A controlled telecommunications environment in which government regulation grants monopolistic rights to one company is becoming harder to find. Even in Africa, as the telecommunications sector becomes less regulated, incumbent telecommunications companies (telcos) are faced with concerns over attracting and maintaining their subscriber base in the face of growing competition.
"Africa may have some of the fastest growing telecoms markets, but the outlook for many telcos is not all that rosy," says Mervyn Mooi, technical director at Knowledge Integration Dynamics (KID). "Far from the usual business problems of attracting new customers to support growth, these companies are facing a more urgent issue of stemming the erosion of their existing customer base to newer, sexier, more convenient mobile services." Consequently, the focus of these companies has changed. Today their primary driver is centred as much on retaining their most profitable customers as on signing up new ones.
"The two questions being asked are: How do we identify profitable customers, and how do we create programmes cultivated around these customers that will persuade them to remain with the company for the long term?" adds Mooi. "The answer is analytics, the only effective tool that provides sound decision support in the limited time business leaders have to make up their minds." Telcos have an advantage over most other businesses in that they collect vast amounts of customer data describing how customers use their systems. Analytical applications, as part of a business intelligence (BI) strategy, can take this information and find patterns and trends in customer behaviour that will assist in the formulation of a strategic programme to create new services and customise existing offerings in order to keep customers from looking elsewhere.
Customer segmentation
"At the heart of these analytical processes is the ability to segment customers into groups according to their profitability and other common characteristics," says Mooi. "Telcos can then address these groups individually and tailor services for them and in so doing prevent churn, increase profitability as well as customers` lifetime value."
The first set of data to be collated is customer attribute information. This includes each customer`s age, sex, gender and other personal data that can be used to create a profile of each person and group people into segments or baskets.
Adding transaction data to the mix can deliver a different view on one`s market. "Then, adding behavioural data, demographic and psychographic information presents telcos with client-focused information that determines exactly what products work where and for which customer segments," notes Mooi.
"The potential of analytical analysis is almost endless," Mooi continues. "Companies can examine their customers nationally or narrow the query down to looking at the market in a 10km radius of a certain location. Time analysis can be done on churn rates to determine when customers are most likely to go astray, allowing the company to introduce special offers at the appropriate times to ensure their clients don`t wander off."
Mooi adds that analytics is the most cost-effective tool companies have in their BI arsenal for maintaining and expanding their customer base. However, as with most IT solutions, it is critical that analytical applications are built on a foundation of quality data. Without clean data there can be no analytics, at least none that delivers reliable results.
Data quality is critical
This is where the importance of a consistent BI implementation, including a data warehouse, comes into play. The warehouse will hold cleansed data, the one version of the truth the corporation will rely on for all its decision-support applications.
If it is implemented correctly, the whole organisation will have access to the same repository of information, ensuring everyone, no matter how dispersed the organisation, will be working from the same data set - the minimum requirement if corporate data analysis is to have a positive impact on a company`s future.
Traditional business applications can handle a certain amount of analytical processing, but these systems are designed for processing transactions and are therefore not as fast as specifically designed analytical programs.
Analytics contained in BI solutions deliver answers almost instantly, allowing executives to call up information in their decision-making process, obtaining the latest trends and figures without having to call IT support to design and run a new report.
Mooi adds that analytics is not specific to the telecoms market, as every company should use decision support to sustain its strategy. However, he notes, "in an industry sector undergoing changes and an influx of competition and new services, identifying who your profitable customers are and customising your services accordingly is a task tailor-made for analytical applications. Analytics makes the difference between a shrinking company with customers constantly looking for new feeding grounds or a stable, growing company with a base of customers who get what they want and have no reason to look elsewhere".
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