understanding how to increase loyalty among your prepaid subscribers

20
!"§==Mobile= Understanding how to increase loyalty among your prepaid subscribers Budapest, September 27, 2004 Prepared by: Andras Kondor VP CRM, T-Mobile International

Upload: inez-robles

Post on 03-Jan-2016

86 views

Category:

Documents


2 download

DESCRIPTION

Understanding how to increase loyalty among your prepaid subscribers. Budapest, September 27, 2004 Prepared by: Andras Kondor VP CRM, T-Mobile International. Margins in prepaid attractive. Prepaid market is simple. Attractive margins and simple business modell attract competition. - PowerPoint PPT Presentation

TRANSCRIPT

Page 1: Understanding how to increase loyalty among your prepaid subscribers

!"§==Mobile=

Understanding how to increase loyalty among your prepaid subscribers

Budapest, September 27, 2004

Prepared by:

Andras Kondor

VP CRM, T-Mobile International

Page 2: Understanding how to increase loyalty among your prepaid subscribers

!"§==Mobile= page 2

Attractive margins and simple business modell attract competition

Margins in prepaid attractive Prepaid market is simple

Postpaid Prepaid

Price CostsPrice Costs

Illustr

ativ

e

No billing required

No credit check, bad debt and financial costs

Only basic customer service needed

Focus on voice and sms makes proposition simple and cover most current needs

Page 3: Understanding how to increase loyalty among your prepaid subscribers

!"§==Mobile= page 3

Prepaid customers want, cost control, cheaper price, but no contract

Conclusions Part of prepaid customers will never migrate to postpaid, as their

fundamental needs cannot be met with postpaid (e.g. no contract or cost control)

By design, prepaid attracts more low value customers – prepaid in itself is not less profitable for similar customer

Source: Ovum, “The Future of Prepaid”, 2003.

Prepaid and postpaid customer needs are different.Prepaid and postpaid customer needs are different.

Prepaid has no contract Prepaid is cheaper for low

usage – customers pay only for what they use and not more

Prepaid has cost control No credit checks Anonymity (not in all

countries) Easy to buy, no hassle

Postpaid is cheaper for high usage

Subsidised handset More roaming possibilities

Reasons for purchase and usage of pre-paid:

Reasons for purchase and usage of postpaid:

In TMO 1.5% of targeted customers

migrated to postpaid on specific campaigns

We know less about PrePaidcustomers and they are more

difficult to contact

Page 4: Understanding how to increase loyalty among your prepaid subscribers

!"§==Mobile= page 4

Prepaid market is challenging for incumbent operators

How to compete with new and/or prepaid focus operators?

How to operate in a less traditional, less information rich environment?

Page 5: Understanding how to increase loyalty among your prepaid subscribers

!"§==Mobile= page 5

Prepaid market is challenging for incumbent operators

How to compete with new and/or prepaid focus operators?

How to operate in a less traditional, less information rich environment?

Page 6: Understanding how to increase loyalty among your prepaid subscribers

!"§==Mobile= page 6

Know the value of your customers

CLASS 4

CustomerContribution

CLASS 2

GrossContribution

CLASS 1

Revenue

CLASS 0

NetContribution

CLASS 3

Acquisition& Renewal

Costs

Directcosts

CustomerDrivenCosts

CompanyDrivenCosts

TotalProfit

Per

Con

tract,

Per

cu

sto

mer

Per

seg

men

t

Measuringcustomer

usage

Measuringprice

efficiency

Segmentscoring

Customerreporting

Renewaloffer

definition

To be implemented

Prepaids and postpaids valued the same way

Already implemented

Page 7: Understanding how to increase loyalty among your prepaid subscribers

!"§==Mobile= page 7

Evaluate value performance against targets and use it for derivation of future measures

Historic Customer Value

Value creation How well did we drive/improve value in our customer

base over time? How did potential strategic moves (e.g., changes in

customer retention model, commission schemes, etc.) influence value creation?

Customer portfolio Who are our most valuable customers and what

describes them? Did we focus our activities on the most valuable

customers? Did we optimize our measures with respect to

management of low/negative value generating customers?

