White Paper Personalisation: The Key Pillar of a Successful Business Strategy for Operators

Copyright Openet Telecom, 2012

Copyright Openet Telecom, 2009

Personalisation: The Key Pillar of a Successful Business Strategy for Operators

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Personalisation: The Key Pillar of a Successful Business Strategy for Operators

TOp sIx use Cases TOward a mOre persOnalIsed, InTeraCTIve and prOFITable CusTOmer experIenCe
personalisation is a very strong business strategy and essential to the future success of operators seeking customer acquisition and retention in highly competitive markets. personalisation isnt a big-bang approach, but rather a logical progression. It is about deploying new technologies that insulate the traditional back office from change and leveraging those new investments, as well as coordinating real-time business rules across network access types. Centralised policy controls, charging mechanisms, and subscriber data management tools enable new business rules to be rapidly deployed by operators and, increasingly, through self care portals. Tactical business initiatives, such as personalised subscriber controls, promotional offers, and even opt-in advertising, enable operators to deliver increasingly more personalised options, evolving capabilities toward a strategic solution that delivers a more enhanced customer experience.

The IrreversIble Change In CusTOmer behavIOur

The current scenario of change in the communications industry is not just another passing trend, but a permanent and fundamental shift. The recent growth in our industry has been driven by a mix of ingredients including the convergence of services, devices, and technologies, along with a remarkable change in users behaviour and their expectations of new mobile devices and networks. Operators have enabled this growth by upgrading their networks, subsidising smart devices, and attractively pricing data plans, which has facilitated mass adoption of high speed internet connections. but existing traditional business models are exhausted. Operators are now faced with several strategic questions: how can they avoid dumb outcomes such as subsidising customers to the extent that theyre not profitable over the customer lifetime or, worse still, even end up being unprofitable? How can they innovate to avoid bit pipe status? How can they profit from data growth? How can they best manage finite network resources? How can they position themselves as central to the customer experience? how can they effectively tackle the increasing competition from Over-the-Top (OTT) content providers?

The arrival of smart deviceswhich are now essential personal accessoriesconnecting us to friends, work, leisure activities, and entertainment, are changing customer priorities. Customers are changing their mobile behaviour as they gain access to faster mobile broadband and more content and services, resulting in a huge rise in data usage. at the same time, the entrance of new players and OTTs into the communications market means that consumers have more choice as well as the ability to access what they want, when they want it, and how they want it. This means consumers increasingly expect a richer, more personalised and interactive experience a trend thats here to stay. The era of customers accepting utility-like behaviour and business mindset from operators is over. The market has changed from a closed, tightly controlled operator environment, to one that is open, dynamic, and interactive, and business approaches and controls now need to reflect that. a recent survey by Telesperience1 of more than 700 postpaid, prepaid and business consumers from 30 countries worldwide revealed that an overwhelming 90 percent do not feel their operators understand them. additionally, 80 percent of customers are now more influenced by factors other than price when choosing a price plan, with only 20 percent wanting the cheapest possible prices. a plan that meets their needs and seems fair is more appealing to most customers than what appears to be rock bottom prices. Two-thirds of customers said that they would like more flexibility in their plans and many subscribers report that the offered plans or mobile devices are still not delivering enough value. sadly, 32 percent of customers said that their operator only made an effort to understand them when they first joined or around the time of contract renewal, with a further 43 percent revealing they have to figure things out for themselves and 15 percent saying they have a completely unsuitable service. For more statistics from this survey please see figures 1 and 2.
1: For more please visit: www.openet.com/personalisation
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mObIle prICe plans: whaT dO CusTOmers ThInk 704 CUSTOMERS 30 COUNTRIES

Rest of World

43% ARE FRUSTRATED THEY CANT

Unhappy

MAKE CHANGES TO THEIR PRICE PLAN

8% 15% 57% 20%

Latin America

13%
US & CANADA

24% 63%

Neither happy nor unhappy

EUROPE

Happy

7 THINGS CUSTOMERS VALUE IN A PRICE PLAN

1: Meets my needs 2: Is fair 3: Is cheap 4: Easy to understand 5: Not tied in 6: Access to other benifits & services 7: Helps me limit my spending 529 460 456 401 296 175 164

81% - value good network coverage 40% - are being charged for things they dont want 20% - say their bills are wrong 55% - say the price plan is important in keeping them loyal 32% - say their service provider only made an effort to understand them when
they joined or at contract renewal
Figure 1: selected Telesperience survey results

