How Today's Carriers Could Use Data Mining To Boost Revenue and Discover the Profits of the Service provider 2.0 World.
Every once in a while you get to look at an industry with fresh perspective and more importantly you get to share a great idea with your readers to help them generate more revenue with little associated cost.
I recently had a chance to talk with William "Duffy" Mich, Jr. Aperio CI's Chairman & CEO who tells me one of their mobile service provider customers (SPA) is using their FlashTrack solution to gain access to near real-time processing of event records. FlashTrack allows the carrier to know by 10:00 am today what happened yesterday.
The solution mines customer data in an effort to determine trends that are worthy of further analysis. For example the service provider recently realized that many customers were calling a non -published number quite often. There was a sudden call spike in fact.
So the provider called the number and -- guess what -- a competitive service provider B (SPB) answered. It turns out the competitor was running a stealth marketing campaign, targeting customers who had switched just away from SPB over 11 months ago. The goal of the campaign of course was to get the customers to switch back as the one-year contract expired. Obviously SPB was leaving messages for customers who were then calling back and thus the spike in calls to the non-published number.
SPA countered by calling customers earlier than SPB and asking if they were doing a good job and further reinforcing the relationship. The goal was of course to resolve any customer issues before they get poached.
In my opinion both campaigns are pure genius and if SPA didn't have the ability to quickly realize they had a problem on their hands, they would not have been able to counter with a campaign of their own. Of course SPA would have realized a month or so later that churn had increased and may never have figured out why.
By the way, after seven days of running this campaign the calls to SPB dropped dramatically.
A while after this incident, service provider C (SPC) came on the market with a new calling plan. SPC is known for splashy, out of the box campaigns. They announced a brand new offer that looked amazing to SPA. SPA was scared and had plans on countering immediately. Instead of doing so however they waited to see how many of their customers were calling SPC. It turns out very few customers made calls so SPA did the smart thing -- nothing.
In another instance, Aperio's software identified 4% of customers who were money losers based on their high levels of interconnect costs. In yet another instance a service provider who decided to make directory assistance calls free didn't realize that one customer made 11,000 directory assistance calls in one month! It turns out the debt collectors were very fond of this service.
In fact further analysis showed the service provider could make $27 million dollars per year more if they just charged 25% less than Verizon for these calls.
I am far from an expert on the legality of using your customer calls as competitive intelligence but Aperio CI tells me in the US it is illegal to use individual calls to competitors over the PSTN but VoIP calls have no such regulation. You are however able to use aggregate data from the PSTN or VoIP. I suggest you consult with your lawyers if you are unsure.
It was at this point the conversation got interesting and Aperio CI queried, "Why don't service providers start to sell this aggregate data?" Imagine a triple-play provider who could call Joe's Pizza and tell them that Sal's Pizza is getting a much higher volume of calls -- based on their customer statistics. They could recommend advertising on their cable network to level the playing field.
Would Southwest Airlines pick Verizon as their exclusive wired and wireless provider if they had access to this data for free? It could even be provided by state, city, time of day -- whatever formats the customer wants.
But wait, isn't the cable company in a position to also let you know how many of their customers are browsing Sal Pizza's website, or Southwest's? Are you seeing what is happening here? Service providers and many internet companies are sitting on invaluable customer and competitive data. It is staggering in fact.
If the government allows this sort of practice to take place and I think using aggregate numbers is fine, then we may be witnessing a huge opportunity for service providers and internet companies worldwide.
Selling customer analytics data in fact could be the goose that lays the golden eggs -- by the bakers dozen. Moreover this could become the killer (no pun intended --please don't tell the goose) application Vonage could use to finally pay for all the market share they have purchased so expensively these past years. If Vonage can get into this market quickly and do it right they could be in fantastic shape.
Let's face it; there aren't too many new ways service providers have to generate revenue. Selling customer analytics is a major change in our market and it should be looked at as the future of the service provider space. You can even call the next-gen service provider service provider 2.0.
Unfortunately for the smaller providers, this game will be all about scale and AT&T, Verizon and cable companies who sell triple-play services are best-equipped to profit from this space. I am sure others will profit as well but obviously the bigger the data set the more valuable the data.
Of course it is too soon to know how big a market this can be but if it lives up to its potential we can expect the service provider of the future to be in a much better position than ever before.
I just wonder why this isn't being done more frequently now. Or perhaps it is -- just very quietly. One thing is for sure -- the secret's out.Are you service provider 1.0 or 2.0? Will you be first to maximize profits by exploring new revenue streams or are you content to let the competition blaze new trails and capture new markets while you wait on the sidelines? Share your passion and enthusiasm with 9,000 other influential IP communications decision makers at Internet Telephony Conference & Expo at the San Diego Convention Center in San Diego, CA in just a few weeks. Not only is there more relevant content than virtually all other service provider shows on the market, Aperio CI will be on hand to answer your questions live.