CRM for MVNOs: Part II

Since MVNOs pride themselves on their superlative understanding of their customer segment compared to traditional operators, Customer Relationship Management becomes a key focus area for them. CRM helps MVNOs manage entire lifecycle of Customers by supporting the following activities.

For an understanding of the business model of MVNOs, importance of the parent brand and customer segments and the changing MVNO Operator relationship, please go through my previous post here.

• Campaigns and Promotions: Since MVNOs normally target the same or similar segments that are targeted by their parent brand; a good point to start for them is to target the customer base from one of their existing lines of business. CRM provides the platform to extract the list, run the campaign, track customer responses and take suitable actions based on the responses.

• Customer Acquisition: Customer acquisition in a saturated telecommunications market is tough, costly and a complex process with multiple points of failure. No provider would want to create a negative impression at the very beginning of the Customer’s Lifecycle. CRM provides smooth on boarding of customers though automated Order Management processes, managing and updating inventories, coordinating with courier/shipping companies for delivery and close looping through Agent or IVR assisted activation and welcome call.

• Complete View of Customer: MVNOs try that much more to create a differentiator by bringing in information from multiple systems and presenting relevant information in a manner that is understandable easily to a BPO Agent or to a Customer availing Self Care.

• Customer Service Management: MVNOs strive to provide 100% resolutions to Customer requests, complaints and queries on the call without passing the buck to a back office team. Apart from higher level of customer satisfaction due to on call resolutions, this creates a suitable opportunity for up sell and cross sell since customers are more willing to listen once their issues are taken care of.

• Analytics & Real Time Decisions: Real time analytics and decisions are triggered by Customer actions. These events re-calculate churn scores of customers on the fly and based on historical patterns of customers with similar profiles, can throw offers at the customer. Customers are prompted for up sell or cross sell or may be offered incentives and customized solutions if identified as churn prone.

CRM for MVNOs: The Way Ahead

• Social CRM: MVNOs are, as mentioned earlier, customer driven companies. They need to be ahead of anyone else in terms of understanding their target segments and need to tune in to the changing tastes of customers through various social networking mediums and communities. The ability to identify micro segments within the broad segment, their unmet needs and specific tastes is what will keep them ahead of traditional operators.

• Cloud based Applications: MVNOs should look at cloud based solutions for their BSS stack. Cloud based BSS solutions are based on a subscription model and reduce setup costs by moving costs to an OPEX model. Cloud based models were not considered suitable for telecom operations earlier because of high transaction volumes, but have now been proven to be scalable and can handle MVNO transaction traffic.

• Integrate with other LOBs: While MVNO’s operate as separate companies within the parent’s brand umbrella and have separate applications and systems, an integrated CRM containing information of Customers across other Line of Business can be done to provide a complete perspective of the Customer’s lifestyle and behavior.

CRM for MVNOs: Part I

A Mobile Virtual Network Operator or an MVNO is a common term in the telecommunications industry today. MVNOs ride on the Network provided by a traditional telecommunications service provider, i.e. they buy or source minutes from the service providers, package them in a market savvy way and sell to consumers. Some key characteristics that differentiate the MVNO from traditional operators are as follows:

• MVNOs primary Line of Business is not telecommunications. They have an established brand presence in other industries and markets

• Their target market segments are aligned to the overall marketing strategy of their brand. They will not dilute the brand by targeting completely new segments.

• They are highly conscious and cautious about their image and hence have higher quality and performance requirements from their IT and Network partners.

• They pride themselves on their understanding of their customers, they want to be nimble so that they can change quickly with the changing tastes of their target customers

• They are highly oriented towards VAS and other innovative ways to bundle and price products and services, their revenue sharing agreements with VAS partners reflects the importance of the VAS partner to them.

Companies have transitioned overtime from being product oriented to being customer oriented. The days when Ford started mass production of automobiles with Model T, an assembly line production of cars of a single color that opened travel to the common middle-class American have been replaced with an era of mass customization. As search costs have reduced, customers have become more powerful and demanding. Companies have been forced to incorporate customer feedback and behavior as a key component of product and service design.

