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© Abiba Systems | www.abibasystems.com
3rd Annual Telecoms in Africa:
Customer Loyalty & Retention Conference
Sathya Karthik R
© Abiba Systems | www.abibasystems.com
© Abiba Systems | www.abibasystems.com
Category 2005 2010 2014 (est.)
Subscriber Base
133.55 506 911
Penetration 14.30% 41.00% 62.4%
ARPU ($) 14.5 10.34 >6
Key Drivers Voice Voice, SMS3G VAS
Business Priority
NetworkNetwork,
Acquisition
Acquisition, Retention,
Profitability
Customer Focus
Market Share Wallet Share
Hottest: Mobile > 65% , Internet > 40%Hot in mobile: Mobile > 65% , Internet > 40%Hot in Internet: Mobile < 65% , Internet < 40%Coolest: Mobile < 65% , Internet < 40%
© Abiba Systems | www.abibasystems.com
• Intense competition – choice for customers
• Rapidly increasing penetration
• Very high churn
4
23 3
9
56
99%
94%
99%
97%
90%
98%99.30%
75%
80%
85%
90%
95%
100%
105%
0
2
4
6
8
10
12
14
16
18
20
Kenya Algeria Botswana Egypt Nigeria Sudan Tanzania
Number of Operators Prepaid Base % of Total
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133.55
280.7
506561.18
14.513.4
10.34
7.5
0
2
4
6
8
10
12
14
16
0
100
200
300
400
500
600
700
800
900
1000
2005 2007 2010 2012
AR
PU
($
)
Sub
scri
be
r b
ase
(M
n)
Subscriber base Vs ARPU
Subscriber Base ARPU
© Abiba Systems | www.abibasystems.com
Benin, Chad, Democratic Republic of
Congo, Uganda
Gabon, Ghana, Kenya, South
Africa, Nigeria, Sudan, Tanzania
Ethiopia, Eritrea, Guinea, Togo
Algeria, Botswana, Egypt, Tunisia
Africa
Mobile Penetration
<= 50% >50%
<=3
>3
No
. of
op
era
tors
© Abiba Systems | www.abibasystems.com
• ABIBA Systems is a Business Intelligence and Analytics company based out of Bangalore, India
• Our industry focused product and services portfolio is getting wide acceptance.
• We offer a consulting based approach to identify cost effective solutions to enhance the decision making capabilities of senior management.
Domain specific pre-built solutions
Rapid deployment for quick wins
Business User friendly solutions
Lower TCO to ensure higher ROI
Our solution approach
Our Clients
Top BI & Analytics Companies
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Acquisition
Cross-sell
Up sell (new product/service)
Retention
Re activation
Life stage
Val
ue
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Differentiated approach based on lifecycle of customer to enhance value
Attack ‘entry point’ by improving quality
of acquisition
Profile the customers and employ retention approach to maximize revenue from retained
customers
Enhance revenue from ‘terrorist’ customers
Revenue
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Acquisition AcquisitionCross – SellUp Sell
RetentionLife Time ValueUp-sell
Life Time Value
Competition
Low High
Low
Hig
h
Pe
net
rati
on
ABIBA Competition Penetration Matrix
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Average Life of Customer
Pro
fita
bili
ty
Steady eddies???
Do not focus on retentionIncrease wallet share
• Additional services• Increase wallet share
• Loyalty• Better services• Benefits
Terrorists Already taken care?
Operator Focus ---- Maximise(Life * ARPU) - Cannot retain – then enhance revenue; have to sacrifice ARPU to enhance life
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© Abiba Systems | www.abibasystems.com
Prepaid subscribers – little information
Cost of acquisition > initial ARPU
Competitive market – getting Multi SIM users
Distribution driven – differing objectives
Strategic focus – Sub.base and market share
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Metrics Scenario 1 Scenario 2No of customers Acquired 1000 750
ARPU (in USD) 6 8
Annual Churn Rate 60% 48%
Customers retained 400 390
Cost of Acquisition/Customer (in USD) 12 15
Total Acquisition Cost 12000 11250
Revenue 48600 53280
Profit 36600 42030
A targeted acquisition results in
•Lower churn
•Higher ARPU
•Increased revenue
•High Profits
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Customers acquired
ARPU (in USD)
Churn Rate/ annum
Customers retained
1000
6
60%
400
750
8
48%
390
Scenario 1 Scenario 2
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Cost of acquisition
Revenue
Profit
12000
48600
36600
11250
53280
42030
Scenario 1 Scenario 2
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© Abiba Systems | www.abibasystems.com
Churn cost global telcos $10 billion annually in the form of
customer defection -Telecommunications Online
The propensity of a pre-paid customer churning is three to five times that of a post-paid customer.
“ It is costing operators 8 to 10 times to acquire a new customer than to retain existing customers” – Gartner
Churn rate in emerging markets is averaging > 50% p.a and is expected to go up further with new operators and MNP.
A loss of just 10% of its high value subscriber base amounts to a loss of 85% in revenues for the company – Dataquest. e.g. In some markets – ARPU of older valuable subscribers is about $20 – while for new prepaid subscribers is <$2
© Abiba Systems | www.abibasystems.com
high costs, low life post connections
Reactive, higher cost,low life post reconnections
Mass, higher cost, customer fatigue, low effectiveness
Only acquisition
Reconnections
Proactive retention –dormancy
management
Value based retention
WAR+Analysis
Maturity
Effe
ctiv
en
ess
The matured approach
Beyond 48 months
Up to 24 months after launch
24 months to 48 months after launch
Now
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Limited customer information
Minimal customer engagement when compared to Postpaid Very low exit barrier
Low Loyalty levels and sticky factor
Very Low ARPU which does not justify ‘generic’ retention
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© Abiba Systems | www.abibasystems.com
Set
Cle
ar C
LM O
bje
ctiv
es Value based approach
Control at entry – channel management, brand fit, Cost of acquisition
No retention at any cost – ROI driven
If you can’t retain - ARPU enhancement
No customer fatigue OR dissatisfaction
© Abiba Systems | www.abibasystems.com
Who will respond to the campaign?
Who is churning?
What is happening?
BI & Segmentation
Churn Prediction
Survival Analysis
CLV
Profiler
Recommendation
Response Modeling
Actionable Decisions
Whom should I retain / acquire?
How long can the customer be retained ?
Why is the customer churning ?
Which are the better campaigns ?
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Campaign
Analysis
Reports
Location Analysis
Data Mart
Hot Spot Analysis
Target
Campaign Planning
Post Campaign
Analytics
Sampling
What -if
Pre Campaign
Analytics
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Manage internal reviews with little ‘sweat’ – Makes you an internal Champion
Improved ARPUs by upselling
Extend life of desired
subscribers
Quick response to market
Understand customer behaviour
and drivers for churn
Retain the high value subscribers
Effective resource utilisation – better
campaign ROIs
Assist good quality and foil poor quality
acquisitions
© Abiba Systems | www.abibasystems.com
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