crm
TRANSCRIPT
CUSTOMER RELATIONSHIP MANAGEMENT AT
AIRTEL
Submitted By:Robin tomar
Rohan Harish chandaniGyan vaibhav singh
(PGP 09-11)
Course Instructor:Mrs. Kavita shukla
INTRODUCTION
Bharti Airtel Limited ,usually referred to simply as "airtel", is a
Indian telecommunications company that operates in 19 countries across South Asia,
Africa and the Channel Islands. It operates a GSM network in all countries,
providing 2G or 3G services depending upon the country of operation. Airtel is the fifth
largest telecom operator in the world with over 200 million subscribers as of October
2010. It is the largest cellular service provider in India, with over 143 million subscribers
as of September 30, 2010. Airtel is the 3rd largest in-country mobile operator by
subscriber base, behind Mobile and China Unicom. It has a 29.00% market share of the
GSM mobile service in India.
Airtel also offers fixed line services and broadband services. It offers its telecom services
under the Airtel brand and is headed by Sunil Bharti Mittal. Bharti Airtel is the first
Indian telecom service provider to achieve this Cisco Gold Certification. To earn Gold
Certification, Bharti Airtel had to meet rigorous standards for networking competency,
service, support and customer satisfaction set forth by Cisco. The company also provides
land-line telephone services and broadband Internet access (DSL) in over 96 cities in
India. It also acts as a carrier for national and international long distance communication
services. The company has a submarine cable landing station at Chennai, which connects
the submarine cable connecting Chennai and Singapore.
It is known for being the first mobile phone company in the world to outsource
everything except marketing and sales and finance. Its network (base stations, microwave
links, etc.) is maintained by Ericsson, Nokia Siemens Network and Huawei., business
support by IBM and transmission towers by another company (Bharti Infratel Ltd. in
India) Ericsson agreed for the first time, to be paid by the minute for installation and
maintenance of their equipment rather than being paid up front. This enabled the
company to provide pan-India phone call rates of Rs. 1/minute (U$0.02/minute). Call
rates have come down much further. During the last financial year [2009-10], Bharti has
roped in a strategic partner Alcatel-Lucent to manage the network infrastructure for the
Telemedia Business.
The company is structured into four strategic business units - Mobile, Telemedia,
Enterprise and Digital TV. The Telemedia business provides broadband, IPTV and
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telephone services in 89 Indian cities. The Digital TV business provides Direct-to-Home
TV services across India. The Enterprise business provides end-to-end telecom solutions
to corporate customers and national and international long distance services to telcos.
.
VISION
To be globally admired for telecom services that delight customers.
MISSION
We will meet global standards for telecom services that delight customers through:
Customer Service Focus
Empowered Employees
Innovative Services
Cost Efficiency
SELECTING AND MEASURING THE RIGHT COMPONENTS FOR A
SUCCESSFUL CRM STRATEGY
Examine the role of Data mining to create differentiators
Determine how CRM is applied in a prepaid business
Using Call Center technologies for one to one relationships
The role of the Front line in CRM success
Measuring the Return on Investment of CRM after its implementation
BEST PRACTICES FOR ANALYTICAL APPLICATIONS IN THE TELECOM
INDUSTRY
Designing your analytical applications to facilitate:
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Useful segmentation methodology and techniques
Effective churn analysis and prediction
Successful cross and up-selling
Targeted acquisition
Accurate price plan analysis
STRATEGIES ADOPTED
Focus on maximising revenues and margins;
Capture maximum telecommunications revenue potential with minimum
geographical coverage;
Offer multiple telecommunications services to provide customers with a "one-stop
shop" solution;
Position itself to tap data transmission opportunities and offer advanced mobile
data services;
Focus on satisfying and retaining customers by ensuring high level of customer
satisfaction;
Leverage strengths of its strategic and financial partners; and
Emphasize on human resource development to achieve operational efficiencies.
TECHNOLOGY FROM WORLD LEADERS
The company has partnered with telecom majors like Siemens, ECI, Lucent and Duraline
for its network. While Siemens has provided the digital switching system (Siemens
EWSD) with CCS-7, a signaling protocol for faster connectivity, the billing software
(Keenan Arbor) has been sourced from Lucent. The Synchronous Digital Hierarchy
(SDH) equipment is sourced from ECI.
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SERVICE GUARANTEE
Service guarantee is a first-of-its-kind scheme and underlines Airtel’s commitment to
provide error free services – ‘Services right the first time and every time’. The service
guarantee scheme entails:
Repair of any dead phones within 8 working hours of receiving a complaint
Error Free billing.
The scheme is a culmination of Airtel’s efforts in continuously setting new benchmarks in
quality by adhering to best quality practices including SIX-SIGMA.
In the unlikely event of any failure in this promise, the company will give STD/ISD pre
paid calling card worth Rs. 100/- to the customers.
VALUE ADDED SERVICES
Besides providing world-class voice products and data services, Airtel – Broadband &
Telephone Services also provides a host of value added services to its customers. These
services, which add a whole new dimension to the meaning of fixed line telephony,
include services like Voice Mail Service, Directory Assistance, Call Completion Busy
Subscriber, Delayed Hotline, Centrex and the like. The company also provides a host of
customized premium services to its customers such as live astrologers, cricket updates,
sending jokes and greeting in celebrity voices, music messaging service etc.
WORLD CLASS CUSTOMER CARE
Apart from the state-of-the-art infrastructure, Airtel - Broadband & Telephone Services is
the first to provide a dedicated 24-hour call centre. The company is planning to have a
250 seater call center equipped with the best ACDs, IVRs and Call loggers to provide
world class after sales support.
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THE ROAD AHEAD
It is an exercise in futility to invest in acquiring a new customer only to lose him before
even a part of the investment can be recovered. Though retaining a customer might
require seven times more effort than acquiring one it definitely makes more economic
sense. Even from a long term perspective maintaining a good relationship with not just
profitable customers but all prospective customers will pay huge dividends. Only a churn
management system can provide a better understanding of the customer, the operators’
most valuable asset.
It is important to deliver value to the customer and put in place offers that tie in the
customer. New products and services development is essential to ensure loyalty. A churn
management solution can help devise more attractive incentives, tariff bundles, loyalty
schemes and proactive customer service along with acquisition strategies to attract the
right type of customer, thus reducing fraud and bad debt—all key to a better bottom line.
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Customer Relationship Management
Customer Relationship Management is a comprehensive strategy and process of
acquiring, retaining and partnering with selective customers to create superior value
for the company and the customer.
The Emergence of CRM Practice
Developing customer relationships has historical antecedents going back into the pre-
industrial era. Much of it was due to direct interaction between producers of agricultural
products and their consumers. Similarly artisans often developed customized products for
each customer. Such direct interaction led to relational bonding between the producer
and the consumer. It was only after industrial era's mass production society and the
advent of middlemen that there were less frequent interactions between producers and
consumers leading to transactions oriented marketing. The production and consumption
functions got separated leading to marketing functions being performed by the
middlemen. And middlemen are in general oriented towards economic aspects of buying
since the largest cost is often the cost of goods sold.
In recent years however, several factors have contributed to the rapid development and
evaluation of CRM. These include :
1. The growing de-intermediation process in many industries due to the advent of
sophisticated computer and telecommunication technologies that allow producers
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to directly interact with end-customers. For example, in many industries such as
airlines, banks, insurance, computer program software, or household appliances
and even consumables, the de-intermediation process is fast changing the nature
of marketing and consequently making relationship marketing more popular.
2. The de-intermediation process and consequent prevalence of CRM is also due to
the growth of the service economy. Since services are typically produced and
delivered at the same institution, it minimizes the role of the middlemen. A
greater emotional bond between the services provider and the service user also
develops the need for maintaining and enhancing the relationship.
3. Another force driving the adoption of CRM has been the total quality movement.
When companies embraced Total Quality Management (TQM) philosophy to
improve quality and reduce costs, it became necessary to involve suppliers and
customers in implementing the program at all levels of the value chain. This
needed close working relationships with customers, suppliers, and other members
of the marketing infrastructure.
4. With the advent of the digital technology and complex products, systems
selling approach became common. This approach emphasized the integration of
parts, supplies, and the sale of services along with the individual capital
equipment. Customers liked the idea of systems integration and sellers were able
to sell augmented products and services to customers. These measures created
intimacy and cooperation in the buyer-sellers relationships. Instead of purchasing
a product or service, customers were more interested in buying a relationship with
a vendor.
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5. In the current era of hyper-competition, marketers are forced to be more
concerned with customers retention and loyalty (Dick and Basu 1994; Reicheld
1996). As several studies have indicated, retaining customers is less expensive
and perhaps a more sustainable competitive advantage than acquiring new ones.
Marketers are realizing that it costs less to retain customers than to compete for
new ones. There is greater opportunity for cross-selling and up-selling to a
customer who is loyal and committed to the firm and its offerings.
6. Customer expectations have rapidly changed over the last two decades. Fueled by
new technology and growing availability of advanced product features and
services, customer expectations are changing almost on a daily basis.
Consumers are less willing to make compromises or trade-off in product and
service quality.
7. Today, many large internationally oriented companies are trying to become global
by integrating their worldwide operations. To achieve this they are seeking
cooperative and collaborative solutions for global operations from their vendors
instead of merely engaging in transactional activities with them.
A CRM PROCESS FRAMEWORK
We develop a four-stage CRM process framework. The broad framework suggests that
CRM process comprise of the following four sub-process: customer relationship
formation process; relationship management and governance; relational performance
evaluation process; and CRM evolution or enhancement process.
I. CRM FORMATION PROCESS
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The formation process of CRM refers to decisions regarding initiation of relational
activities for a firm with respect to a specific group of customers or with respect to an
individual customer with whom the company wishes to engage in a cooperative or
collaborative relationship. Hence, it is important that a company is able to identify and
differentiate individual customers. In the formation process, three important decision
relate to defining the purpose (or objectives) of engaging in CRM, selecting parties (or
customer partners) for appropriate CRM programs; and developing programs (or
relational activity schemes) for relationship engagement with the customers.
Formation Management & Governance Performance
Source : Sheth Jagdish N. and Atul Parvatiyar (2000), Handbook of Relationship Marketing,
Sage Publication
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Team Structure
Role Specification
Planning Process
Process Alignment
Monitoring Process
Communication
Employee Motivation
Employee Training
Purpose - Increase Effectiveness- Improve Efficiency
Programs- Account Management- Retention Marketing- Co-op Agreements- Strategic Partnerships
Partners- Criteria- Process
Evolution- Enhancement- Improvement
Relationship Performance- Strategic- Financial - Marketing - Retention - Satisfaction - Loyalty
(i) CRM Purpose : The overall purpose of CRM is to improve marketing productivity
and enhance mutual value for the parties involved in the relationship. CRM has the
potential to improve marketing productivity and create mutual value by increasing
marketing efficiencies and/or enhancing marketing effectiveness. By seeking and
achieving operation goals, such as lower distribution costs, streamlining order processing
and inventory management, reducing the burden of excessive customer acquisition costs,
and through customer retention economics, firms could achieve greater marketing
efficiencies. Thus, stating objectives and defining the purpose of CRM in a company
helps clarify the nature of CRM programs and activities that ought to be performed by the
partners. Defining the purpose would also help in identifying suitable relationship partner
who have the necessary expectations and capabilities to fulfill mutual goals.
i) CRM Programs : A careful review of literature and observation of corporate
practices suggests that there are three types of CRM programs : continuity
marketing; one-to-one marketing; and, partnering programs. These take different
forms depending on whether they are meant for end-consumers, distributors
customers, or business-to-business customers.
