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Look Inside your Customers
DN
ACustomers
CUSTOMER SEGMENTATION
&
SOCIAL NETWORK ANALYSIS
Presentation by Customers DNA
CONTENTS
– CUSTOMER SEGMENTATION & SOCIAL NETWORK ANALYSIS
– CUSTOMER VALUE = ACTUAL VALUE + REFERRAL VALUE
– CUSTOMER 360º = SEGMENTATION + SOCIAL NETWORK
– HOW TO UTILIZE CUSTOMER SEGMENTATION & SNA
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ACustomers
Types of Segmentation in Consumer Markets
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High
Medium
Low
Value Based
Cluster 1
Cluster 2Cluster 3
Behavioral
BachelorFull
NesterEmpty Nester
Solitary Survivor
Life Stage & Socio-Demographical
Rational
Emotional
Needs Based
Monitor value migrations
Service delivery strategy
Resource allocation &
prioritization
Relationship Marketing
Existing product management
Churn prevention
Campaign management
Competition & SWOT analysis
Brand image
Product positioning
Communication tailoring
New product development
Service delivery strategy
Targeting new prospects
New product development
Life stage marketing
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Social Network Analysis
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Identify relationships between individuals
Identify core groups and leader(s) within them
Estimates influence that individuals have on their peers
Opinion Leader is usually someone who:
has many connections in his group
His/her connections get influenced by him/her
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Individual VS Social Approach
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Target the right customers based on
Segmentation & Propensity modeling
Target Opinion Leaders based on SNA
to take advantage of Diffusion Effect
Targeting
based on Individual Attributes
Targeting
based on Social Network Attributes
Combining those two may lead to exponentially higher ROIAll Rights Reserved by Customers DNA
CONTENTS
– CUSTOMER SEGMENTATION & SOCIAL NETWORK ANALYSIS
– CUSTOMER VALUE = ACTUAL VALUE + REFERRAL VALUE
– CUSTOMER 360º = SEGMENTATION + SOCIAL NETWORK
– HOW TO UTILIZE CUSTOMER SEGMENTATION & SNA
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ACustomers
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Most common levels of Profitability Analysis for Telecom Providers
Revenue(ARPU)
Marginal
Profitability
ABC
Profitability
Revenue only (Average Revenue Per Unit)
No account taken of different product margins, cost to serve
or expected lifetime (billed revenue).
Revenue minus the cost of providing the products and
services used
(interconnection costs, handset subsidization costs etc).
Revenue minus the cost of providing the products and
services used, less other costs attributable to the customer,
cost to serve (e.g., call center costs if customer calls often).
Lifetime
Value
Revenue that have been captured and can be captured during
the forecasted time horizon based on existing and available
products, services offerings and channels.
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Why don’ t you move
to my provider and
talk for free all-day?
The importance of Referral Value in Mobile Telephony (e.g. Prepay)
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Most of the Mobile Telephony Providers offer significant incentives for On-Net
usage (free minutes, unlimited with a small fee, etc)
Customers, especially prepaid, usually influence their closest connections to
move from competition to their provider in order to take advantage of On-Net
privileges
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The Referral Value in Banking based on Family Groups
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Primary Holder Sub Holder
Customer related with the Bank
Do Financial Institutions group
Customers into Family Groups?
Do Financial Institutions know
Opinion Leaders especially for
Business Customers?
What is the average Fraction of
Family Groups with a significant
relationship with the Bank?
Are there appropriate offers for
supporting not only Customer
Share but also Family Share?
In contrary dissatisfaction of
a member in a family group
may lead to defection of other
members too
Me
Wife
Mother Sister
Opinion Leader
Pension Account Payroll Account
Internet BankingInsurance
Credit CardDeposits
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Payroll Account Internet Banking
Credit CardTime Deposits
CONTENTS
– CUSTOMER SEGMENTATION & SOCIAL NETWORK ANALYSIS
– CUSTOMER VALUE = ACTUAL VALUE + REFERRAL VALUE
– CUSTOMER 360º = SEGMENTATION + SOCIAL NETWORK
– HOW TO UTILIZE CUSTOMER SEGMENTATION & SNA
www.Customers-DNA.com 10All Rights Reserved by Customers DNA
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ACustomers
Retail Banking Basic Axis of Behavioral Segmentation
Liabilities Assets
Inactivity
Activity
Active
Investors
Dormant
Depositors
Active
Borrowers
Once off
Borrowers
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Passive
Inactive
Transactioners
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Mobile Telephony Basic Axis of Behavioral Segmentation
Voice Data
Inactivity
Activity
Advanced
Professionals /
Techno fans
Youth / Shared
users
Mature Heavy
users
Mature Basic
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Passive
Inactive
Pure
Professionals
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Analysis should into consideration both Internal and External data to
Validate and Amend database Segmentation & SNA
Single dataset of customer records
Internal data External data
Customer value
Customer demographics from DBs
Customer behaviour - usage
Customer products utilization
Customer intention to recommend / to defect
Customer socio – demographics from MR
Customer needs and attitudes
SWOT analysis
Customer 360 Viewwww.Customers-DNA.com 13
Individual Attributes Individual Attributes
Customer referral value
Customer Social group / Family circle
Opinion leader & diffusion energy
Early adopter
Ways & incentives to spread the information
Social network status, life style, preferences
Ask the Opinion Leader………..
