Opening Keynote

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Opening Keynote
The Strategic Value of Measuring Customer
Migration
Alok Shende Vice President Frost Sullivan
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Trend I
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The Changing World of Telco

• From waiting lists to 20 need and value based
  segments
• Discreet offerings have ballooned
• Prepaid, Postpaid, Family-friendly, night and
  weekend schemes, Text, data, messages, music
• Customer touch points
• Company owned stores, web, shared and exclusive
  dealers, telemarketing agents, affinity partners
• Communication channels
• Television, print media, bill boards, event
  marketing, viral marketing, Product placements

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Emotional State
Print
Market Place Dynamics
Fulfillment
email
Consumer Stage
Unsure
Peer Influence
Web
Demographics
Generational Beliefs
Trends
Political Trends
Not Interested
Desire to Interact
Consumer trends
World Conditions
Telemarketing
Engaged
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Proliferation

• Media

• Technology

• Sales Service channels

• Information

• New customer segments

• Communication

• Marketing Approaches

• Products

• Distribution

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Trend II
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The Income Demographic Shift
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Auto industry Trends
CAGR 22.4
CAGR 16.9
CAGR 11
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Telivision Industry Trends
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Polarization

• For many industries including cars, Consumer
  durables, clothes, computers, retailers, growth
  is higher at high end and lower end
• Should we relinquish one segment for another?
• How do we separate the price, quality, brand and
  delivery in the emerging paradigms
• How does this translate into sales force,
  organisational hierarchy.

Tiers
High End
Mid End
Low End
Average Growth
Nominal growth relative to average growth
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Customer Equity
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Customer Equity

• The total lifetime value of a firms customer
  base
• Customer Equity gt Shareholder Equity
• Data driven analytics can measure customer equity
  to high degree of accuracy
• Managers can manage the current and future
  customer value and its likely impact on the
  share holder value
• Firms such as Dell, Royal Bank of Canada and Best
  Buy concentrate on raising their returns on
  specific customer segments.
• RBC share value increases in the past one, three
  and five years (and through the last "recession"
  or downdraft in the stock markets.)

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Customer value matters

• Customer profitability management is an integral
  feature of effective customer relationship
  management (CRM)
• Understanding customer profitability is an
  essential element in building customer value and
  through that share holder value
• The benefits for effective profitability
  management are not restricted to high value
  customers
• Critical when developing client value
  propositions that will improve revenues and /or
  costs
• Corner stone for sales performance management and
  benchmarking reports
• Feeds financial management reporting and risk
  management decisions
• Informs product design/management

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Engaged Customer Model
Loyal
Evangelist
Converted
Not Loyal
Engaged
Not Converted
Relevant
Not Engaged
Aware
Non Relevant
Unaware
Unaware
Awareness
Consideration
Conversion
Loyalty
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What customers really want

• Show me that you care
• Appreciate and value my business
• Treat me as an individual, not a member
• Demonstrate that you know me
• Anticipate my needs
• Regardless of where and when I interact with you

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Analytical prerequisite

• A level of detail sufficient to document how each
  customer comes into contact with the company plus
  the associated revenue and costs
• A comprehensive view of the customers
  relationship with the company so that the true,
  holistic contribution or cost is understood
• A consistent view over time so that changes in
  the relationship can be properly understood
• Timely information reporting so that the company
  can act promptly to seize the opportunity while
  risk is minimal
• Flexibility so that as the business environment
  changes, the measurement process can smoothly
  adapt.

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How comfortable are you with your measurement
today

• In 1999 we replaced our original model with a
  behavior based profitability model
• Averages hide insights. Actual account data
  resulted in 75 of our customers shifting 2 or
  more profitability deciles
• Given that we know 90 of profitability comes
  from 20 of our customers, accuracy matters
• Quote from a leading bank

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What do you do with the information

• How do we go about designing a customer
  experience and ensure consistency at all touch
  points
• Use our customer information and decision
  technology to
• Segment Customers
• understand profitability
• predict preference and behavior
• Create personalized strategy for each customer

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Challenges
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Lack of Historical Customer Track Records

• Traditionally been low on customer focus,
  resulting in the least customer-tracking systems
  in place
• Limited or scant customer behavior information
  and trends have been captured in systems in the
  past
• Almost zero historic records of customer trends
  and reactions to many marketing and promotional
  schemes
• Level of digitization of processes and value
  chains of suppliers, customers, and partners is
  very low
• Lack of real-time, authenticated, and exhaustive
  information poses a strong hurdle for BI

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Integration Bottlenecks

• Indian businesses have adopted automation and
  business solutions at various speeds based on
  their requirements and understanding of the
  solution
• The overall technology adoption has been so
  diverse, with large and disparate systems that
  the systems are difficult to integrate
• Systems integration is a major problem for a BI
  which has to extract information from various
  sources and across different business departments
  and functions

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Summary
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Over all key Success Factors

• Start with the client
• Clearly defined sub segments
• intimate knowledge of client needs
• n depth competitor assesment
• identify gaps and client unmet needs
• Develop Fact Base
• Determines if gap is product, process, policy,
  training or communication
• Quantify size and opportunity
• Engage partners
• Business leads with client / identify desired
  client experience
• partners determine desired product, process,
  communication plan or solution
• Enable sales force

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• "Companies that measure profitability by customer
  have a distinct advantage over those that dont.
  They can more intelligently manage their
  customer-facing processes. But even more
  important, they can identify and strip costs out
  of processes that do not add strategic or
  economic value to the relationship. They can then
  reinvest in processes that are mutually valuable
  to the relationship. That leads to profitable
  growth.
• Capgemini Profitability Practice Leader Marc
  Shingles

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Thank You ashende_at_frost.com 91 9892593581