Channels Do we have the right channel mix with respect to

acquisition/retention and active marketing? Where should we consider/apply alternative

commission schemes (e.g., risk sharing) to lower acquisition/ retention cost? Service

Do we have the right service models for the existing/current customer portfolio?

Offering What are value creating propositions/offerings?

Systematic analysis of customer base

Value

Contract length

0 ?

Page 8: Understanding how to increase loyalty among your prepaid subscribers

!"§==Mobile= page 8

Focus to keep especially top and high value prepaids

Prepaid value creation

0%

20%

40%

60%

80%

100%

Low

Med

HighTop

Customers

Contribution

Top

Hi

Mid

Low

Value segments

Illustr

ativ

e

Top and high value prepaids create a lot of value

Page 9: Understanding how to increase loyalty among your prepaid subscribers

!"§==Mobile= page 9

Conclusions:

Prepaid has many positive sides to TMO

Higher contribution margin per minute than in postpaid

Upfront payment from customer

Easy to sell (no contract)

Reduced exposure to fraud

Lower SAC and CRC

Shorter payback period for TMO

Higher contribution margin

Benefits Concerns

But no contract and lower usage

But no commitment

But attracts more low value customers

But more inactive customers

But lower ARPU

15%

45%55%

65%

85%

55%45%

35%

Low Med High Top

Postpaid Prepaid

Prepaid has also significant amount of high and top value customers

Prepaid postpaid split by customer value segment:

Prepaid has many advantages over and above postpaid (e.g. upfront payment)

We should not force migration to postpaid

We have been relatively passive in trying to overcome the concerns (e.g. lock-in instead of contract)

Source: Ovum, “The Future of Prepaid”, 2003. DWH analysis delivered by Irene Dziergas on October 2003.

Illustr

ativ

e

Page 10: Understanding how to increase loyalty among your prepaid subscribers

!"§==Mobile= page 10

Base retention on three dimensional segment strategy

Segments are established based on fundamental customer knowledge

Value

Needs(Motivation)

Churn probability

Customer strategy formulated on the segment level, but executed and measured for individual customers

Knowledge Segments

Page 11: Understanding how to increase loyalty among your prepaid subscribers

!"§==Mobile= page 11

Differentiate treatment by value segments across functions

Top

Hi

Mid

Low

Marketing

Value segments

Call Centre POS

Differentiation

Apply customer value approach in defining customer experience for all pre- and post-paid customers at all touch-points

Create a memorable positive experience especially at early lifecycle, which forms a strong foundation of satisfaction

Minimise the negative experiences (e.g. credit suspension and exchange of faulty handsets)

Differentiation by value replaces differentiation by pre/postpaid

Page 12: Understanding how to increase loyalty among your prepaid subscribers

!"§==Mobile= page 12

Increase loyalty along the customer lifecycle

T-Mobile

Competition

Acquisition Retention

Segment based strategy needed to

increase the loyalty gap over the contract

lifecycle

T-Mobile

Competition

Differentiated customer treatment: Implement premium service Implement new joiner differentiation Implement improved bad debt

management

Loyalty actions and programmes: Provide tangible benefits to customers

to stay and bind them also emotionally Enhance positive customer experience

and brand perception Measure effect of loyalty processes;

form the basis for improving the customer experience

Overall strategy

Source: IM14

Differentiated customer treatment: Diminish difference between pre- and

postpaid Provide web-based service support

Loyalty actions and programmes: Provide tangible benefits to customers

to stay and bind them also emotionally Provide additional benefits for more

commitment Value tenure

Prepaid focus

Page 13: Understanding how to increase loyalty among your prepaid subscribers

!"§==Mobile= page 13

Prepaids get benefits based on their tenure and value

10 points/year of tenure (each month)

1 point/2 minutes of incoming call

1 point/each 50HUF (€0.20) of turnover

Gold Limit: 420 points

Prepaid Gold

10 points/year of tenure (each month

1 point/2 minutes of incoming call

1 point/each 50HUF (€0.20) of turnover

Gold Limit: 2,250 points

Prepaid Platinium

Benefits: Handset discounts Usage (voice, sms, content) discounts Special customer treatment

Example: T-Mobile Hungary

Page 14: Understanding how to increase loyalty among your prepaid subscribers

!"§==Mobile= page 14

Prepaid market is challenging for incumbent operators

How to compete with new and/or prepaid focus operators?

