Communicate with impact

Vodafone reduces costs and increases response rates by creating customer relevance

The mobile phone market for voice and data is at a virtual saturation point in Australia, where Vodafone Australia serves 3.74 million direct customers and provides mobile coverage to 95 percent of the population. To continue to grow, network operators such as Vodafone must seek to take market share from other providers as one part of their continuing growth strategy. The other part is to increase revenues per acquired customer.
 
At the same time, intense competition puts margins under increasing strain, so marketing campaigns must be designed with much more likelihood of success. The additional challenge resulting from fierce competition, of course, is that of retaining and upgrading existing customers who are deluged with appealing offers from alternative suppliers.

Despite these challenges, Vodafone Australia has achieved significant uplift in sales rates since  enhancing its marketing capabilities with SAS^® Marketing Optimization. Implemented in only three months, the solution’s advanced analytics and customer optimization techniques have helped the company mount better-targeted, more cost-effective and successful marketing campaigns. 

Reduce campaign costs by 30 percent
Tyrone O’Neill, Vodafone Australia’s General Manager of Insights and Innovation, was instrumental in the decision to adopt SAS to address these needs. The fact that SAS integrated well with the company’s existing IT infrastructure further influenced his choice to use SAS. For example, Vodafone’s existing infrastructure includes data warehousing from Teradata, a closely aligned SAS technology partner.

Other factors influencing the decision to partner with SAS, according to O’Neill, included:

• The breadth of the SAS toolset.
• The nondisruptive scalability.
• Comprehensive 24/7 SAS support.
• SAS experience in implementing many similar solutions worldwide.
• The overall strength of the local SAS operation in Australia.
  

O’Neill has been a thought leader for Vodafone and earlier pioneered the use of Short Message Service for marketing purposes in conjunction with Apple and other products. Now, with the SAS deployment, the Australian arm is leading the global group in the use of predictive analytics for marketing advantage and to gain a single view of the customer.

Before SAS, Vodafone Australia’s individual direct marketing campaigns regularly targeted more than a million customers, but in the words of Cahyadi Poernomo, Vodafone Australia’s Head of Campaign Analytics and Intelligence, “As the number of  campaigns increased and became more strategically integrated, our capabilities were progressively  inadequate. It was taking too long to manually process the information we needed.”

Vodafone’s campaigns were costing many millions of dollars, and Poernomo says the company aimed to reduce this outlay by up to 30 percent, adding, “By implementing SAS, we estimated that we could significantly improve the return on our investment in marketing campaigns, while simultaneously increasing customer satisfaction, by eliminating uncoordinated or conflicting marketing communications. Vodafone is the first telecommunications company in Australia to take full advantage of such innovation.”

Dramatically improve response rates
Vodafone uses SAS Marketing Optimization to collect and analyze data to precisely calculate which elements of its campaigns are most successful. Up-to-the-minute information reveals which channels are the most effective in a given situation, which customers should be targeted with what types of approaches and when.

The analyses are used to refine and optimize future campaign design and execution for improved return by:

• Scoring and modeling to help segment user categories and behaviors.
• Managing channel propensity.
• Addressing customer loyalty and churn.
• Improving cross-sell and up-sell rates.

The analyses enable Vodafone to process and optimize as many as half a million leads in as little as half an hour. Next steps are looking into pricing optimization and real-time Web analytics.
 
O’Neill says implementing the software has typically resulted in a response rate that is three to four times better than before and, “In some cases you can see response rate increases of 10 times better or more.” In an interview with the influential business newspaper The Australian Financial Review, O’Neill was reported as saying he considered the cost of the SAS system and its implementation to be moderate in the scale of overall IT costs and that he expected the project to have paid for itself in a matter of months from the initial investment.

Communications with great impact
Vodafone also uses SAS to trawl through its customer transaction database to identify customer behavior, independently of feedback from marketing campaigns. For example, Vodafone can use SAS to see which customers are missing inbound calls and might, therefore, benefit from the voicemail service. In this example, a promotion of the voicemail service would be aimed only at those subscribers.

Before implementing SAS Marketing Optimization, various offers may have been made quite broadly. “Now, however,  we typically tell fewer people about a particular offer,” says O’Neill. “In fact, we are communicating less frequently, but  the intention is that each communication has a greater impact.”

Quite apart from the dramatic improvement in response rates, the now more targeted communication is in keeping with Vodafone’s concern not to call a particular segment of customers when the offer is inappropriate to them. With SAS, the company now has the ability to tell a customer only about something that is relevant to them.

The success of the SAS deployment has also helped bring about a productive change in marketing culture. Before SAS, the approach was to take a given product and tell everyone about it, without readily knowing if it might appeal. The company necessarily thought in terms of mass campaigns, not individual customers. Now, with predictive models built in SAS in as little as two days, Vodafone is able to approach its customers based on an understanding of specific behavior and be fast to market. If the customer’s behavior exhibits a  possible need for a product, the approach is made. If there isn’t that perceived need, there is no approach.

Making fewer calls – cutting out calls that would be a waste of time and might alienate the customer – reduces the cost of Vodafone’s direct marketing operations, while dramatically improving response rates to provide an impressive return on investment and help grow the business. Sally Crockett, Head of CRM for Vodafone Australia, says: “Overall, SAS Marketing Optimization has improved our ability to manage demands, volume, budgets and delivery resources through conducting sensitivity analysis. As a result, we have faster speed to market and up to four times better ROI.”

“We estimated that we could significantly improve the return on our investment in marketing campaigns, while simultaneously increasing customer satisfaction, by eliminating uncoordinated or conflicting marketing communications.”
– Cahyadi Poernomo, Head of Campaign Analytics and Intelligence, Vodafone Australia