MVNOs are companies who consider themselves as champions at customer orientation. They believe they are in the telecommunications market to fill a gap and satisfy an unmet need of their target segment. While traditional telecom operators are tied to their products (mainly voice based) and want to sell to as large a customer base as possible, MVNOs consider themselves as partners to their customers trying to fulfill their needs.

MVNO Operator Relationship

On-boarding of MVNOs was a costly affair till a few years back. MVNOs wanted to have control over most of the BSS systems, which meant significant investments around CRM, Rating, Billing, VAS, Self Care, Portals etc. While MVNOs wanted to limit their dependencies on operators, operators themselves were wary of losing Customer base to MVNOs. However, with the MVNO concept gaining ground and providing a steady and new revenue stream for operators, traditional operators today are encouraging MVNOs and preferring to play a wholesale and B2B role in some cases. Lately, operators have started supporting most of the BSS platforms for MVNOs to the extent that some operators even own the portals of MVNOs. Outsourcing BSS systems to operators (in most cases to the operators IT vendor) have resulted in win-win combination for both the operator and the MVNO partner. For the MVNO, the CapEx on infrastructure has been replaced by OpEx, which has reduced their entry barriers. At the same time, the Operator has been able to rent out the existing IT infrastructure they had in place, thereby creating an additional revenue source for them. Thus, the Operator MVNO relationship, which started out as a vertical co-specialization of activities, has moved to the next level of consolidation, with rationalization of resources taking place between the operator and MVNO.

In the second part of this post, I will detail the role CRM plays in MVNOs and share thoughts on how MVNOs can use CRM more effectively.

Segmenting your Customer base

While organizations start with some basic understanding about their target customers, the target segment gets refined with time and may undergo significant changes once there is visibility of ground realities. In organizations that have implemented CRM solutions, the CRM application tracks information about customers across different channels. Overlaying analytics on top of CRM data, organizations can identify different segments, outlining buying habits like preferred products/services, channel, location, willingness to pay for premium services etc. A successful segmentation strategy will result in segments that are easily definable, sizable, reachable and actionable. Segments are defined in such a way that characteristics within a segment are homogenous while between segments are heterogeneous, so that different treatments can be designed for different segments. Characteristics, based on which customers can be segmented can belong to any of the four major types:

• Geographic (e.g., country, region, climate)
• Demographic (e.g., age, sex, income, education, # household members)
• Psychographic (e.g., lifestyle, personality, values)
• Behavioral (e.g., usage rate, loyalty status, usage occasion)

Geographic variables provide high level indicators. Mobile telephony customers based out of coastal regions, where one of the primary occupations is fishing, have a higher willingness to pay for weather related services and forecasts on their phones.

Demographic variables can indicate if a particular age group uses specific types of services more often than others. SMS is used more often in the age group 15-25 than in any other age group.

Psychographic variables are based on human psychology. Customers can be identified as Innovators, Adopters or Followers. High end new products or services can be targeted specifically at Innovators thereby increasing acceptance rates.

Behavioral variables are based on the presumption that past performance is a true mirror of future performance. The success of RFM methodology (Recency, Frequency and Monetary Value) to predict future revenues from customers proves the efficiency of behavioral variables. The number and value of prepaid recharges made by a customer over a period of time, in addition to time lag from the last recharge can predict to considerable accuracy whether the customer is still with the service provider; it can also predict when and of what value will be his next recharge.

Segments are rarely based on one type of variable; a combination of multiple variables of different types can provide useful insights that define a customer segment. A study conducted by a colleague and me on the upcoming 3G market in India found that young (22-28 years) medium income (9–14 lacs) basic degree holders interested in music would have the highest willingness to pay for Mobile Gaming. Get entire report from here.

Once segments are identified and selected, the next step is to design service offerings and pricing keeping the target segments in mind. There is a trade off involved between the depth of segment definition and cost; some experts, however think that one need not make an either or choice. To read more about creating service offerings for a segment size of one, refer to the blog on 1to1 Marketing