A Return to Profitability

With industry-specific solutions, telecommunications companies can achieve ROI quickly by Leah Severance

The economic downturn of the past two years has had a tremendous impact on the telecommunications industry. Forecasted demand for new services has yet to materialize, and the revenue growth needed to generate adequate returns on technology investments still seems far away. More than ever, increased scrutiny from investors compels organizations to produce consistent profits and reliable financial reports.

The good news is that telecommunications organizations have the means to a profitable outcome. Residing in various operational and transactional systems, in disparate data functional units, and driven by unit-level directives, there exists a massive volume of data about customers, suppliers, operations and more. The challenge is to transform that data into strategic intelligence in order to make decisions that will generate immediate and long-term results.

The Battle for Profitability
In the world of telecommunications, success or failure hinges largely on improving customer relationships and profitability, reducing operating expenses and managing risk, all while maintaining – or increasing – shareholder value.

To achieve success, companies must be able to work simultaneously from both the top down and the bottom up. "Top down" means setting a strategic business direction and effectively communicating and managing this direction throughout the organization, so that each group, down to the individual, understands how their work affects the business. "Bottom up" means empowering people at their respective levels to make decisions that benefit the organization.

Several of the issues standing in the way of success include customer churn, lack of detailed customer knowledge and resources that are spread too thin.

Telcos around the world are trying to reduce churn – the loss of valuable customers to competitors. Churn is estimated to cost companies in excess of $10 billion worldwide. Ever-changing incentives and low barriers to switching providers result in customers moving from service to service, further reducing the likelihood that providers will recoup their acquisition costs. And since those acquisition costs can average between $400 and $700 per customer, churn rates greatly affect a carrier's return on investment. As market growth slows and predatory activity among competitors increases, these rates may go even higher.

Predicting which customers are likely to leave and devising cost-effective strategies to persuade those "churners" to stay are extremely difficult undertakings for most companies. The volumes of data that are needed are huge and often difficult to assess and consolidate using conventional operational systems tools. Many organizations simply lack the expertise to support the complex data mining and analytical/predictive tasks that are essential to combating churn.

Unfortunately, the frustration of customer churn is just the beginning. Many telecommunications companies are finding it increasingly difficult to translate the vast quantities of customer information scattered throughout the enterprise into strategic, effective and measurable actions. They have the data, but not the knowledge. Lacking that detailed customer knowledge, telcos find it hard to cross- and up-sell their customers. Knowing that Customer A spends more than $100 on long distance calls and frequently calls internationally, and that Customer B rarely calls long distance but often uses call waiting and three-way calling, would enable marketing executives to target specific offers to each customer. Instead, generic mass mailings are often sent and discarded without even being opened. By gleaning and utilizing customer details, telcos could quickly find themselves one step closer to profitability.

During the past few years, many telecommunications companies acted upon inaccurate predictions of the promise of new technology, which caused them to invest hundreds of millions, even billions, of dollars to support demand that has yet to materialize. It may be that some companies tried to secure a foothold in every new form of communication and spread their resources too thin. Certainly, many organizations, assuming the trend of profit was infinite, did not realize how precious these resources would soon become.

Whatever the cause of the decline in telecommunications profits, there is a bright side. There is a solution. Or rather, there are several.

The Means to a Successful Outcome
Tailored to meet the unique business intelligence needs of the telecommunications industry, SAS Telecommunications Intelligence Solutions allow telco organizations to implement business strategies effectively, maximize corporate profits, retain and grow customer accounts and execute efficient marketing campaigns. Built on the telcos' operational environments, these solutions transform organizations into smarter enterprises by locating business intelligence from their own real-world data.

Enabling executives to communicate a strategic vision to their entire work force and empowering individuals to implement it proactively – those are the dual goals of SAS Telecommunications Intelligence Solutions. A few of the measurable benefits of these solutions include:

• Establishing top-down objectives across the enterprise, aligning processes and resources around those goals, and monitoring progress toward achieving them through integrated performance dashboards.
• Eliminating silos of disconnected operational data through effective data management that pulls the right information together, in the right format, from any data source.
• Prioritizing customer campaigns based on analytics that reveal a customer's likelihood to churn or purchase additional services.

Since SAS is the industry leader in customer analytics, SAS Telecommunications Intelligence Solutions allow organizations to use their customer data to develop a deep understanding of each customer's behavior, risk and profitability. Because these solutions are fully integrated, decision makers throughout the enterprise can have complete confidence in the reliability and consistency of the information they are using.

Designed to address business challenges unique to the telecommunications industry, SAS Telecommunications Intelligence Solutions reduce the time and resources required to define the data environment. These solutions share a common foundation and can be deployed in a modular fashion, so organizations can achieve quick results for a focused business problem while building on this foundation over time.

Because these solutions include a roadmap for successful implementation, SAS reduces project risks and enhances the ability to extract and share valuable insights, while realizing returns on investment. In addition, all SAS solutions can be easily recalibrated to encapsulate the variables unique to an individual organization.

SAS Telecommunications Intelligence Solutions are the only solutions that combine award-winning analytic and data warehousing technologies with proven prebuilt processes and techniques that speed up both implementation and results. This allows telecommunications companies to see results within weeks, rather than months of implementation.

SAS Telecommunications Intelligence Solutions are based on a solid foundation of 26 years' experience in the telecommunications industry. These solutions, comprising SAS Strategic Performance Management, SAS Marketing Automation, SAS Customer Retention, SAS Customer Segmentation, SAS Cross-Sell and Up-Sell, and SAS Credit Scoring, provide a data architecture that is telecommunications-specific and essential to bringing together the appropriate data from all disparate sources. And with proven models designed to find the most accurate and appropriate information for the business challenges facing telecommunications companies – such as customer retention and cross-selling – SAS Telecommunications Intelligence Solutions require less implementation time, thereby dramatically reducing the time it takes to realize a significant return on investment.