How to operate in a less traditional, less information rich environment?

Page 15: Understanding how to increase loyalty among your prepaid subscribers

!"§==Mobile= page 15

Develop segment based development strategy and leverage contact potential by increasing contact rates

Top

High

Medium

Low

Segment 1 Segment 2

Segment 1 Segment 2

Customer development strategy Contact strategy

High value content

Value for money content

Voice

&

SMS

Illustr

ativ

e

Ø 0,5 Ø 1.0

Page 16: Understanding how to increase loyalty among your prepaid subscribers

!"§==Mobile= page 16

"COC mapping" allows to identify and target individual (cross-/upsell) offerings based on usage of current customer, offer, and channel data

CH1

Channels

Offers

Customers

CH2

C4

C3

C2

C1

CH1

P1 P2 P3 P4

Whomdo we sell a given

offering?

Which offeringsdo we sell a given

customer?

''COC cube''

Each single cube provides info on an individual customer's (C) propensity to provide additional value by using a given product (P) when offered via a given channel (CH)

Example COC info includes: For customer C2,

offer P2 is most compelling, economically most attractive when provided via channel CH2

Within current base, X customers show

high usage affinity foroffer Y, yielding profit potential of Z

Which channel to

use?

Page 17: Understanding how to increase loyalty among your prepaid subscribers

!"§==Mobile= page 17

Focus on e-mail, and SMSGet and update e-mail addressesSecure permissionGather information on customer preferences

Customer development will be based on e-channels

0

5

10

15

20

25

30

35

40

0,1 1 10 100

Cost per order [EUR; log. scale]

co

ns

um

er c

ha

nn

el p

re

fere

nc

e [

%] Channel evaluation

SMS

MMS

Outbound Call

mail

email

inbound CallOutbound Call

Page 18: Understanding how to increase loyalty among your prepaid subscribers

!"§==Mobile= page 18

A number of initiatives to support targets

Cornerstones Killer initiatives Description

Increase ARPU

Increase quality of acquisition

Retain high value customers

“More value for commitment” tariff

Top-up rewards

Ease of Top-up

“More value for commitment” tariff

Youth tariff/options

Lock-in offers

Prepaid tariff linked to direct debit

Loyalty programmes

• Digressive tariff or access to specific loyalty tariff plan upon minimum commitment of time or usage

• Depends on competitive environment

• Additional free credit depending on top up value(free credit for high value) / frequency (free credit for minimum amount in pre-defined timeframe) or channel (direct debit)

• Reward proportional to trigger

• Top up channels: e-Top-up / ATM• Top up abroad within TM /partners countries• Direct SMS upload

• Digressive tariff or access to specific loyalty tariff plan upon minimum commitment of time or usage

• Depends on competitive environment

• Specific rat-plan (adapted off-peak, mobile to mobile rates, SMS rates), specific top up voice data ratio

• Time lag effect

• Top up: buy monthly allowance (in credit) for several months• Bundle: buy monthly allowance (in usage) for several months

• Access to post-paid like tariffs• No contract, but direct debit

• Reward (handset renewal, free credit, free usage, other partners) upon usage / revenue s.a. Kläxchen/TMA, Nectar/Vodafone UK

1.1

2.2

2.3

2.1

1.2

3.1

3.2

3.3

1

2

3

Acquisition

Retention & win-back

Development &

service

Page 19: Understanding how to increase loyalty among your prepaid subscribers

!"§==Mobile= page 19

A quantitative assessment of value generation, planning and targetting along the lifecycle is needed

Acquisition

Retention & win-back

Development & service€

Page 20: Understanding how to increase loyalty among your prepaid subscribers

!"§==Mobile= page 20

Conclusions

Focus on high value prepaids Know the value of your customers Differentiate them based on their value Provide them with tangible benefits along the lifecycle based on their

value

Customise your development plan Develop customer specific cross/upselling Leverage e-channels Control the lifecycle