axes - sophistication in online use, total communications wallet (where we can see where BT spend sits, and where we have the opportunity to win more business from that segment), and demographics.
"SAS Enterprise Miner enables us to easily compare different models, refine them and help us to select the best one to use."
BT's Total Communications Segmentation is also multidimensional, and here the company looks at Internet broadband sophistication and communications spend to categorise customers.
"Categories include our 'dabblers', an interesting bunch who use a bit of everything - some fixed-line, some mobile and some Internet but often from Internet cafes - to our Gold and Silver groups who are high-spend users," says Johnson.
"Our purpose is to predict people's behaviour, by looking at the total communications spend, and seeing what percentage of that is with us. Many customers may be high spenders, but not with us."
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