CRM Program
Customer types
Program Types
Mass Markets Distributors Business-to-
business markets
Continuity
marketing
After marketing
Loyalty programs
Cross selling
Continuous
replenishment
ECR programs
Special souring
arrangements
One-to-one Permission Customer business Key account
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marketing marketing
Personalization
development Global account
programs
Partnering/co-
marketing
Affinity partnering
Co-branding
Logistics
partnering
Joint marketing
Strategic
Partnering
Co-design
Co-development
Source : Sheth Jagdish N. and Atul Parvatiyar (2000), Handbook of Relationship Marketing,
Sage Publication
a) Continuity Marketing Programs: Given the growing concern to retain customers as
well as emerging the knowledge about customers retention economics have led many
companies to develop continuity marketing programs that are aimed at both retaining
customers and increasing their loyalty (Bhattacharya 1998, Payne 1995). For
consumers in mass markets, these programs usually take the shape of membership
and loyalty card programs where consumers are often rewarded for their members
and loyalty relationships with the marketers. For distributor customers, continuity
marketing programs are in the form of continuous replenishment programs ranging
anywhere from just-in-time inventory management programs to efficient consumer
response initiatives that include electronic order processing and material resource
planning. In business-to business markets these may be in the form of preferred
customer programs or in special sourcing arrangements including single sourcing,
dual sourcing, and network sourcing, as well as just-in-time sourcing arrangements.
The basic premise of continuity marketing programs is to retain customers and
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increase loyalty through long-term special services that has a potential to increase
mutual value through learning about each other.
b) One-to-one Marketing: One-to-one or individual marketing approach is based on the
concept of account-based marketing. Such a program is aimed at meeting and
satisfying each customer's need uniquely and individually (Peppers and Rogers 1995).
In the mass market individualized information on customers is now possible at low
costs due to the rapid development in information technology and due to the
availability of scalable data warehouses and data mining products. By using online
information and databases on individual customer interactions, marketers aim to
fulfill the unique needs of each mass-market customer. Information on individual
customers is utilized to develop frequency marketing, interactive marketing, and after
marketing programs in order to develop relationship with high yielding customers.
For distributor customers these individual marketing programs take the shape of
customer business development. In the context of business-to-business markets,
individual marketing has been in place for quite sometime. Known as key account
management program, here marketers appoint customer teams to husband the
company resources according to individual customers needs. Often times such
programs require extensive resource allocation and joint planning with customers.
c) Partnering Programs: The third type of CRM programs is partnering relationships
customers and marketers to serve end users needs. In the mass markets, two types of
partnering programs are most common: co-branding and affinity partnering. In co-
branding, two marketers combine their resources and skills to offer advanced products
and services to mass-market customers. Affinity partnering program is similar to co-
branding except that the marketers do not create a new brand rather use endorsement
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strategies. Usually affinity-partnering programs try to take advantage of customer
memberships in one group for cross-selling other products and services.
d) In the case of distributor customers, logistics partnering and cooperative marketing
efforts are how partnering programs are implemented. In such partnerships the
marketer and the distributor customers cooperate and collaborate to manage inventory
and supply logistics and sometimes engage in joint marketing efforts. For business-to-
business customers, partnering programs involving co-design, co-development and
co-marketing activities are not uncommon today .
KEY RELATIONSHIP MANAGEMENT
Relationships are not built and sustained with direct e-mails themselves but rather
through the types of programs that are available for which e-mail may be a delivery
mechanism. The overall goal of relationship programs is to deliver a higher level of
customer satisfaction than competing firms deliver. Managers today realize that
customers match realizations and expectations of product performance, and that it is
critical for them to deliver such performance at higher and higher levels as expectations
increase due to competition, marketing communications, and changing customer needs.
In addition, there is a strong, positive relationship between customer satisfaction and
profits. Thus, managers must constantly measure satisfaction levels and develop
programs that help to deliver performance beyond targeted customer expectations.
A comprehensive set of relationship programs includes
Customer service
Frequency/loyalty programs
Customization
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Rewards programs
Community building.
CUSTOMER SERVICE
Because customers have more choices today and the targeted customers are most valuable
to the company, customer service must receive a high priority within the company. In a
general sense, any contact or “touch points” that a customer has with a firm is a customer
service encounter and has the potential to gain repeat business and help CRM or have the
opposite effect. Programs designed to enhance customer service are normally of two
types. Reactive service is where the customer has a problem (product failure, question
about a bill, product return) and contacts the company to solve it. Airtel CALL
CENTRE have established infrastructures to deal with reactive service situations through
800 telephone numbers, faxback systems, e-mail addresses, and a variety of other
solutions. Proactive service is a different matter; this is a situation where the manager
has decided not to wait for customers to contact the firm but to rather be aggressive in
establishing a dialogue with customers prior to complaining or other behavior sparking a
reactive solution. This is more a matter of good account management where the sales
force or other people dealing with specific customers are trained to reach out and
anticipate customers’ needs.
LOYALTY/FREQUENCY PROGRAMS
Loyalty programs (also called frequency programs) provide rewards to customers for
repeat purchasing. Such programs have become a competitive necessity.
CUSTOMIZATION
The notion of mass customization goes beyond 1-to-1 marketing as it implies the creation
of products and services for individual customers, not simply communicating to them.
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The idea is that it has turned customers into product makers rather than simply product
takers.
COMMUNITY
One of the major uses of the Web for both online and offline businesses is to build a
network of customers for exchanging product-related information and to create
relationships between the customers and the company or brand. These networks and
relationships are called communities. The goal is to take a prospective relationship with a
product and turn it into something more personal. In this way, the manager can build an
environment which makes it more difficult for the customer to leave the “family” of other
people who also purchase from the company.
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CUSTOMER PROFITABILITY
ANALYSIS- IMPORTANCE
The Customer as Financial Asset
“Assurance" is telecom's equivalent of the American Idol. “Assurance” usually refers to
financial assets – like cash, network equipment, vehicles, and buildings. Squishy things
like customer loyalty, meanwhile, don’t fit neatly in an accountant’s general ledger.But
while customer “delight” is certainly tough to quantify, it’s a financial asset nonetheless –
and as vital to a telecom’s future .
In short, telecoms are warming to the idea that customers are financial assets that need to
be assured.Telecommunications firms care a lot about "customer assurance". It's just that
they know it by many different names.
Customer assurance spans an array of business systems and best practices from customer
care and analytics. . . to churn management and CRM. Yet no single one of these terms
captures the essence of customer assurance in a holistic way. So the definition:
Customer Assurance: Strategies that synchronize business intelligence, customer
interactions, and marketing programs to optimize customer value.
KEY FUNCTIONS THAT COME UNDER CUSTOMER ASSURANCE
UMBRELLA
Profitability Assessment: Tying costs and revenues to specific customer segments to
ensure products yield maximum profits.
Churn & Loyalty Management: Predictive modeling & other techniques to proactively
retain and increase the revenues of profitable customers.
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Business Intelligence/Analytics: Data warehouse & mining techniques to enhance
decision making and uncover profitable data patterns.
Self-Care: Web- and IVR-based techniques for lowering call center and billing costs,
keeping customers informed, and making customer interactions more efficient.
CRM/Customer Care: Personal interaction techniques and policies that improve the
effectiveness of the call center, trouble desk, and field sales.
Credit/Fraud/Collections: Processes to ensure the financial integrity of customers.
Campaign Management: Coordinating and measuring advertising, direct marketing,
and sales programs.
Data Integrity: Detecting, correcting, and maintaining the accuracy of data used in
customer assurance.
Having said that it should be realised that not all customers are equal. There are some
who give bread and butter and others who provide the jam. And there are those who
actually take away a good part of the hard earned meal! Evaluation of customer
profitability breaks the myth that .all customers, big or small, near or far. are profitable. A
good understanding of customers (be they direct customers or trade) and their profitability
helps in allocating differential resources towards them. This in turn would translate into
higher profits for the organisation as a whole.
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Many organizations cannot even begin to improve the management of their customers
simply because they lack the information of where to start and where to focus their
efforts. Some organisations have made significant investments in IT and tried to take
advantage of the benefits on offer. But more often than not they have not integrated their
investments. CRM as a concept may be appreciated but its spin-offs have not been
measured and adapted for business benefits.
In order to assess the profitability of customers, all costs need to be allocated to each of
the customer. It is relatively easy to glean direct costs like transportation cost, cost
incurred in handling returns, discounts offered etc associated with each customer.
The challenge is to allocate overheads in proportion to the resources deployed for each
customer. Activity based costing system is used for measuring costs of activities
and tracing the customer cost to the activities it consumes. e.g. Sales personnel salaries
can be allocated in proportion to the time spent in servicing the customer. Such an
exercise can become tedious in AIRTEL. In addition, one must bear in mind that the cost
of gathering data for computing customer profitability has to be in line with the benefits
sought from the initiative.
They would normally expect the 80:20 rule to apply when discussing the distribution of
customer profitability with 20% of the customers providing us with 80% of profits. But
it is found that the distribution of profitability in many circles is much worse.
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Airtel also bears in mind that few customers would be unprofitable for reasons such as
new customers with high potential., .new product developed for them which is under
stabilization. and so on.
The solution they adopt by focus on the following three initiatives to improve overall
profitability:
Better customer management
Targeted selling efforts, and
Focused customer retention
Subscriber usage patterns
Rate packages and retention incentives
Focused costing model for all customers.
These combined elements enable profitability analysis by various groupings and can
serve as the basis of effective marketing programs and product and service launches. This
approach minimizes churn and maximizes profitability.
MAKING CUSTOMER DATABASES MORE PROFITABLE
For years, Airtel have attempted to maximize customer value through the use of general
ledger reporting systems and segmentation. However, thanks to modern technology,
today are seeking to extract even more information, not just from their existing financial
systems, but from customer management and operational systems as well. To accomplish
this, they are looking for an environment that can help them understand and maximize the
profitability of their existing customer base. This is particularly true in the current
economic environment where companies can no longer sustain growth through the
purchase of customer databases alone. Instead, companies are finding that to be truly
competitive in the 21st Century, they must grow profits from existing customers.
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For Airtel the 80/20 rule, that roughly 20 percent of a company's customer base accounts
for 80 percent of its revenues. This formula also implies is the remaining eighty percent
of a company's customer base is either marginally profitable or possibly even profit-
eroding for the organization. So by merely adding more customers to its base through
direct acquisition, a company might actually be reducing its value while it's increasing
revenue. A potential formula for disaster.
