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.

SOLVING CUSTOMER RELATIONSHIP MANAGEMENT INVOLVES ADDRESSING A

PRINCIPLES-BASED VALUE CHAIN

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,

People & Activities

Business Strategy

Business Process Reengineering Change Management Project Management

- Application Implementation- Data Warehouse/ Data Modeling

Warehouse Architecture

Data & Applications

Application Specific Data ModelExternal Data ProvidersData Hygiene / Enrichment

Cleansing & Conditioning Householding

- Segment of One Marketing Customer Valuation

Technology

Data Warehouse/Data Mart

Extract & Transformation Database OLAP Data Mining Statistics Query & Reporting

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 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 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.

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

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 .

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.

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 behaviour 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.).

CRM CONCEPT AND IMPLICATIONS BY AIRTEL

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, 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 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,”.

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 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.

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

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.

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.

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

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 .

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.