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Look Inside your Customers

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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


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


http://www.google.gr/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=xlunLGYyBf0DuM&tbnid=32G9CYj3Zo-NEM:&ved=0CAUQjRw&url=http://www.12manage.com/description_opinion_leader.html&ei=OJ0vUavsLozesgaH4YGIBg&bvm=bv.42965579,d.Yms&psig=AFQjCNHt_PiGVVOqfZwy6Fhv0knlwBZpqQ&ust=1362161291695426

http://www.google.gr/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=xlunLGYyBf0DuM&tbnid=32G9CYj3Zo-NEM:&ved=0CAUQjRw&url=http://www.12manage.com/description_opinion_leader.html&ei=OJ0vUavsLozesgaH4YGIBg&bvm=bv.42965579,d.Yms&psig=AFQjCNHt_PiGVVOqfZwy6Fhv0knlwBZpqQ&ust=1362161291695426

Individual VS Social Approach


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






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ACustomers

www.Customers-DNA.com

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)


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


The Referral Value in Banking based on Family Groups


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


Payroll Account Internet Banking

Credit CardTime Deposits

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Retail Banking Basic Axis of Behavioral Segmentation

Liabilities Assets

Inactivity

Activity

Active

Investors

Dormant

Depositors

Active

Borrowers

Once off

Borrowers


Passive

Inactive

Transactioners


Mobile Telephony Basic Axis of Behavioral Segmentation

Voice Data

Inactivity

Activity

Advanced

Professionals /

Techno fans

Youth / Shared

users

Mature Heavy

users

Mature Basic


Passive

Inactive

Pure

Professionals


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


The Next Generation of Target Marketing


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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Combining Segmentation with SNA for optimizing Targeting


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


The Effect of the Opinion Leader within Social Groups



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



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.


About Customers DNA

www.Customers-DNA.com

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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