Airtel’s need for organization to sustain and grow profits from internal opportunities has
led companies to search for retention and cross sell solutions that differentiate service
levels based on the total value exchange of a customer. In other words, the customers that
drive the most value for the company should be the customers that receive the highest
levels of value from your organization in the form of service and product offerings. This
means focusing more time on retaining the best customers, while spending less time on
marginally profitable customers, and ridding unprofitable ones. For this , it needed a shift
in technology.
To understand the dynamics of customer profitability, it's important to understand the
drivers of profit or loss as these interactions flow through a customer's record and to
evaluate the specific risk and spread funding characteristics of individual products and
services held by the customer. If only looks at organizational-based reporting measures
that average customer revenue, funding, cost, and risk information regarding products and
services, it is missing specific information critical to understanding the true behavior
based profit of the customer.
While organizationally-based information represents a level of "truth" within the
organization, it lacks access to deeper levels of customer data to determine true
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profitability. Behavior-based analysis offers this deeper level of access to customer
actions, reaching its full potential when tied to the big picture.
TRADITIONAL ORGANIZATIONAL REPORTING — IT'S ALL ABOUT THE
GENERAL LEDGER
From the beginning of modern business, organizational information has been based on
profit and service center activity, and the financial activity of business units that drive the
detail of general ledger reporting. Once the basic available information has been
collected, a business can use it for budgeting, planning, and forecasting — all primary
financial control tools.
This information comes from a Airtel’s business units and is then tied directly to the
general ledger. It is both highly accurate about the activity of the business unit and highly
aggregated with respect to the underlying details of the customer behavior that drives
balances, revenues, and costs for customer activity. Without this valuable information, an
organization could not operate effectively. However, as Airtel realize that customer
databases can now be turned into goldmines of potential profit, the general ledger system
alone has not been able to effectively access this customer information and turn it into
bullion. This is where behavior-based measuring comes in.
BEHAVIOR-BASED PROFITABILITY — IT'S ALL ABOUT THE DATA
To get a deeper view of customer profitability that reflects the profit and loss behaviors of
individual customers requires a great deal of data about a customer's activities. This level
of information based on a customer's revenue generating and cost-incurring interactions
with an organization is stored in the company's database and is driven by the profitability
model.
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These specific profitability models start from base level profit objects, such as accounts,
passenger records, subscription numbers, and shipment figures combined with transaction
and interaction information, and other customer details that are required to give a
company a full view of the customer's value to the organization. In addition, there are
costs and revenues that are not transactional-based — such as the fees and costs of
establishing, maintaining, and closing a relationship these must be captured and allocated
to get true profitability.
To find the true value of behavior-based profitability, it's important to look at four areas
within this methodology that can help AIRTEL calculate their most valuable customers,
but also identify and track those that are least profitable.
FEE REVENUE
Specific fee revenue figures at the account/customer level are usually quite easy to
correlate to the general ledger. However, some level of modeling or approximation may
be needed to make allowances for small buckets of revenue as the application accounting
system or back room operations likely hide the necessary detail needed to account for this
revenue. In general, between 95 percent and 99 percent of the detail is available, but 100
percent of detail must be accounted for and allocated to achieve true customer account
accuracy.
COSTS
Customer activity level costs are often difficult and time-consuming to capture and they
are generally not as up-to-date as the figures available for a company's products and
services. This is often the case because the time and effort involved in capturing customer
level activity costs often lag the organization's creation of new products and channels as
they enter the market. Any remaining costs not typically identified in the general ledger,
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such as overhead costs that do not directly tie to customers or their level of individual
activity, should be apportioned to customers and the activities to which they apply. In
order to attain accurate data at this level, it's important that well-thought-out and specific
apportionment schemes are in place so the right groups of profit objects get the right
amount of cost.
In addition, some of the costs of doing business just do not happen at the customer level.
For instance, capital for business, market, and operational risks are only indirectly related
to customer activity. And fixed assets expense and organizational infrastructure costs
arise from organizational mandates and are also very loosely tied to customer activity.
But by capturing these activities that are most common and represent the highest amount
of cost, the organization can identify and allocate essential costs that both drive and affect
customer profitability. Once these figures are captured, additional costing work could
then be driven by customer activity levels and product offerings so that the most
important costs are always part of the profitability calculation.
RISK-ADJUSTED FUNDING COSTS AND VALUES
Customer balances are generally correct to the general ledger, and include both monthly
and/or cycle-end balances. However, to achieve detailed level profitability often requires
the use of daily average balances for calculation of spread revenue and risk, making this
level of information not readily available in general ledger.
The actual interest amount paid or received by customers can be tracked in detail at the
account level by the application accounting systems.
RISK
Just as the attributes of behavior determine revenue and expense, it is the attributes of the
profit object that determine the level of credit risk that should be assigned to customers.
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Airtel use credit scores to accomplish this task. Profit objects without a credit score can,
at a minimum, use a portion of the monthly reserve for losses to approximate the cost of
credit risk. There exist many complex and highly accurate ways of determining the risk of
loss given default on a specific profit object. Additionally, there are many highly
sophisticated and accurate ways of deterring the potential for loss on a specific profit
object. All of these methodologies can be reconciled in detail back to the financial results
from the general ledger, therefore improving analysis and projections going forward.
While all of these areas improve the level of accuracy of behavioral-based reporting, they
reach their full potential when tied to a company's general ledger to achieve true customer
profitability.
MERGING BEHAVIOR-BASED AND ORGANIZATIONAL-BASED
REPORTING — IT'S ABOUT CUSTOMER PROFITABILITY TAKING FLIGHT
Maintaining both behavioral-based and organization-based reporting methods can be
costly to an organization. Yet, both systems serve essential roles in the organization and
neither can be dispensed with. To merge these two methods of analysis, it's necessary to
create an environment that captures the detailed data and serves the need of management
to plan for people and pencils. Further, this solution must accomplish its tasks in a time-
saving manner and be able to be quickly corrected when new and unforeseen issues arise.
For successful development of financial management capabilities, whether this is G/L,
Risk Management, Budget & Planning, Cost Allocation, Fund Transfer Pricing, Customer
Value Management, Performance Management or Statutory reporting — a comprehensive
architecture that addresses all financial management needs is essential. Having such an
architecture enables an AIRTEL to detect the "white spots" and to prioritize future
customer development activities.
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CORE ACCOUNTING AND DELIVERY SYSTEM ARCHITECTURE
The central piece of a successful financial management architecture is the enterprise data
warehouse which brings together all of the essential elements that support an
organization's financial needs, including G/L, Risk Management, Customer Value
Management, and so forth. As more detail is supplied by the application systems and
brought into the structured warehouse environment, the information becomes more
consistent and reconcilable. This allows Airtel’s business to have a complete view of its
customers and its organization — while supporting the specific financial reporting needs
of the company.
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By deploying this new type of enterprise database architecture, it's now possible to marry
the accounting system information that drives the books as well as the account and
customer level behavior based profitability information that identifies customer
profitability. As all components of both reside in this single architecture, the comparison
and contrasting of the reporting results are made into one efficient task. And while the
results of the profitability metric may not always balance directly to the financial
statements, they are certainly reconcilable within this environment. This reconciliation
process can provide companies with a roadmap to improve the accuracy of such things as
the costing system, operations for the collection of revenue, the tying of a credit score to
the provision for losses.
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AIRTEL’S STRATEGY — MAKING CUSTOMER PROFITS SOAR
It's becoming increasingly clear that typical general ledger environments alone are not
enough to support a company's need to generate highly accurate and actionable customer
profitability models. Equally, it's clear that pure behavioral-based information is not
enough to maximize corporate profitability if it is not tied to the general ledger. However,
when these methodologies are merged in a company's enterprise database architecture,
organizations are able to maximize products and services to their most profitable
customers and reduce or replace unprofitable ones. Together, they are helping
organizational profits to soar.
Yes, it took mankind thousands of years to realize that a simple shift in technology would
allow humans to fly. A similar shift in technology is making it possible for companies to
access a deeper level of customer information, helping businesses to better understand
and increase customer profitability in ways that were undreamed of just a few years ago.
Data warehouse technology — allowing true customer profitability to fly.
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KEY FACTORS THAT KEEP COMPANIES FROM ADOPTING AND USING
CUSTOMER PROFITABILITY ANALYSIS.
A lack of comprehensiveness.
The majority of customer P&Ls lack enough detail to provide a true view of total cost and
customer contribution. The most valuable customer profitability analysis captures data
across all functions and includes customer-allocated cost metrics related to
manufacturing,
distribution, logistics, sales, trade marketing, order management, administration and
support, and customer overhead.
Manual vs. automated processes.
Data for customer P&Ls are typically extracted manually from various sources and
entered into a spreadsheet for review and analysis. This time-consuming process creates
inconsistent data gathering and analysis and infrequent updates, making its use and value
limited. In addition, customer cost and investment data need to be continually updated, as
actuals come in to replace estimates. If this continuous feed of data isn’t automated, it’s
very likely that it never will be updated.
A lack of integrity and user buy-in.
Manual and non-comprehensive processes create results that tend to lack integrity. Data
quality compounds the issue, as critical data such as promotion cost/investment may be
found only on salespeople’s laptops. Data integrity issues cause business owners to
second- guess analytical results — and not use them to engage in a mutually beneficial
and productive dialogue with their channel customers. Without sound data integrity,
business owner buy-in is a challenge.
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Point-in-time and single use.
This needs to be developed and automated for continuous use and measurement, vs. a
one-time tactic for negotiation purposes or leverage.
The process is overcomplicated.
Customer P&Ls need not be fully loaded and reconciled to corporate financial reporting
statements and systems. The focus should be on business use and reporting vs. financial
use and reporting.
The “80/20” fallacy.
Promotional investment and spending are no longer representative of total investment and
the cost of doing business with a customer. Years ago, an understanding of customer
specific trade promotion ROI would have provided with 80 percent of the cost category of
investment in a total customer profitability analysis. Today, size, complexity and
individual customer requirements generate other significant costs and investments critical
for accurate analysis, such as freight, inventory carrying cost, HR support investment,
displayready pallet cost, “nuisance fees” and so on.
No linkage to strategy.
As industries have rushed toward a solution, putting technology before strategy was a key
shortfall. Companies must develop a transformation roadmap and plan for how they will
use this type of analysis to affect their bottom line. How customer profitability analysis
will be used is a key element to developing a strategy. An effective strategy and the use of
customer profitability analysis should outline mutually beneficial (to manufacturer and
customer), measurable and actionable uses and results. The manufacturer and the
customer can engage in reinvestment dialogue, using the analysis to highlight mutually
ineffective
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and inefficient activities — such as returns, unsaleables, random-case picks and
emergency orders — that are driving cost and, therefore, investment that could be more
effectively reallocated and reinvested toward mutually beneficial activities, such as
consumer marketing, branding and retailer equity development.
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LIFE TIME VALUE
“What you use to measure your success often defines your vision and your strategy”.
According to AIRTEL , if the company’s goal is more customers, one can get them, but
they may not be profitable. Airtel are not believing in the idea that sales and discounts
are the road to success. They knows that all these may actually be the road to ruin.
