Thom Point of View on Segmentation

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Customer Segmentation and Intelligence“All customers are equal, but some are more equal”

Learning from IIR Conference &THoM’s point of view on segmentation

October 2008, Monaco

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Monaco…the ultimate segmentLifestyle, needs, product/service usage and value

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The conference offered deep insights in customer intelligence and segmentation, both by telco players and consultants

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Telco players Consultants

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Agenda

1. Insights in Telco sector

2. Integrated segmentation approach

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Telco as a retailer:

Capturing value from third parties in order to avoid becoming ‘commoditized’:

1.Differentiated customer care & service support

2.Segmentation & 1-to-1 marketing

3.Intelligence, analytics & 360° customer view

Telco as a retailer:

Capturing value from third parties in order to avoid becoming ‘commoditized’:

1.Differentiated customer care & service support

2.Segmentation & 1-to-1 marketing

3.Intelligence, analytics & 360° customer view

Economic situation is impacting the industry: Telco as a retailer playing on customer intelligenceCurrent recession only reinforces this trend

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Consolidation in VS, coming to Europe - Investors reshape the industry

• Media, Applications and Content create value by innovation

• Telecoms Resellers by scope• Telecoms Carriers by scale

Consolidation in VS, coming to Europe - Investors reshape the industry

• Media, Applications and Content create value by innovation

• Telecoms Resellers by scope• Telecoms Carriers by scale

How to reduce cost to serve while at the same time optimizing customer experience?How to reduce cost to serve while at the same time optimizing customer experience?

Look for more value in customerLook for more value in customer

The challenge is on Customer Intelligence and Segmentation•Collect lifestyle/needs data (vs. a lot of usage data available)•Converged services: 3-play (household) vs. 4-play (mobile: personal)•US: “Death of proactive telemarketing”(1)

- Customers only want to be contacted when in their own interest

The challenge is on Customer Intelligence and Segmentation•Collect lifestyle/needs data (vs. a lot of usage data available)•Converged services: 3-play (household) vs. 4-play (mobile: personal)•US: “Death of proactive telemarketing”(1)

- Customers only want to be contacted when in their own interest

(1): Ruth Rowan, Head of Global Marketing BTSource: IIR Conference Customer Segmentation and Intelligence, Monaco 2008

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5 Telco consumer trends also impacting the customer intelligence practice

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Consumer driven innovation (outside in)Adapt organizational flexibility accordingly (CRM 2.0)Consumer driven innovation (outside in)

Adapt organizational flexibility accordingly (CRM 2.0)

Channel preferences: consumers prefer non-human interactionChannel preferences: consumers prefer non-human interaction

Consumers drive to personalization (individualization)Consumers want more time too choose but not more choice (e.g. Starbucks)

Consumers drive to personalization (individualization)Consumers want more time too choose but not more choice (e.g. Starbucks)

Changing demographics: generation gap at 25“Anyone younger than 25 has grown up with technology and they are the telco

customers for the next 50 years”

Changing demographics: generation gap at 25“Anyone younger than 25 has grown up with technology and they are the telco

customers for the next 50 years”

Bills and statements capture customers’ attentionRediscovery as a communication means (TransPromo: Transaction documents +

Marketing promotions)

Bills and statements capture customers’ attentionRediscovery as a communication means (TransPromo: Transaction documents +

Marketing promotions)

Source: IIR Conference Customer Segmentation and Intelligence, Monaco 2008

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Some other eye-openers from the conference

• Churn is not linked to satisfaction

• Risk assessment when using value based segmentation

• Don’t get to personal in 1 to 1 communication (do not show that you have detailed data on customers)

• It might not be a good idea to stop servicing customers with negative profitability (depending on level of fixed costs)

• Blending B2B and B2C: tag consumers accountsif they have a large potential/influence in B2B (e.g. British Airlines)

• “Customer is king…but ‘cash’ is more king”

• Guerilla BI iterative IT development

• Sense & Respond (e.g. MCI vs AT&T: Friends & family program)

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Source: IIR Conference Customer Segmentation and Intelligence, Monaco 2008

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Agenda

1. Insights in Telco sector

2. Integrated segmentation approach

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4 different types of segmentation can be applied depending on the business objectives

Needs-based segmentation (including drivers)Segment based on behaviors, needs and drivers. Behaviors indicate past behavior,

while needs and drivers indicate planned behavior.

Needs-based segmentation (including drivers)Segment based on behaviors, needs and drivers. Behaviors indicate past behavior,

while needs and drivers indicate planned behavior.

Value-based segmentationSegment customers based on how much they are worth (potentially)

Value-based segmentationSegment customers based on how much they are worth (potentially)

Lifestyle-based segmentation (including socio-demo and psychographics)

Segment customers on their lifestyle and their attitudes towards product categories

Lifestyle-based segmentation (including socio-demo and psychographics)

Segment customers on their lifestyle and their attitudes towards product categories

Usage-based segmentationSegment customers on their past and current usage of channels and products (if

possible include also usage at competitors)

Usage-based segmentationSegment customers on their past and current usage of channels and products (if

possible include also usage at competitors)

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THoM’s methodology for developing a targeted marketing strategy thanks to an integrated segmentation method

Understand business issues and define strategic objectivesUnderstand business issues and define strategic objectives

Elaborate integrated segmentation models in function of strategic objectives

•Macro-level segmentation•Micro-level segmentation•Integrated segmentation approach

Elaborate integrated segmentation models in function of strategic objectives

•Macro-level segmentation•Micro-level segmentation•Integrated segmentation approach

Develop value propositions per segmentDevelop value propositions per segment

Quantify campaign ROI and evaluate impact of segmentation with regard to strategic objectives

Quantify campaign ROI and evaluate impact of segmentation with regard to strategic objectives

Conduct targeted marcom & sales initiativesConduct targeted marcom & sales initiatives

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