This survey has shown that value can mean different things to different people. hence, understanding customer needs and matching the offer to their behaviour is well worth the effort in terms of improving satisfaction ratings. however, its worth noting that this is not about creating a limitless number of plans in an attempt to cover all options. It is about creating plans with clear value propositions, targeted at segments of users, and proactively suggesting the most appropriate bundles or offers according to the customers needs. but creating loyalty and customer satisfaction also necessitates moving beyond just the point of customer acquisition or contract renewal. Operators must repeatedly and proactively re-energize their offerings and allow customers to change offers, products, and price plans as suits them. The survey also revealed that operators are not channeling efforts effectively (e.g. giving a wide range of choices in terms of price plans and handsets that still dont fit customer needs), instead of delivering what will actually bring bigger business value (which comes from understanding and giving customers what they truly value). Teresa Cottam, research and publications director, Telesperience, summarizes this point by saying: Its pretty basic that we all want to be treated as individuals. after all who wants to be told what we can or cant do, or be bombarded with offers we dont want, or be forced to accept a product or bundle that doesnt meet our needs? Choice is pretty fundamental, but choice also has to be meaningful to me as an individual, and it has to be flexible because my needs and wants will change. The days of a single product (voice), a small number of tariff options and little competition are over in telecoms. There are now huge numbers of potential product options, tariff and offer combinations, and competition is increasingly fierce.

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75% of customers want a

mobile price plan that meets their needs

Only 10% of customers feel their

mobile service provider currently tries to meet their needs

Figure 2: selected Telesperience survey results

but every challenge offers opportunities. The current scenario shows a clear opportunity for operators to foster their relationships with customers while also developing innovative business models to meet future needs and moving subscribers to become loyal brand advocates. This is where personalisation can make a vital difference, because Personalisation is not a fluffy CRM or marketing strategy, its about hard business facts create more effective offers and you will sell more, meet customer needs and you will build loyalty, understand needs and you will waste less. personalisation helps operators differentiate themselves from competitors and it means they can build highly valuable expertise they can resell to other companies, says Cottam. however, she warns: If these are not attributes you are interested in, then I hope you are happy in your dumb pipe future. personalisation enables operators to increase revenues through cross-sell and up-sell opportunities, and better targeting of products. personalisation can also increase both customer loyalty and customer satisfaction, and even turn loyal customers into advocates (also increasing sales). Additionally, it can help operators become more operationally efficient by channeling network investments more effectively, as it helps remove service elements that arent valued, as well as by reducing the effort needed to support weakly targeted products, services, prices and offerings. but the million dollar question is: where should operators start the Personalisation journey?

Top 8 must haves: What would customers like their mobile operator to do to better in order to meet their needs?
Improved networks - improved coverage and quality of experience, choice of speeds/Quality of service (Qos) Better customer service better information to help Csrs resolve queries quickly, localised call centres, more frequent contact to inform of better or more relevant offers, more pro-activity in the relationship, better communication (such as providing the right information when needed rather than irrelevant information at the wrong time), keeping promises, and offering a choice of customer service channels. Greater flexibility in terms of the ability to make service and price plan changes more frequently, unbundling to allow customers to select exactly what they want, and shorter contracts. Better value for money only paying for whats required, rolling over credits or allowances to the following month, lower prices particularly, lower charges for calls to other networks (including international calling). Controls helping divide up business and home usage, helping control spending, and provision of controls to protect children. Clearer price plans and bills - easy to understand and fair offers are seen as key. many customers feel confused, bemused and certain theyve been bamboozled into a sub-optimal deal Rewards for loyalty loyal customers want to feel valued and rewarded rather than see the best deals go to newcomers. They also want to be able to shape the service and be listened to by their mobile provider Support for parents for example, enabling the parent to help manage their childs usage more easily and cost-effectively. many parents want to be able to share, pay for and/or allocate mobile airtime and data usage allowances to family members.

Figure 3: source: Opportunities from personalisation the customer view, Telesperience 2011

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persOnalIsaTIOn In aCTIOn
Two key ways in which operators can enable personalisation today are in the forms of combined personalised policy controls and personalised charging mechanisms. personalised controls enable operators to offer dynamic tiered service plans for content and data, and to enforce entitlements. more advanced forms of controls support real-time updating of entitlements when new products are purchased, including support for time-limited or oneoff entitlements. Controls also support customer notification of usage and customer-defined controls (self-set controls). according to Telesperiences Cottam, Controls are a doubleedged issue. You need to control what your customers are doing and spending or else you risk bill shock, non-payment, repudiation & bad debt, and non-compliance with legal or regulatory requirements. At the same time customers want control so they feel the confidence to use operators services. lack of controls is a business disaster in the making, but done well they offer considerable opportunity. Controls are thus both a necessary and desirable feature which has value to both customers and operators. despite being a core competence though, as well as something that can easily be developed and is valued by customers, they are a low-hanging fruit that has been badly underexploited by operators to date. additionally, personalised charging is about creating price plans and offers that are suitable and attractive to individual customers, with the purpose of enabling incremental revenues to operators. personalised charging can be applied to a complete product or to a service element, such as premium Qos. more advanced options can include pricing and offers related to context, preferences, proactive recommendations, as well as historic spending, usage or behaviour. Charging and control mechanisms are at the very heart of a mature/advanced/progressive personalisation strategy. so lets begin the journey with some practical scenarios. what use cases can operators apply today to enable personalisation and begin to deliver a richer customer experience to their customers?