Lifetime value is the net present value of the profit to be realized on the average new
customer during a given number of years. Airtel firmly believes LTV is a wonderful
concept, and can be an excellent guide to profitable strategy. The steps they are going
through are these:
Get the customers to give the data, and build it into a database complete with purchase
history.
Use the data to segment your customers by profitability.
The goal of their marketing programs should be to build a relationship with customers
whose behavior can be modified, to convert them over time into long run loyal and
profitable customers. The process can be measured and tracked by using a lifetime value
chart.
LIFETIME VALUE BEFORE NEW PROGRAMS
Year 1 Year 2 Year 3
Customers 5,000 3,500 2,590
Retention Rate 70.0% 74.0% 80.0%
Visits/Week 0.64 0.69 0.78
Average Basket $33 $45 $55
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10
Total Sales $5,280,000 $5,433,750 $5,555,550
Cost Percent 83.0% 80.0% 79.0%
Direct Costs $4,382,400 $4,347,000 $4,388,885
Labor + Benefits 11% $580,800 $597,713 $611,111
Card Program $16, $8 $80,000 $28,000 $20,720
Advertising 2% $105,600 $108,675 $111,111
Total Costs $5,148,800 $5,081,388 $5,131,826
Gross Profit $131,200 $352,363 $423,724
Discount Rate 1.00 1.20 1.44
NPV Profit $131,200 $293,635 $294, 253
Cum. NPV Profit $131,200 $424,835 $719,088
Lifetime Value $26.24 $84.97 $143.82
In this chart, they are tracking the performance of 5,000 newly acquired customers over
three years. Their initial retention rate is 70%, which means that during the first year,
30% stop shopping with us. The retention rate goes up over time, as loyal customers are
sorted out from disloyal ones.
The lifetime value of these customers is $143 in the third year. They should note that this
is based on the net present value of their profits, adjusted by a discount rate. The discount
rate is needed because money that will receive in the future is not worth as much as
money that have in hand right now. The rate discounts future money so it can be
legitimately added to current profits to get a valid lifetime value. The formula for the
discount rate is:
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D = (1 + i)n
Where i = the current interest rate plus a risk factor, and n = the number of years that have
to wait to get hands on the future money.
The lifetime value numbers are really very powerful measures. They include in a single
set of numbers the retention rate, the spending rate, the costs of marketing, and the
discount rate. By themselves, however, they are not as powerful as they will be when
using them to evaluate marketing strategies.
This strategy is targeting certain customers whose behavior y want to change, and giving
something only to them that can afford which helps to modify their behavior.
LIFETIME VALUE USING CUSTOMER MANAGEMENT PROGRAM
Year 1 Year 2 Year 3
Customers 5,000 3,750 2,963
Retention Rate 75.0% 79.0% 85.0%
Visits/Week 0,68 0,73 0.82
Average Basket $38 $50 $61
Total Sales $6,120,000 $6,843,750 $7,409,213
Cost Percent 83.0% 80.0% 79.0%
Direct Costs $5,079,600 $5,475,000 $5,853,278
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Labor + Benefits 11% $673,200 $752,813 $815,013
Card Program$16, $8 $80,000 $30,000 $23,700
Customer Specific Marketing $61,200 $66,438 $74,092
Advertising 1% $61,200 $68,438 $74,092
Total Costs $5,955,200 $6,394,688 $6,840,176
Gross Profits $164,800 $449,063 $569,037
Discount Rate 1.00 1.20 1.44
NPV Profit $164,800 $374,219 $395,165
Cum. NPV Profit $164,800 $539,019 $934,183
Lifetime Value $32.96 $107.80 $186.84
With the resulting savings, they have boosted programs for his valued customers. The
retention rate has gone up from 70% to 75%
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VARIOUS CRM INITIATIVES
With the increased penetration of CRM philosophies in organizations and the
concomitant rise in spending on people and products to implement them, it is clear that
AIRTEL see improvements to establish long-term relationships with their customers.
However, there is a big difference between spending money on these people and products
and making it all work: implementation of CRM practices is still far short of ideal. Airtel
is recognizing the importance of creating databases and getting creative at capturing
customer information. They Are continous learning how to develop better communities
around their brands giving customers more incentives to identify themselves with those
brands and exhibit higher levels of loyalty.
One way developing an improved focus on CRM is through the establishment or
consideration of splitting the marketing manager job into two parts: one for acquisition
and one for retention. The kinds of skills that are need for the two tasks are quite
different. People skilled in acquisition have experience in the usual tactical aspects of
marketing: advertising, sales, etc. However, the skills for retention can be quite different
as the job requires a better understanding of the underpinnings of satisfaction and loyalty
for the particular product category. In addition, time being a critical scarce resource
makes it difficult to do an excellent job on both acquisition and retention. As a result,
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Airtel has appointed a chief customer officer (CCO) whose job focuses only on customer
interactions.
In this organization, the person overseeing the company’s marketing activities, the VP-
Marketing, has both product management and the CCO as direct reports. The CCO’s job
is to provide intelligence to the VP from marketing research and the customer database
for use by product managers in formulating marketing plans and making decisions. In
addition, the CCO manages the customer service operation. Although it would perhaps
seem more logical for the CCO to report to product management, the reporting
arrangement to the VP-Marketing is a signal to the company of the prominence of the
position. The CCO also interacts with other company managers whose operations may
have a direct impact on customer satisfaction.
The notion of customer satisfaction is being expanded to change CRM to CEM, Customer
Experience Management. The idea behind this is that with the number of customer
contact points increasing all the time, it is more critical than ever to measure the
customer’s reactions to these contacts and develop immediate responses to negative
experiences. These responses could include timely apologies and special offers to
compensate for unsatisfactory service. The idea is to expand the notion of a relationship
from one that is transaction-based to one that is experiential and continuous. As with any
decision with substantial resource implications, a cost-benefit analysis of CRM
investments must be performed.
CREATING A CUSTOMER DATABASE
A necessary first step to a complete CRM solution is the construction of a customer
database or information file. This is the foundation for any customer relationship
management activity. This should be a relatively straightforward task as the customer
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transaction and contact information is accumulated as a natural part of the interaction
with customers. The task will involve seeking historical customer contact data from
internal sources such as accounting and customer service.
Ideally, the database should contain information about the following:
Transactions. This should include a complete purchase history with
accompanying details (price paid, SKU, delivery date)
Customer contacts. Today, there is an increasing number of customer contact
points from multiple channels and contexts. This should not only include sales
calls and service requests, but any customer- or company-initiated contact.
Descriptive information. This is for segmentation and other data analysis
purposes.
Response to marketing stimuli. This part of the information file should contain
whether or not the customer responded to a direct marketing initiative, a sales
contact, or any other direct contact.
The data should also be over time.
CRM RESPONSIBLE FOR MAGIC AT AIRTEL
Though it is continuously spreading its wings, expanding its capabilities, and exploring
new horizons, one rule at Bharti remains unchanged: seek out the world’s best technology
and put it at the service of customers. CRM is part of this process.
WHY CRM FOR AIRTEL
In a telecom services company like Bharti, airtime is considered a product. “It is vital for
them to manage the expectations of their customers and provide them with innovative
products and services in a manner which makes them loyal,”.
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To achieve this, Bharti needed to have the appropriate means. “To better serve their
customers they needed a tool. It is this need that made them to opt for a CRM (customer
relationship management) solution”.
CHERRYPICKING A SOLUTION
Today Bharti is using the Oracle CRM platform. “As part of their vision, they intend to
provide AirTel services anywhere and at any time.
A customer should get the same quality of service no matter which of our call centres he
contacts. This has been the vision, and because of that they have gone in for a centralised
application like CRM. The implementation of CRM also helped Bharti in having a unified
workflow and unified processes across the country.
Before choosing its CRM tool, Bharti evaluated many options. It considered factors like
Proper workflow automation
Facilitation of knowledge sharing
Integration with the billing system.
After a thorough evaluation, it decided to go ahead with the Oracle CRM platform.
BENEFITS
One of the primary things that Bharti has done with CRM is SEGMENTATION OF
CUSTOMERS, which has helped in providing customers more value for their money. It
is important to understand and segregate customer needs depending on the product and
services he is buying.
METRICS
The increased attention paid to CRM means that the traditional metrics used by managers
to measure the success of their products and services in the marketplace have to be
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updated. Financial and market-based indicators like profitability, market share, and profit
margins have been and will continue to be important. However, in a CRM world,
increased emphasis is being placed on developing measures that are customer-centric and
give the manager a better idea of how her CRM policies and programs are working.
Some of these CRM-based measures are the following:
Customer acquisition costs
Conversion rates (from lookers to buyers)
Retention/churn rates
Same customer sales rates
Loyalty measures.
Customer share or share of requirements (the share of a customer’s purchases in a
category devoted to a brand).
All of these measures imply doing a better job acquiring and processing internal data to
focus on how the company is performing at the customer level.
AIRTEL CUSTOMER INITIATIVES
In fact, most cellular players to be the leader, left much to be desired in meeting Telecom
Regulatory Authority of India’s Quality of Service (QoS) standards. In such a scenario,
business intelligence solutions such as analytical CRM can help companies gain a 360-
degree view of the customer’s needs to address a wide range of customer initiatives
ranging from profiling and segmentation, maximising cross and up sell opportunities,
customer retention, customer loyalty and lifetime value.
Using analytical CRM solutions, companies are empowered with answers to questions
such as:
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Who are their best customers?
Which customers likely to leave?
What can you do to retain them?
How can you attract others like them?
How can you improve the profitability of all your customers?
ANALYTICAL CRM SOLUTIONS WORKS
The first step involves creating a central repository of customer data. This is created by
extracting, cleansing and transforming data from multiple sources such as the billing
systems, call detail records, customer demographic and tariff data. Once all of this data is
organised, consolidated and stored in a repository that is scaleable and extensible, it is
ready to be used for predicting the propensity of churn for a possible segment of
customers or an individual customer.
The churn model that is built using predictive capabilities throws up a score or a number
that ranges anywhere from 0 to 1 for a particular customer. This number typically depicts
the likelihood of a customer to churn. For example a number like 0.9 shows that the
propensity of a customer to churn is extremely high.
On the basis of such information, and in keeping with various other parameters like the
average bill value of a customer, payment patterns, usage, etc., an organisation can
strategies on various initiatives to retain the customer. This initiative is increasingly
gaining strategic importance in telecom on the basis of the fact that it costs 3 times over
to acquire a new customer vis-à-vis retaining an existing one.
Additionally, business intelligence (BI) solutions can also help to optimize network
planning and capacity, analyse, validate and monitor network fraud, run effective and
efficient marketing campaigns across multiple channels that result in higher levels of
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customer satisfaction and revenue stimulation. In light of the above it is important to
arrive at a holistic view of BI. BI encompasses customer intelligence, supplier
intelligence and organisational intelligence to deliver true enterprise intelligence.
Customer Intelligence is thus a subset of BI and includes analytical CRM, marketing
automation, marketing optimisation and interaction management is a integral component
of BI. Thus in an industry where your customer is your competitor’s prospect and an
organisation as good as the last call, it is imperative to maintain optimum levels of
customer satisfaction in order to foster customer loyalty and maximise lifetime value. The
time for customer intelligence has arrived!