Customer responsiveness to new services
Social Attributes Social Attributes
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The Next Generation of Target Marketing
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Individual Attributes
Social Network
Attributes
Next Generation
of Target Marketing
Social Network Analysis combined with traditional Segmentation enable the identification of
the right Opinion Leaders to maximize the Diffusion energy.
Effectively, it models a “word-of-mouth” scenario where an individual influences one of her
neighbors to follow, from where the influence spreads to some other neighbor, and so on.
The Referral Value is one of the most important components of Customer Profitability but
most of the times is not considered at all.
SNA & Segmentation could be useless without a right offer that can support the Viral effect.
Offer should be Relative with Clear Benefit & Easy to be Spread.
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CONTENTS
– CUSTOMER SEGMENTATION & SOCIAL NETWORK ANALYSIS
– CUSTOMER VALUE = ACTUAL VALUE + REFERRAL VALUE
– CUSTOMER 360º = SEGMENTATION + SOCIAL NETWORK
– HOW TO UTILIZE CUSTOMER SEGMENTATION & SNA
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Combining Segmentation with SNA for optimizing Targeting
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Techno Fun Segment
Traditional Segment
Actually SNA has to be combined with traditional Segmentation techniques in
order to optimize your targeting & maximize the Viral effect
A myth about SNA:
If an Opinion Leader adopt a new service then his Followers will adopt it
1st
2nd
X
X
X
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The Effect of the Opinion Leader within Social Groups
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7%
16%
20%
31%
33%√ √
x √
√ x
x* x*
Early Adopter Opinion Leader Data Bundles Penetration within Social Groups
* With at least one User within Social Group
Active Customer Base
|
Opinion Leader is a more
significant Role than
Early Adaptor in terms of
Diffusion energy
Someone that adopts new products/services earlier than others
Someone that influences many others with his/her opinion
Example of applying a Referral program in Mobile Operators
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A special code was created offering 1GB of data for one month for free.
The offer was communicated via SMS to three different segments:
Opinion Leaders that are already users of mobile data
Opinion Leaders with high propensity to start using mobile data
Not Opinion Leaders that are already users of mobile data
The offer can be shared with on-net connections via SMS by simply
forwarding the original SMS.
A second SMS to the initially contacted subscribers inform that the three
most active promoters earn special gifts.
× Increased Risk of Revenue Cannibalization from connections
Tips for Successful Segmentation & SNA Projects
Try & combine different types of segmentation in order to address your business goal in the best way.
There is not a ‘‘magic’’ segmentation that will cover all aspects of a customer’s relationship with the
organization
Always enrich segmentation with market research to gain actual customer insight & perform SWOT
analysis to support your segmental strategy vs competition.
Start SNA for addressing basic business objectives before moving to more sophisticated ones e.g.
detection of networks with increased churn rates or low company penetration. In banking the identification
of the family circle is a project of major importance.
Combine SNA with Segmentation & other Business Analytics in order to strategically acquire opinion
leaders of your competition and promote new products & services utilizing the Viral effect.
Ask opinion leaders (of both your customers’ base & competition) what can motivate them to switch
providers or adopt a new service/product using market research.
Use test campaigns for different products & services testing different referral incentives to identify early
adopters & influencers. Keep that info in your databases and decide what works best for the Viral effect.
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About Customers DNA
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Customers DNA is a firm of experts specialized in applying quantitative methods to enterprises’ growth and optimization issues, particularly in the domains of sales, marketing and strategy.
Our team combines technical as well as business experience in numerous industries aiming to bridge the gap between technology and its applications in business & strategy.
Customers DNA provides a comprehensive and complementary range of services across CRM, Customer Intelligence, Market Research and Training.
We offer a fully outsource collaboration model where encrypted data are securely transferred and analyzed in our premises.
We can guarantee successful and low cost projects giving any company, looking to move its marketing to the next level, a great advantage without the need of internal investments.
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