TOp sIx persOnalIsaTIOn use Cases

1: Flexible Service Tiers
Operators can segment their customer base by offering a choice of flexible data plans and prices, according to speed of access, data volume limits, exclusion of certain applications, or per device. Data contracts can be flexible enough to respond to the growth in demand for bandwidth. Intelligent Service Tiers give operators the flexibility to create innovative plans tailored to specific traffic mix and application usage types. Additionally, controls can be used not only to define service tiers, but also to create business rules that dynamically allocate subscribers among these tiers, moving users automatically from one tier to another based on subscriber preferences, pre-defined events, and real-time conditions. This offers subscribers both certainty of price and flexibility to accommodate changes in usage patterns. For example a subscriber can have a data plan, which for a monthly fee gives them a volume of usage and maximum bandwidth speed. assuming operators can arrive at the right data pricing strategy and keep it simple and transparent, this can provide an up-sell opportunity for heavier users. Once a user exceeds their initial limit, they can be offered an upgrade to the next tier, with this upgrade being either temporary or permanent; or they can be notified that incremental outof-bundle charges now apply; or if they do not wish to be charged, they can choose to have their data service throttled to a lower speed. This sophistication in the application of usage controls provides opportunities for brand differentiation, service transparency, and to up-sell using flexible charging systems. Additionally, it influences subscriber behaviour to enable better traffic management on the network, and it compensates operators for the actual usage of network infrastructure by subscribers, closing the gap between data growth and flattening revenues.

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2: Personalised Service Passes

Service Passes offer limited access to specific services or devices, for a certain amount of time, or usage volume, or both. service passes can be purchased by customers, or offered as a promotion by the operator. They enable the bundling of device and data packages for daily, weekly, or monthly use, with associated data caps. some service passes can also offer a data bucket that can be shared by multiple users or devices. with the increasing demand for anytime, anywhere broadband access, offering service passes for wireless data services can be a compelling way to personalise service offerings to customers who may or may not be existing subscribers. They enable operators to move beyond the current paradigm of pre-paid and post-paid business models, to providing casual access to services when these are needed. service passes widen the addressable market to create new revenue opportunities for operators, profitably capturing ad hoc business and low-use or transient customers. adopting a service pass business model supported by policy controls and real-time charging, allows operators to offer multiple charging models, using real-time service authorisation, access, and session management. novel offers, such as temporary speed tier upgrades, can be supported and monetise a currently unmet need. In this scenario, a customer on a standard speed plan decides to stream a video and realises the quality of experience may not be satisfactory. They could be either a consumer streaming a movie or a business customer taking an important video conference call. The customer is willing to pay extra to temporarily improve their quality of experience and to have this guaranteed. not only does this provide an improved network experience for the subscriber (resulting in customer satisfaction), it helps manage network resources (delivering operational efficiency) while effectively monetising the high speed network and providing an additional revenue opportunity (resulting in a positive commercial outcome). The rules determining the pricing, the offered speed and the duration of the add-on are all configurable by the operator, and different add-ons can be tailored to different profiles of subscriber.

3: Personalised Pricing Options

Operators need to demonstrate value to their subscribers. In recessionary times, one of the items often reviewed by customers who have monetary constraints is their spending on mobile phone usage. despite the fact that a great deal of the competition for mobile services being priced based, many customers are still not on the best plan for them or are not sure whether they are. Therefore the ability to prove to a subscriber that they are on the best plan, or if theyre not, then to pro-actively suggest a switch, will increase customer loyalty and in many cases will actually increase subscriber usage and spending. Cost-effectively communicating this best plan message to a subscribers mobile device is also a strong personalised marketing message and communicates that the operator values the customer. Operators can compare a subscribers usage against multiple available plans resulting in a proactive suggestion of the best plan or plans for the customer. Operators can then advise the subscriber of alternative plans that are suitable to their needs, show the potential cost saving or additional benefits, or offer an instant upgrade. If the subscriber accepts the suggestion, all current period usage is then updated according to the terms of the new plan. presenting best plan advice direct to the subscribers handset or device offers a substantial and cost effective strategy for plan conversion combined with a subsequent increase in subscriber loyalty.