DATA ANALYSIS SUPPORT
Area of telecommunication sector is predetermined to take advantage of data analysis
methods, because it continuously operates with huge streams of data changing
dynamically every second when customers are using the services. Competition for every
customer is very crucial here, independently if the company is GSM service operator or
stationary phone connection provider. Due to wide public access to telecommunication
services the number of potential customers is very large, it corresponds with the number
of citizens in active age. Furthermore, acquiring and keeping the customers directly
translates to company's profit. Therefore the proper understanding and care of customers
is essential and this can not be done without intelligent exploitation of the available data.
CREDIT SCORING
Credit scoring is regarded as one of the most successful data modeling applications in
business area. It involves an evaluation of your customers based on their application and
behavioral data. This analysis can be used in various situations concerning any kind of
credit offering to a customer, for example renting a valuable products or devices, mobile
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phones exchange, deciding on new contracts length with the customer, evaluation and
tolerance of billing delays, credit scoring for leasing purposes etc
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CUSTOMER LOYALTY / CHURN ANALYSIS
The goal of this analysis is to identify customers that are likely to leave company and join
the competition, what is especially critical in highly competitive market of
telecommunication sector, where profit is directly related to number of customers and
loosing a customer means he/she will most probably use the competitor's offer. Churn
modeling helps to increase the loyalty of customers towards your company in several
ways. Discovering the factors causing a churn enables a company to address them
properly. Additionally, separating the particular group with high churn likeliness allows
to focus more on your loyal customers.
SURVIVAL TIME ANALYSIS OF A CUSTOMER
Survival analysis estimates life time value of a customer and his/her churn hazard over a
time (a churn means a customer is turning to different product provider). The analysis
describes distribution of the survival time for individuals in a given population,
investigates the strength of parameter influence on expected survival time and allows to
compare survival time distributions among different subpopulations. By using this
method the company can get valuable insight into customer behavior and find ways to
increase his/her survival time.
Especially within telecommunication companies, the survival time analysis finds a wide
set of applications e.g. deciding when is the best time to update a contract with customer,
designing new contract duration and other conditions customized to specific client.
FRAUD DETECTION
Fraud detection has proved to be powerful method capable of saving significant amount
of money to a company as well as maintaining good relations with their customers.
Detecting the frauds means identifying suspicious fraudulent transfers, orders and other
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illegal activities against your company. Models of fraud scoring can be divided into
application and behavioral scoring. Application fraud scoring detects suspicious clients at
early stage of signing a contract with the company based on data from the client's
application form. Another model - behavioral fraud scoring, is built on data collected
during the client'slife time activities e.g. billing data, usage of services or history of
actions. Fraud detection is often applied to avoid telecommunications fraud (various
misuse of communication services), computer systems intrusion, Internet transaction
fraud, telemarketing fraud, identity theft etc.
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CRM IMPLEMENTATION TAILOR-MADE SCHEMES
SEGMENTATION OF CUSTOMERS - AirTel is now able to give its customers
more value for money.
Able to provide customers different schemes and services depending on airtime usage.
Customer is a heavy user then they have some specific schemes; for normal users they
have other schemes.
They have also managed to segregate their workflow with the help of the CRM tool.
CHALLENGES - Roll it
The biggest challenge for Bharti was to have a unified process in place. Once this was
done they faced the challenge of imparting training. “When you go in for such a large-
scale implementation you will definitely have problems,” . They also had certain
technical difficulties during implementation, but were able to overcome them.
CRM STRATEGY:
The CRM strategy at Airtel revolves around two aspects:
Operational CRM
Analytical CRM.
Operational CRM is about helping their call centres in the workflow part, helping them
in their day-to-day activities.
Analytical CRM provides staff with the required information on customers; this is used
for business development activities.
Altogether they help Bharti provide better services to its customers.
MANAGING CUSTOMERS FOR VALUE ENHANCEMENT
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AIRTEL believes in , “don't talk about exceeding customer satisfaction - that's passe - the
time has come to `dazzle the customer'. But to do that, first you must get customer
relationship management (CRM) in place. “
For Airrtel , "Managing customer relationships is not only complex but is also multi-
faceted and thus calls for an inter-disciplinary approach."
Particularly, as in the New Economy, the customer has become very demanding and the
emphasis needs to be on being consumer-centric. "Technology solutions as applied to
various front-end functions could aid in building a viable link between the organisations
and customers irrespective of geographical separation. This has to be backed with
appropriate systems and processes to mine the right type of data by the right function in
an organisation."
Besides technology, systems and processes, another important link is human
resource.
ONCE CRM IS IMPLEMENTED, WHAT MAKES IT CLICK
"The success of CRM hinges on how it is implemented". Uneven focus is bad for its
implementation. Also in the new economy, targets and objectives change every few
weeks. The priorities then become very different,'' he added. The solution lies in putting
in place a set of people across the organisation focused on implementing CRM. What is
required is building relationship over a period. This could be the most integral approach
and go a long way in harvesting CRM profitability. For CRM to succeed, enterprise-wide
solution is required - this was the common refrain at the meet.
BECAUSE GOOD RELATIONS MATTER
In a competitive telecom marketplace, where operator service offerings look deceptively
similar, the only differentiator is the quality of customer contact responsiveness through
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improved internal process management. The expansive nature of the operators’ business
processes coupled with an ever-increasing subscriber-base unwittingly introduce service
errors, which could adversely impact customer retention. Customers would unlikely talk
of a satisfying experience but would definitely let out a customer service failure,
impacting operator credibility.
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PEOPLE STRATEGIES AT AIRTEL
"If CRM is the key, HR would be the nerve centre for any CRM activity."
ESOP now a vibrant tool for attraction and retention : Lowering of attrition.
WORK CULTURE
The work culture at Bharti Mobile is one that is open, informal and performance-
enabling. 'Speed' (chosen over Perfection), innovativeness, respect for people,
empowerment with accountability and entrepreneurship are some of the key ingredients
of the organization culture.
SKILLS THAT ARE IN DEMAND AT AIRTEL AT ANY POINT OF TIME
Airtel strongly believe that 'softer skills' are extremely important to deliver error-free
service to customers.
Working in teams
Inter-personal skills
Communication skills
Creative thinking
Entrepreneurial skills etc.
Basic domain knowledge
Certain functional skills like Network Management, Revenue Assurance, Risk
Management and Collections
PEOPLE WITH WORK EXPERIENCE OR A FRESHER
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The pace at which the company are growing demands more people with requisite
experience across functions. However, do employ freshers as a strategy to have trained
people for the future growth needs. This year as a group hired Engineer trainees and
Management Trainees from top management institutes for various group companies.
RECRUITEMENT PROCESS
As a Corporate policy, Airtel works with a select panel of Consultants/ Search
Agencies across the Country.
Also attracts a lot of people applying to us on email, by post and walk-ins.
Apart from this, also have employee referrals coming in.
They have a documented process for recruitment.
Airtel primarily look for candidates with high energy levels, with a value system aligned
with ours, and having the 'softer skills' mentioned above. Only such candidates are
further interviewed.
TRAINING - POST RECRUITMENT
All new employees undergo a comprehensive induction programme.
Also take formal feedback for continuous improvement.
For employees joining in Customer Services, provides job training for two weeks
ending with certification.
This year, for Management trainees, we have drawn out a detailed 52-week training
schedule. The assignments to be carried out are well scoped and with clear learning
objectives and have name of the guide and the names of 'Mentors' for each of the trainees.
CAREER TRACKS OFFERED
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Bharti strongly believes in adding value to employees' experience. They have, in a
planned manner, moved people both laterally and vertically within the company and
within the group companies. Being in a very exciting expansion and growth phase
currently, career enhancement opportunities for employees at all levels/ all functions are
huge.
STEPS TAKEN TO ENSURE THAT PEOPLE HAVE A GOOD EXPERIENCE IN
THEIR WORKING ENVIRONMENT
A good working environment is a fundamental requirement in our business. Airtel ensure
that the employees are 'at ease -at work' and have no constraints coming in their way of
'delivering error-free service', be it to external customers or internal. The key challenge
here is to make every step in the process that much more simpler and easier for their
employees to follow.
The launching of a 'Quality Movement' across the organization last year has been highly
successful in
Mapping and establishing 'processes'
Establishing role clarity, resulting in reduced 'hassles' for all.
IMPORTANT ELEMENTS OF A GOOD WORK ENVIRONMENT
Informality
Fun
Work life balance
Basic welfare facilities
They have evolved, over the last one year, into a strong, well-knit one big family of
people with a mission to provide 'world class service' to their customers.
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One other important factor is 'employee communication'. The management strongly
believe that sharing company information, performance, plans, listening to employees'
views, recognizing teams and individuals in an open forum, helps developing credibility
and thereby mutual trust. This impacts the work environment very positively. Also, the
facts -that Airtel had huge successes in the last one year and that 'Bharti' is always in the
media - also compliments efforts to boost the morale and help employees take pride in
working with Bharti Mobile.
Unique HR policies
Unique policy like 'HR Reach out'. Every HR member is assigned a department. He/she
works with the department very closely not only to proactively enable employees perform
but also to partner with the business and influence business processes and policies.
Few more would be the 'Customer Contact Programme'. Once a month, all senior
managers reach out to customers to get a first hand feel and feedback from them.
Similarly, some senior managers go and meet channel partners, meet walk-in customers
to gain feedback on their experiences with AirTel.
Also have forums like 'Knowledge Management Meets' wherein the heads of a specific
function from other mobility circles in the group meet to share best practices.
BUILDING OF COMMITMENT FACTOR IN EMPLOYEES
Airtel know that only motivated and empowered employees give 100% commitment.
The role of HR in Bharti Mobile is to align organization goals with employees'
aspirations, develop commitment, passion and a positive attitude, build employee
capability and so on.
Thus, their strategies and objectives flow from our role. Few key objectives have
achieved and are working on, are to have clear job descriptions, performance objectives,
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training to enhance job performance and managerial skills, ensure internal equity in
compensation and benefits, have a sound rewards and recognition scheme, involve
employees in reviewing and influencing policy and process changes through team
working, have open communication forums where in employees are encouraged to ask
questions.
Also conduct
Employee Satisfaction Surveys
Departmental strategic matrices developed to work on employee feedback, etc.
These initiatives have helped immensely in building credibility with employees and gain
their 100% commitment to performance.
PREPARE PEOPLE TO DO IT RIGHT THE FIRST TIME ITSELF
The essential pre-requisites are a right attitude, commitment to quality and knowledge.
Airtel formally rolled out a 'Quality Movement'. If they have to 'deliver error-free services
right from the first time, every time', then need to consistently conform to requirements of
the customer. The aspect of 'How to' is addressed by the 'Quality Education Series' (QES)
sessions, which all employees go through. This and the other programme on QC Tools &
Techniques helps employees develop and document processes using the process model
worksheet, enter into 'service level agreements' with internal customers and conform to
their requirements.
