Every mobile network operator today has a department within Marketing that is responsible for managing the customer base. The scope of work and names of such departments vary across organizations. Some of the common department names that also reveal the scope of work are; Customer Base Management (CBM), Customer Value Management (CVM), Customer Lifecycle Management (CLM), Usage and Revenue Management (U&R), Customer Experience Management (CEM), and Loyalty and Retention (L&R) among others. In this blog post I will try to cover the key areas of focus for a Customer Management unit of a mobile network operator.
1. Customer Retention:
Retaining customers is one of the key functions of Customer Management. The most pertinent Key Performance Indicators of Customer Retention unit are; Rate of Retention, Percentage of Active Customers of Total Base, and Incremental Revenue Generated through retention activities. To achieve these KPIs Customer Retention is best divided into two sections; a) Pro-active Retention and b) Re-active Retention.
Pro-active Retention is about intelligently analyzing customer behavior of active customers to predict churners. One of the most potent methodology used for pro-active retention is known as Churn Prediction Modeling.
Re-active Retention on the other hand is about retaining customers that show one or more signs of churning. Such signs are usually based on customer lifecycle and usage behavior; for example, nearing of customer contract expiry, number of in-active days, decline in usage, and number of days with zero balance, among others.
2. Customer Value Management (CVM):
Another key area of focus for Customer Management is revenue enhancement from the existing customer base. This is commonly known as CVM but may also be referred to as CLM, U&R, or Value Base Management (VBM). The KPI for CVM is the amount of Incremental Revenue generated through CVM campaigns. It is important to note that CVM is not solely responsible for achieving the total revenue targets of a segment or service. CVM objectives are derived from marketing objectives to compliment the efforts of other marketing functions to achieve revenue and profitability targets. Foundation of a productive CVM practice is laid upon a thorough and meaningful micro-segmentation. A meaningful micro-segmentation helps in identifying key business opportunities and business risks that can be addressed by micro-targeted CVM campaigns. The most common type of CVM campaigns include; Up-selling Cross-selling, Usage Enhancement, Recharge Stimulation, and Bundling among others. One key aspect of CVM campaigns is the execution and evaluation methodology which involves taking a target group and control group to compare the campaign performance tin-order to reach actual campaign ROI.
3. Customer Experience Management (CEM)
CEM generally has a larger scope, encompassing all departments and customer facing processes within the organization. However it can become a very effective force if it is organizationally aligned within Customer Management unit. Such alignment helps give more accountability and responsibility along with the means to deliver on Customer Management KPIs. CEM perspective and CEM data helps form a 360 degree view of the customer that is essential for the success of Customer Retention and CVM campaigns. The most commonly used KPIs for CEM are Customer Satisfaction Index (CSI) and Net Promoter Score (NPS). An effective CEM program hinges on a well defined Customer Journey that covers all customer interaction touch-points with the organization. The role of CEM unit is to ensure the delivery of consistent and promised experience throughout the customer journey while creating moments of delight occasionally. The role when fulfilled not only leads to an increase in CSI but also helps massively in retaining customers, acquiring customers, and increasing revenue from existing customers.
These three areas of focus form the basis of Customer Management function. In-order for these three areas work, it becomes essential to introduce a support unit. Such a support unit is usually referred to as Customer Operations. The key tasks of Customer Operations unit include; operational management of Campaign Management Tool, campaign execution and post-launch tracking, operational management of BTL communication channels such as SMS and outbound calling agents. Some mobile network operators also include Customer Loyalty unit within Customer Management department. I believe that if the organization has a well defined loyalty program running, it is best to have it separate from Customer Management unit. Management of Customer Loyalty programs require a completely different set of capabilities and responsibilities such as partner management, budget management, event management and so on. One key challenge that is not discussed in this blog post is how to set up the three areas of focus across products/services. For example should the Customer Management unit be set-up product wise (prepaid voice, postpaid voice, fixed, mobile data, fixed data, and B2B) or functionality wise (Customer Retention, CVM, CEM)? The set-up of CM department will be discussed in another post.
I will be looking forward to your feedback and comments and would love to know if there are any areas you would want to know more about.