The Potential of User Analytics

As competition and the economic crunch pit themselves against communications service providers (CSPs), it’s getting harder and harder for them to maintain profitability, so the search is on for ways of exploiting underused assets. Take customers for example – CSPs have them by the billions, yet they often know almost nothing about them other than an address or a phone number in the eyes of many providers.

As competition and the economic crunch pit themselves against communications service providers (CSPs), it’s getting harder and harder for them to maintain profitability, so the search is on for ways of exploiting underused assets. Take customers for example – CSPs have them by the billions, yet they often know almost nothing about them other than an address or a phone number in the eyes of many providers. But knowing your customer and exploiting what you actually have if you look for it – the veritable treasure trove of customer data that sits unused inside the hundreds of systems a CSP uses every day – is a big step towards increasing profitability.

Thankfully, it’s starting to dawn on many CSPs that there is an inextricable link between customer, the customer’s experience and profitability. tThe very concept of customer experience can often be very vague and intangible, but through the use of data analytics CSPs can leverage their valuable information, which can lead to better understanding of customer motivation and behavior; suggesting offers and predicting the likelihood they will be accepted; modeling and improving customer experience-related processes; measuring performance improvement and customer satisfaction and predicting if a customer might churn so that action can be taken to avoid that outcome.

With so many uses for analytics, one can’t help but wonder why CSPs aren’t fully leveraging this goldmine of customer data they’ve been sitting on for decades. It really is a goldmine since you have to dig in different places in different systems to find the answers, but CSPs potentially know more about their customers than even a bank does, and there have even been studies that show that consumers actually trust their service provider and hold them in higher regard than their financial institutions – not that that would be hard after recent years of banking bailouts and bonuses! The point is that while consumers may complain about their phone, cable TV or Internet service, most have a good relationship and a strong level of trust in their service provider.

Using Analytics to Leverage Customer Information

But let’s be honest; the vast majority of CSPs haven’t really been on the ball when it comes to doing anything with the customer data they have on hand. Think about it: your provider knows where you live, who you call, when you call and so much more. The trick is to balance the desire to leverage this valuable information for internal marketing and other purposes while keeping the information safe and secure.

So while some CSPs are now starting to mine their customer databases in order to develop more effective service packages and pricing as well as marketing campaigns, some are getting even more creative and thinking how valuable the data is to third parties. But should they be monetizing that information, and if so how should they go about it?

We’ve all seen recently how Facebook and Google have gotten themselves into a bit of hot water by revealing customer data to third parties. While everyone knows it goes on, and it’s an implied price of getting an otherwise ‘free’ service, it doesn’t stop consumers from becoming jumpy at the thought of everything being out there for anyone to see. And it’s especially sensitive if you have a lot of trust in the provider – over in the UK, BT got to be national news and questions asked in Parliament because of a fairly innocuous trial of tracking user information on their Internet service.

The lesson learned here is that if you’re revealing the personal habits of Joe Blow in Chicago, that’s dangerous territory. However, if you anonymize the data so that all that shows up is the buying behavior of 18-20 year olds who live in the Chicago area, it’s quite another matter altogether. Even better is if the customers ‘opt in’ to have their data revealed in return for some benefit.

But I think there’s an industry debate that needs to take place about what information is OK to use, for what and when. It’s especially important for CSPs who are increasingly rubbing up against a ‘free’ service model (think Skype, Google Voice) with their paid model. If the practice of exploiting user data is OK, and done routinely by Internet companies, should it be OK and done routinely by phone companies that have a slew of customer information?

There’s a lot of psychology in play here – phone companies have been around for decades, in some cases over 100 years, so there’s a strong trust relationship between provider and customer. There’s a privacy issue, too, that I think is different than with a user’s relationship with a Facebook or Google.

It’ll be interesting to see if anyone is doing research on whether it’s even commercially viable for a phone company to package up its customer data and sell it to a marketing company. Maybe it’d make them some money, but would they be ill-advised to do it because of their unique relationship with the end customer?

The answer is I don’t know, but what I do know is data analytics presents a huge opportunity for telcos to significantly improve their bottom line and improve their own marketing and customer service. It’s how they choose to make their next move that will determine if they can truly leverage the goldmine in their midst or seriously bungle it by not respecting the customer.

A recent TM Forum Insights Research report, “Exploiting Analytics: How to Improve Customers’ Experience,” authored by Rob Rich, concludes that just a small amount of improvement in customer retention rates can yield very high levels of increased profits. But even if CSPs see the worth of data analytics and are willing to consider this strategy, they are being held back by several barriers, namely cost, data integration challenges and complexity.

In an in-depth survey conducted with senior executives at 20 CSPs around the world for this report, more than half cited reduced support costs, improved customer retention and increased customer satisfaction as the main drivers for their customer experience programs. So it’s clear they are on the right path, but they need to surmount the barriers to analytics implementation first.

While the overall effort may seem daunting, the return for CSPs that take the time, money and effort on improving the customer experience is more than worthwhile. They’ll be able to better differentiate themselves from the competition and show their commitment to their markets. During bleak economic times, when revenues are stagnant and competition is coming from all corners, any little bit helps.