Appropriate reward and recognition programmes to support this initiative, customer
contact programmes, customer meets, visits to AirTel Connects, to upcountry locations,
cross- functional knowledge building, customer-first training module, various team-
building initiatives helps to deliver error-free services to their customers.
ATTRITION RATE & EMPLOYEE RETENTION
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Attrition rate annualized is 18%. This may be far lower than what it was a year ago, but
are still hopeful of bringing this to around 14 to 15% over the year.
One of their key strategies focuses on Retention. They work very hard to retain key
contributors. They acknowledge their efforts and provide fast track growth, additional
percentage increase in compensation, etc. A detailed retention policy is being worked
upon currently which for instance will include inviting such employees to meetings meant
for senior managers, additional leave, additional bonuses etc.
FACTORS THAT ATTRACT JOB SEEKERS
'Speed' is the main ingredient for success and when communicate this to prospective
candidates, they are very attracted to this way of working. Also, their brands AirTel and
Magic are very powerful, have been conceived very well, have high visibility and recall.
SEVEN STEPS TO PERFORMANCE THROUGH PEOPLE
Leadership that Moves People
People Relationship Management
Alignment and Communication
Training
Measurement
Technology
Error! Hyperlink reference not valid.REWARDS OF PEOPLE PERFORMANCE
MANAGEMENT
Organizations focused on fostering customer loyalty via a motivated work force will
outperform those that aren't.
BENEFITS
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The benefits include:
Higher profit margins
Increased sales
Increased market share
Greater net income per employee
Lower costs
Better asset utilization
Increased innovation
Fewer Accidents
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BUSINESS PROCESS SUPPORT
As the leading provider of mobile services across India, Airtel is an Indian wireless
“super brand” within a fiercely competitive mobile telecommunications market. When the
company needed a single enterprise-wide billing system to support the acceleration of its
postpaid mobile business, it turned to CSG Systems to deploy its Kenan billing and order
management systems.
While the Kenan system ensured that Airtel delivered the high-quality customer service
and products it is known for, the operator sought to do more to continue to maintain its
No. 1 status in the market. Airtel wanted to optimize every point within its infrastructure
to further enhance operational efficiencies and maximize its investment. By infusing
industry best practices into its organization and leveraging its billing operations to its
fullest potential, Airtel knew it would be able to stay ahead of its competition.
To assist with this challenge, Airtel turned to CSG’s billing experts to work side-by-side
with Airtel staff on-site to meet its objectives. By leveraging CSG’s expertise in billing
operations, Airtel could focus on what it does best: delivering unparalleled mobile
services to the Indian market.
CHALLENGE: OPERATE TO ACCELERATE
While the Kenan systems were in place to run Airtel’s entire business using a two
instances billing and order management platform for postpaid and wireline business, de-
centralization of Airtel’s business made the operations—and optimization—of these
systems more challenging. Under India regulation, each business region, or “circle” was,
essentially, a separate business entity with distinct business owners, thus opening the door
for duplicative, competing, and/or redundant processes.
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Under this de-centralized organization, Airtel realized that it needed to deploy a cohesive
and coordinated approach to operating its systems. Airtel also wanted to ensure its longer-
term self – sufficiency and not build a model that relied on third-parties for support.
Airtel turned to CSG experts for help. Under a six-month engagement, CSG’s
Professional Services team worked with Airtel staff to design to develop a world class
billing operations organization across India and provide comprehensive day-to-day
support for its Kenan®/BP billing engine and Kenan®/OM order management systems.
CSG also played a key role in coordinating numerous other strategic initiatives, such as
developing standard operating procedures, enhancing business processes to optimize
efficiency, providing best practice recommendations on revenue assurance and
creating/implementing an overall architectural framework for its billing and order
management infrastructure that will scale to support Airtel’s rapid growth over the
coming years.
SOLUTION: OPERATE, ALIGN, AND TRANSFER
Bharti’s Airtel engaged with CSG’s Professional Services Organization through the
Operate, Align and Transfer arrangement, a model by which CSG manages billing
operations on a short-term basis and then transfers it to the operator.
Under this model, CSG assumed temporary ownership for Airtel’s postpaid billing
operations. During this timeframe, Airtel’s operations team reported into CSG,
learning on-the-job best practices and tuning processes daily. What ensued was a
complete analysis of the organization (design & capabilities), the processes, the
underutilized components of the solution, the revenue leaks, and the implementation
of critical business projects to optimize Airtel’s investment and build a solid,
centralized operational foundation for Airtel’s future.
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The Operate, Align and Transfer model is part of CSG’s™ Outsourced Operations
offerings, which leverages the company’s world-class expertise in managing and
operating billing and customer care systems and extensive product portfolio to deliver
a comprehensive solution to telecommunications operators worldwide. CSG™
Outsourced Operations includes a variety of approaches including day-to-day
management on-site, remote application management, managed applications and
hosting and traditional service bureau.
CSG’s Outsourced Operations offerings are tailored to meet the unique business
needs of an operator by delivering a wide range of outsourced services and solutions.
With this approach, operators can rely on CSG to manage all or segments of their
billing and customer care infrastructure through on-site or service bureau models.
Through this offering, operators can also choose if and when they wish to take over
the day-to-day operation of these systems.
RESULTS:
Leveraging CSG’s Professional Services Team, Airtel made numerous enhancements to
its operations, including:
IMPROVED OPERATIONAL EFFICIENCIES AND QUALITY OF CUSTOMER
SERVICE
Increased rating timeliness by 90%. This enables Airtel to provide current details on
what the customer has spent, and as a result gives the operator better fraud and bad
debt management capabilities.
Created a Zero Billing Delay environment across all circles, providing a more
predictable and reliable revenue stream for the operator.
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By streamlining online data management and reducing the level of communications
required between ordering systems and switches, Airtel reduced the amount of time it
took to provision an order by 60% (from 12 minutes to less than 5 minutes).
Improved rating, roaming & billing performance from 50%-800%
Enabled business reporting intelligence by deploying automated intelligent business
reporting tools, reducing the number of daily reports from 1,300 hard copy reports to
just 83 that can be viewed via the Web across Airtel’s organization.
The CSG team worked with the Airtel sales & marketing teams to explore software
functionality previously underutilized by Airtel (rate plans, discounts, payments,
revenue treatment) and develop strategies for how these tools could be used by Airtel
to significantly improve Airtel's competitive advantage at little to no additional cost.
By centralizing the way in which its billing and IT operations were managed, Airtel
was ahead of its competitors when the Indian government enabled operators to obtain
a universal license that allowed for a more centralized business structure.
OPTIMIZED SYSTEM AND RESOURCE PERFORMANCE TO STREAMLINE
COSTS
Reduced the number of bill cycles by 80% and engineered an on-time billing delivery
pan-India to improve cash flow and resource utilization.
Implemented industry best practices via on-the-job training and effective knowledge
transfer program. AirTel now has in place a sophisticated internal billing operations
team trained to optimize system performance and fully tap system capabilities.
Besides operational efficiency and cost-savings, this also enabled increased time-to-
market with innovative market offerings.
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Engineered and implemented a multi-year hardware infrastructure to fully optimize
the company’s hardware investment.
Designed best practice revenue assurance processes and utilities.
Implemented more than 30 standard operating procedures with clearly defined roles
and responsibilities.
Delivered end-to-end system performance improvements
CRM REFERENCE MODEL
This reference model is logically layered model that includes touchpoint, business
application, process, CRM, Data management and Decision support layers. It was
developed as a result from customer feedback and extensive research in the marketplace
on Enterprise
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TOUCHPOINT AND PRESENTATION LAYER
This layer presents information to the business end-user through a communication
channel-specific device. The presentation and navigation displays a consistent “look and
feel” for input and output information in the format required by the device (e.g., browser,
terminal, keyboard, keypad, phone) that is consistent across different business processes
and their functions. Navigational aids will be presented to human interfaces; buttons,
hotspots, etc on windows or browser (HTML) based interfaces, menus or other simpler
interfaces such as 3270 terminals, or interactive voice for voice channels. The navigation
function of a front-end helps the user to control the usuage of, or switch between different
elements of the presentation surface, e.g., activate a specific window with the mouse, or a
select a presentation object specific function with the right mouse button. In addition, this
layer will determine the kind of communication channel being used, and will transform
the information going to and from the process layer to the required interfacing of this
communication channel, e.g., Text-to-speech for Phone/IVR, CGI/Java for Internet, etc.
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It will also prepare the user identification and process selections required by the next
layer.
BUSINESS APPLICATION LAYER
This layer determines the communication touchpoint being used, and transforms
knowledge from the touchpoint to the Application such as Billing.
PROCESS LAYER
The process layer provides services to different communication touchpoint- specific
devices, from a single implementation of that specific device. The process layer is
separated into a Contact, Context handler and personalization. The user accesses
information through a communication channel-specific front-end; the user’s authorization
and profile together form a context under which all interaction between the user and IT
functions that form and support a business process are carried out.
The Contact and Context Handler initiates and terminates the communication
channel/user dependent context with a process/routing engine. It registers the context to
the Contact Management, Segmentation, Routing, Resource Management and Channel
Management making it known to the underlying layers. Personalization executes the
business logic initiated from specific context and selects a set of business rules specific to
the business process.
CRM LAYER
This layer represents databases that consist of the single customer view, integrated
contact/dialogue, customer profile, and content information. This layer also provides for
the ability to perform analytics and reporting on the customer experience by using the
variety of knowledge gained from all customer activity.
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DATA MANAGEMENT LAYER
The data management layer is the first layer that has no direct link to the business
processes. It represents purely IT centred objects:
Transactions (get data x for user y and reservation z), direct read/write operations (read
user profile u), etc. Its main function is the separation of data storage from business
process functions. This is done by wrapping the calls to the new or legacy systems and
presenting
them as objects to the higher layers. Here, wrapping means transforming data in a
predefined (unchangeable) format to the object representation required by the object
oriented environment. This layer may also use existing data warehouse management
services.
DECISION SUPPORT LAYER
The AIRTEL has been a leader in implementing various decision support applications in
order to determine who their best customers are and what best services to offer them.
Regulatory changes have made this industry so competive that many existing databases,
campaign management applications, etc. exist and need to be leveraged in the upper
layers of this model.
VERTICAL LAYERS
The vertical layers of this reference model provide services that are required by all the
horizontal layers.
DISTRIBUTED APPLICATION AND SECURITY COOPERATION SERVICES
In order to support the mangement of objects between the various layers some
generalized support will be required. DCE-services, Name-services, etc. are other
examples of distributed services. Security services establish an end-to end secure
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environment for network and system infrastructure, applications (business processes and
underlying activities), and the data layer. The following services have to be provided
(following the definitions of ISO 7498-2): Identification and Authentication,
Authorization,Protection, Management, Audit, and Non-repudiation.
IT SERVICE MANAGEMENT
All components in the model will have to be managed for availability and performance
(Service Level Agreements). IT management processes and technology must be in place
in order for an IT organization to deliver quality services to its customers .
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TECHNOLOGY NETWORK INFRASTRUCTURE - IT
Like any other telecom service provider, Bharti also considers information technology a
key driver of its business. “For telecom, IT is like bread and butter.
IT plays two significant roles
It works as a support system
It can also be a business driver.
Thus IT is very important at Bharti.
The service provider has a WAN set-up in place; it has a mix of leased lines and E1 and
E3 lines for wide area connectivity. The company also has an extranet in place through
which it extends different applications to its dealers and partners. They have an extremely
large infrastructure based on products from multiple vendors. This includes a range of
high-end servers from Sun and HP. “In the telecom business volumes are very large.
Have millions of records and have to process them everyday, so for at Airtel storage is in
terabytes”.
Bharti also has a storage area network (SAN) in place, and has selected EMC as the
storage provider for the SAN. The main data centre is located in Gurgaon, Haryana. The
company uses high-end routers from Cisco, and is in the process of implementing a
disaster recovery (DR) set-up. As far as software is concerned, some of the applications
that are running on its network are
billing
fraud management
revenue assurance and data warehousing.
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They also have some internal-facing applications like Oracle Financial and Oracle
HRMS.
TOOLS:
Airtel has been one of the earliest adopters of software to control churn in the Indian
market. The company implemented SAS Institute’s customer retention solution .
Business Intelligence (BI) is an umbrella term for a set of tools and applications that
allow corporate decision-makers to gather, organise, distribute and act on critical
business information.BI applications include the activities of online analytical processing
(OLAP), report generation, decision support systems (DSS), query and reporting (Q&R),
statistical analysis, forecasting, data warehousing and data mining. Some of the popular
BI tools are:
Multi-dimensional analysis software, which is also popularly known as online
analytical processing (OLAP) tools. This software gives the end user an opportunity
to look at the data from various angles.
Data Mining Tools - The software automatically searches for significant patterns or
correlation in the data
Query Tools - They allow the user to ask questions about patterns or details in the
data.
For Airtel, Business intelligence is the process of getting enough of the appropriate
information in a timely manner and usable form, and analyzing it so that it can have a
positive impact on business strategy, tactics and operations. BI applications allow users to
quickly and easily view data on essential metrics such as sales, inventory and customer
activities. This information can be dispersed through a dynamic interface, preferably one
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that is web-enabled. If a dynamic interface is implemented, users can explore the data
from different perspectives or levels of detail.
CUSTOMER RELATIONSHIP MANAGEMENT - GIS
In today's competitive telecommunications market, for AIRTEL , customer service is the
number one differentiator for companies. Customer relationship management (CRM)
applications improve the relationship between the company and its customers. Timely
service provisioning, response to customer queries, and reporting on network
performance are aspects of CRM. With GIS, call center operators can access all the
information on a customer and the associated network based on location. Databases
containing information on outside plant infrastructure, signal quality, and equipment can
be integrated using GIS and made available using a corporate Intranet.
In CRM, Tier 1 handling means the customer's issue is resolved with the initial call. Tier
2 calls require initiating a trouble-ticket and obtaining additional information. Carriers
who have successfully implemented GIS support for CRM achieve higher Tier 1 handling
and customer service is performed more quickly and economically. With CRM contacts
at an all-time high, improving CRM operations can make a big impact on the bottomline
of a carrier. In the wireless sector, "churn" refers to the rate that customers jump from one
service provider to another. For many carriers, customer churn is the single largest cost
factor. GIS improves the speed and quality of contact handling, augments customer
satisfaction, and reduces churn.
BUSINESS CONTINUITY STRATEGIES FOR CUSTOMER RELATIONSHIP
MANAGEMENT
With the growing adoption of Customer Relationship Management (CRM) initiatives in
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just about every type of industry, call centers today are much more than cost centers.
They are increasingly considered strategic business assets."
Call centers helps the company achieve customer-centric objectives as well as provide
world-class customer service and technical support. CRM is designed to optimize
profitability, revenue and customer satisfaction by organizing the business around
customer segments and encouraging customer-satisfying behaviors.
For many companies, call centers represent the principal link between their customers and
themselves. But for Airtel , it’s a Successful call center differentiate companies, directly
impact their annual turnover and competitive position, and are critical in achieving CRM
goals.
As a key element in CRM, call centers use three building blocks to satisfy their
customers:
People
Technology
Process.
People - The human element is probably the most important component in a call
center.
Technology - Call centers use network services to connect customers with the call
center, telecommunications systems including Automatic Call Distributors (ACDs)
and Interactive Voice Response (IVR) systems; and IT products such as workstations,
computing platforms, Local Area Networks (LANs) and Computer Telephony
Integration (CTI).
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Process - To make everything work harmoniously and cost-effectively, and to satisfy
CRM objectives, a series of processes are needed to define how systems and people
work together.
With the increased emphasis on customer service, the bar has been raised on customer
expectations. Customers expect 24x7 availability, as well as e-mail and Web integration.
Access and availability are among the keys to top-drawer customer service. But what
about the relationship of these three elements? For today's high-tech call center, people,
technology and process are truly integrated. The loss of any of the key elements - whether
accidental or deliberate - can put call centers at risk.
RISKS TO PEOPLE
Successful call centers base their success on how well their staffs perform. If call center
staff members are unable or unwilling to perform their assigned tasks, the call center is at
risk.
RISKS TO TECHNOLOGY
Call center systems such as ACDs and IVR are at risk from fires, floods, loss of power,
system failure, component failure, loss of data (with no backups), vandalism, and human
error. Voice network services are at risk from cable cuts, power failures, security
breaches, and service interruptions. Data communications equipment at risk includes
routers, hubs, switches, and power supplies. Data network services, such as switched or
private circuits, or Internet-based services, face the same risks as voice networks.
Business applications require hardware, such as mainframes, mid-range systems, and
servers, plus business applications, utilities, and web-based programs. Threats to
hardware are the same as for telecom equipment, while human error, viruses, security
breaches and theft of information threaten software.
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RISKS TO PROCESS
Without documented procedures on how to operate, call centers cannot function
smoothly. The overall business process, e.g., Customer Relationship Management, is
comprised of numerous sub-processes and functions, each of which link together in
various combinations.
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CRM STRATEGIES
PRINCIPLES FOR BUILDING STRONG CUSTOMER RELATIONSHIPS
How to acquire, strengthen, and retain strong customer relationships in the era
Principle 1: By knowing more about the customer value and anticipating relationship
needs better than when the customer was involved in a high-touch relationship.
Principle 2: Consolidate and make available all customer interaction information from all
channels/touchpoints
Principle 3: Develop a customer centric infrastructure that can consistently support the
customized treatment of each customer.
Principle 4: Assign dedicated people, process and technology resources to achieve
profitable results
AIRTEL’S CUSTOMER RELATIONSHIP MODEL
Developed a Customer Relationship Model based on experiences attained from CRM
project engagements globally. The Model shows that the customer relationship is
strengthened by Relationship Building tactics, which are continuously measured through
time. The end result is a strong customer relationship, which lead to acceptable customer
loyalty, profitability and retention. Success criteria such as share of wallet, profitability
and cross-sell rations are also applied as part of the continous measurement to ensure that
Business Case requirements have been achieved.
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SOLVING CUSTOMER RELATIONSHIP MANAGEMENT INVOLVES
ADDRESSING A PRINCIPLES-BASED VALUE CHAIN
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Technology
Data Warehouse/Data Mart
Extract & TransformationDatabaseOLAPData MiningStatisticsQuery & ReportingWarehouse ManagementMetadata Management
High-End ServersIT Infrastructure
NetworkingNetwork & Systems
ManagementInternetWeb WarehouseSecurity
Integration TechnologiesOperational Data StoresCall Center & MessagingMiddleware
Data & Applications
Application Specific Data ModelExternal Data ProvidersData Hygiene / Enrichment
Cleansing & ConditioningHouseholding
- Segment of One MarketingCustomer ValuationCustomer Risk AnalysisProfiling and SegmentationPredictive Behavior ModelingTargeted Marketing & CampaignManagementCustomer Contact ManagementCustomer ProfileContent ManagementCatalogue Management
People & Activities
Business Strategy
Business Process ReengineeringChange ManagementProject Management
- Application Implementation- Data Warehouse/ Data Modeling
Warehouse ArchitectureLogical, Physical DesignChannel IntegrationDB Implementation
- IT InfrastructureIT ArchitectureNetwork Design, Planning & ImplementationNetwork & System Management
-On-going Customer Support
CHURN MANAGEMENT
What are the commonest reasons for customers to switch from one service provider
to another?
Some of the common driving factors for churn are
poor performance,
poor customer care,
rate plans and
handset issues - GSM or CDMA service.
Regarding churn, something interesting that’s been noticed is that it’s much higher in the
case of pre-paid services, with a churn rate of 8:1, than in post-paid service where the rate
is 3:1.
The idea of pre-paid cards is that the customer will mature to become a post-paid one and
so it pays to retain him too. After all, it’s five times more expensive to acquire a new
customer than to retain an existing one.
HIGH CHURN RATES
The industry standard is around 2 percent a month. The cost of acquiring a new customer
is more than that of retaining one. The cost of acquiring a new customer is more than five
times that of retaining an existing customer. Even if you calculate a churn of 2 percent a
month, an operator is losing 24 percent of its customers every year. Whatever the
numbers, the fact remains that the telecom industry’s bottom line is getting affected
significantly thanks to the high churn rate.
WHY IT HAPPENS
Usually, such a high churn rate is witnessed in more mature markets where operators try
to attract customers from competitors since market growth is saturated. But with one of
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the lowest telecom penetrations, the Indian market is anything but mature. Then what are
the reasons for this trend?
Many subscribers shift to another vendor due to brand image. Beyond the brand image,
higher churn is generally attributed to the numerous tariff options available to customers.
A customer may also churn due to billing disputes with a particular vendor—billing fraud
also comes into play. More than tariff plans it is the quality of customer service that
prompts a customer to churn or remain loyal. In the current market scenario there is
hardly any difference in offerings, prices and quality of service offered by different
operators. Cut-throat competition has ensured that there is not much difference between
the tariff plans offered by different vendors. This is where customer service and value-
added services come into play. If an operator doesn’t anticipate market needs or does not
provide value-added services offered by the competitor, then the customer is likely to
churn.
Other than this, some of the key factors that encourage churn are inadequate network
coverage, which includes dropped calls that occur in places where network coverage is
thin and blocked calls that occur when the demand for network services exceeds capacity.
The churn problem is more prevalent in the prepaid segment, which today accounts for
the vast majority of Indian cellular users. The prepaid customer is more price-sensitive
than the post-paid one. With rentals as low as Rs 300, customers with low usage prefer
prepaid cards. Also, students and those who like to experiment with different networks
prefer the prepaid offering.
Bharti Cellular reduced its churn from 3 percent to 2 percent with immense positive
impact on its bottom line after deploying the churn management solution SAS. Today,
they can predict with 80 percent confidence, which customer will churn. Internationally
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they have reached accuracy levels of 90-95 percent. But customer variables keep
changing. Hence the solution has to be continuously fine-tuned to improve accuracy. SAS
offers a total end-to-end customer retention solution, which supports the whole process of
managing churn—right from gathering and warehousing data to predictive churn
modeling to reporting and distributing actionable results to decision makers.
The solution enables an operator to gain a better understanding of the variables that
influence customer churn. The solution predicts a customer’s likelihood of cancellation or
switchover by scoring them on a scale of 0 to 1. If a customer scores 0.73 it means there’s
a 73 percent chance of his churning. The lower the score, the more content the customer.
Once the scores are known, it is easy to figure out which customers are likely to switch.
The solution provides the telecom company with a sliced and diced view of the customer
base, thereby empowering it to treat each customer differently as per needs. The customer
attributes typically considered in a churn analysis can be broadly categorised into
customer demographics, contractual data, technical quality data, billing and usage data
and events-type data. But the most commonly used historic variables include the time a
customer spends on air, the number of calls he makes and the revenue generated from that
customer.
The predictive information becomes crucial as it gives the service provider a window to
proactively fix the glitches in service and contain churn, thereby improving bottom lines.
The solution also helps identify cross-sell and up-sell opportunities, which can have a
further positive impact on the operator’s bottom line. Once they have identified the
customers who are likely to churn they can take immediate measures to retain at least 85
percent of them.
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POSTPAID CHURN SOLUTIONS THAT WORK
Optimising subscriber acquisition costs
Managing retention costs healthily
How do you keep your customers with an effective pricing dimension?
Matching the right customer profile with the right marketing bundle creatively
Learning points from past campaigns
EFFECTIVE CHURN MANAGEMENT AND PERFORMANCE
MEASUREMENT FRAMEWORK
Exploiting historical churn data and optimising the churn prediction
Structuring a strong churn management framework
Measuring the effectiveness of your churn management strategy in terms of:
Methodology
Results
MINIMISING CHURN & BUILDING CUSTOMER PROFITABILITY
POSTPAID CHURN SOLUTIONS THAT WORK
Optimising subscriber acquisition costs
Managing retention costs healthily
How do you keep your customers with an effective pricing dimension?
Matching the right customer profile with the right marketing bundle creatively
Learning points from past campaigns
COMPREHENSIVE APPROACH TO CHURN CONTROL IN HIGH GROWTH
AND COMPETITIVE MARKETS
Acquiring quality customers
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Using new customer induction and expectation management as a retention tool
Managing monthly payment cycles to minimise defaults
Engaging channels to expand your reach for your retention programs
Customer retention
Revenue stimulation
Direct customer communication
All these enhancements successfully changed the customer retention paradigm from a
reactive to a proactive one resulting in a continuous decline in postpaid churn over last
year leading to an all time low churn.
BEST WAYS TO PREVENT THESE HIGH RATES OF CUSTOMER CHURN
Effective customer service could be a deterrent to churn.
Branding and service differentiators also help in taking customers away from
competitors.
proper operational and analytical CRM tools in place that would help segment and
analyse customer behavious and predict their propensity to churn.
It is necessary to proactively strategise and service customers so as to retain the high
value ones.
For Airtel , Analytical customer retention solutions would help identify the high-, mid-
and low-value customers and the valuable ones who are most likely to cancel services,
and their reasons for doing so. They would also help in better campaign targeting and a
more focused strategy. The multidimensional data base (MDDB) that Airtel has, let
internal sales and marketing groups research customer information from their desktops .
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CUSTOMER ACQUISITION
Steps:
Identification of potential customers
Influence the target customer buying behavior
Customer acquisition
STRATEGIES:
Introduction of a new tariff plan with different slots like leisure lifestyle, executive and
premium for postpaid customers. AirTel also offers different tariff plans to different
segments like students, professionals, etc.
Airtel has also implemented an e-CRM platform to create a central database of customer
information, to enable pan-India access and service delivery.
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OTHER MEANS
Airtel has introduced a plethora of value-added services to increase customer ‘stickiness’.
The common services offered by the operator include SMS, group messaging, voice mail,
caller line identification, Hello tunes, GPRS and even multimedia messaging. Other than
this, different service providers have introduced unique services for certain segments of
customers, depending on their usage patterns.
Operators have also introduced closed user group (CUG) services for corporate that want
to provide employees with cell phones but also want to restrict their usage. Operators
even offer special pricing for calls made within a limited group.
Airtel also offers various mobile banking services like balance enquiry, cheque book
requisition, bank statements, etc, free of cost.
CUSTOMER DEFECTION
Customer-focused marketing technology is developing rapidly: The term “customer
database” is outdated. It has been found that companies, which reduced customer
defections by 5 per cent, could boost profits from 25 per cent to 85 per cent.
Today, the consumers are smarter and they expect more.As the general population
becomes better educated, consumers approach purchase decisions with greater scrutiny,
and they have access to more data for comparison purchasing.
The Internet has led to disloyalty: The Internet as a distribution channel for product
sales and information has caused many consumers to change buying habits and methods.
Researchers report record-low consumer loyalty in the Internet environment.
Price-based switching: the customers prefer those services or products which are offered
to them at much competitive prices. Hence it has become very essential for the companies
to stop the consumers from switching.
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The global market introduces new competitors: As the global economy opens, our
companies are seeing increased competition, and many sectors are facing foreign
competition for the first time.
6 TYPES OF DEFECTORS
Price defectors, who switch to a low-priced competitor
Product defectors, who defect to a superior product offered by a competitor
Service defectors, who leave due to poor service
Market defectors, who are lost but not to any other business - they may go out of
business or to another market
Technological defectors, who switch to products offered by companies outside the
industry,
Organisational defectors, who switch due to internal or external politics.
Analysing complaint and service data is a good method to identify problems and
understand why customers defect. Analysis should be statistical and should be fairly
detailed in order to understand the underlying patterns of the problems.
Strategic bundling is another way of erecting a barrier against defections that can lead to
enhanced customer retention. A bundle is a group of products or services offered as a
single cost saving and convenient package. A customer who opts for a bundle will not
switch to a competitor even if he is offered a better deal on a single item of the bundle.
Usage analysis is a method that can be effectively used to help in customer retention.
Segmenting markets by consumption can provide valuable insights into the mix of
customers. Heavy users are more valuable than the medium or light ones and appropriate
marketing strategies have to be devised to retain them. Similarly in the business context,
we find the Pareto Principle or the 80/20 rule in operation. Key accounts that comprise
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about 20 per cent of the business customers are responsible for about 80 per cent of the
sales generated. Such heavy and key users are prone to poaching by competitors. Hence it
is important to concentrate advertising, promotion, sales and communication efforts on
this segment. Medium customers should be targeted with revenue enhancement strategies
through phone calls and e-mails. The light or unprofitable customers should be served in
new ways to upgrade them. In some cases, the unprofitable customers might also have to
be ignored.
The strategies for retaining customers are a function of the nature of the product, the stage
of the product life cycle, and the buying behaviour of the customers.
Customer value affects customer satisfaction, which in turn affects loyalty. Customer
loyalty affects customer retention. Loyalty of the customer increases with customer
satisfaction at an increasing rate. Segmentation of customers should be done by
satisfaction levels, prior to the strategising of retention activities.
Airtel is also trying to prevent its customers to its competitors such as: Hutch and Idea.
The company is establishing a strong CRM system.
CUSTOMER RETENTION
Airtel maintains its leadership with its effective churn controls in India.
Gaining new customers is good news for any company, the flip side is the loss of
customers—or churn, in industry parlance. So mobile players are putting churn
management systems in place, which can almost accurately predict the behavior of fickle
customers. Churn is a widely-recognized problem today for most mobile
telecommunications providers. In simple terms churn refers to customers cancelling their
existing contract only to embark on a relationship with a competing mobile service
provider.
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The cost of acquiring a new customer is more than five times that of retaining an existing
customer. Hence it is advisable for any company to try to reduce the churn rate of its
company.
The churn rate of Airtel is about 2% which is at parlance with the industry figure. But if
you calculate a churn of 2 percent a month, an operator is losing 24 percent of its
customers every year. Whatever the numbers, the fact remains that the telecom industry’s
bottom line is getting affected significantly thanks to the high churn rate.
Optimizing the Level Of Customer Retention Costs (CRC) To Increase Customer
Lifetime Value:
Defining customer life time value
Establishing a customer life cycle perspective
Assessing proven methods to apply customer lifetime value to define customer CRC
Ascertaining how to make CRC an investment in the future customer value
MEASURING CRM PROGRESS
CUSTOMER COMPLAINTS
When the customer pays for a product or service, it is assumed that the product will work
correctly or that the service received is as promised. Ideally, the customer will be
satisfied, and there will be no complaints. But at times, the customer is not satisfied with
the services since the expectations do not meet with the results, this causes customer
complaints.
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Airtel has toll free numbers for handling customer complaints. A separate division is
meant for customer care, where, the customer care executives are present to handle any
type of customer complaint. These customer care executives are specially trained for the
same purpose.
TYPES OF CUSTOMER COMPLAINTS
Letters
Spoken Word to Employees
Phone Calls
NEED TO LISTEN TO CUSTOMER COMPLAINTS
Development
Loyalty
Lost Customers
Employees
How to Solve Customer Complaints
Listen
Always Offer a Solution
ENCOURAGE CUSTOMER COMPLAINTS
Open Details
Friendly Staff
Comment Slips
Do Not Forget!
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No matter how bad a problem is, no employee should be subjected to any personal insults
or threats from a complaining customer.
Encourage complaints rather than silence, but customers must not be allowed to threaten
your employees in any way.
INDICES
The ultimate indication of success of a CRM initiative is the change in attitude and
behavior that an organization exhibits toward its customers. To determine if the initiative
is successful is to independently develop an index and monitor the progress. A Customer
Loyalty and Velocity Index (Customer Love) has been done. The index's intention is to
determine if the CRM initiative is successful from a quantitative view. Components of the
index are:
Marketing
Response rate to marketing promotion
Sales leads generated by promotion
Conversion rate of responses
Effectiveness and cost of channels (web, TV, radio)
Product offerings (customer interest)
Sales by product offering
Market share
Product positioning
ROI on marketing expenditures
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Sales
Customer turnover (rate of new customers to departing customers and the active
customer base size)
Customer acquisition costs
Average order frequency and size
Revenue per rep ratio
Sales profits per customer and per contract or deal
Win rate
Number of completed sales calls per rep
Number of sales calls within a selling cycle
Customer service:
Average speed of answer
Percentage of abandoned calls
Frequency of all trunks busy
First contact resolution
Number of training days per customer service representative
Average cost per customer service employee
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CRM BUSINESS STRATEGY
In fact, Airtel has seen that CRM actually represents a business strategy that involves
focusing knowledge, business processes and organizational structures around customers
and
prospect for the whole organization. Surrounding this business strategy is an information
technology infrastructure consisting of data warehouses, decision engines and integrated
middleware for touch points/channels in order to better understand customer behavior and
respond in a timely and relevant manner.
Today’s consumers’ can no longer be treated as a “homogenous collection of revenue
generating unitsӠ, but rather as individuals whose specific wants and needs determine
unique behavior (buying patterns, channel usage, etc.).
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