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HOW CHARGING DELIVERS AGAINST BUSINESS GOALS?

Goal Examples of tactical goal supported Provide incentives to move some traffic into off-peak periods to maintain QoS ensure that the cost of providing a service is covered in the offers monetise wasted or under-utilised capacity provide additional mini-packaged service elements/products (e.g. bolt ons) Offer paid-for premium quality of service and prioritisation (differentiated Qos) according to service, user choice etc Offer time-limited offers/products and support ad hoc purchases support complex rules, including zero-rated trials and pricing based on related purchases etc provide contextual offers (e.g. according to location) Offer special prices/offers for friends/family support fully convergent charging and any choice of payment type (subject to status/ credit worthiness) support credit from external sources/partners (e.g. for ad-subsidised, loyalty credits etc) to enable split-billing (payment from multiple sources) Create new payment-based revenue streams support choice of service level support loyalty-based offers (different offers according to length of time with Csp or amount of usage) enable customers to create own bundles of offers and services that appeal to them allow choice of payment methods according to subscriber credit worthiness, and service (including blended payment) provide m-payment to support easy and convenient micro-payments
Figure 4: source: Telesperience 2011

Operational: maintain Qos and maximise use of resources Commercial: increase revenues and maintain profitability

Customer: increase customer satisfaction and loyalty

4: Personalised Controls
Location controls: subscriber expectations are changing to the point where connectivity is now expected wherever they are. however, bill-shock, and increasingly data bill-shock, is a cause of great concern to consumers themselves, as well as national and regional regulators. One of the most common, concerning and complained about bill shock scenarios arises when subscribers roam from one network to another. many customers react to this fear by simply turning their phones off when abroad, which means the operator is losing a revenue opportunity. Others receive huge bills and are unhappy, complain, and may even churn. Dealing with these unhappy customers has cost implications and can cause significant brand damage as such customers are increasingly willing to share their experience using blogs, Facebook or Twitter. Central to avoiding bill-shock is timely communication of personalised usage information. In the european union (eu) there is now a regulatory requirement to inform customers when they reach a certain threshold (50), and operators must enable customers to set their own thresholds. The EU model demonstrates that operators and subscribers can easily configure spend thresholds which trigger notifications to be sent in the appropriate format for the customer and the service they are using. policy control technology ensures consumers can block certain services when roaming, and it provides support for real-time subscriber spending notifications and cut-off mechanisms once spending reaches a certain limit. This capability can be combined with personalised roaming offers, to encourage users to make better use of their mobile device when roaming. additionally, operators can improve how data bundles are sold by making offers more segmented and context-relevant. This can change the emphasis from customers having to pre-subscribe to a roaming package prior to departure, to one where they make an ad hoc selection of the appropriate bundle for their individual service, such as a Twitter-only bundle whilst roaming.
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Usage controls: with internet access now available as a standard feature on most mobile devices, children and teens increasingly have unfettered access to a broad range of anytime, anywhere mobile services. Operators can offer parents peace of mind, by giving them the ability to personalise controls and limits for their childrens access to data services. by offering services such as parental Controls, operators can ensure compliance with age restrictions on certain products, and reduce churn by offering parents a valued service by helping them control both access to certain types of content, time-of-day or location-based usage, and the amount spent. policy control technology supports the ability to set restrictions on individual sites or data services, to limit when and where services can be used, and even what can be spent on them. Access to individual services can be configured to be restricted to certain times of the day or even on a location basis. Parents can also be provided with reports and notifications to enable them to monitor usage behaviour. parental Controls enable parents to give children access to mobile services while maintaining appropriate usage boundaries. This eases parents concern about inappropriate or excessive usage of data services, which means that parents permit children to use mobiles; thereby supporting revenue streams from usage by minors. In particular, parental Controls using charging also help avoid bill shock scenarios resulting from children inadvertently running up large bills or rapidly depreciating their prepaid account. Combined with real-time charging, support can also be offered to bucket or reserve parts of the balance ensuring that a proportion is always reserved for calls to parents, for example, or restricting what the balance can be spent on (e.g. calls, texts and internet but not games). Application and content controls: parents also want the peace of mind to know that their children are safe when using their phone and that excessive usage can be prevented. equally employers want to ensure that corporate devices are not being used to access inappropriate content. The ability to control children and employee content can enable services to be personalised to differentiate an operator and potentially add a new revenue stream. while each operator will need to determine its own policies towards content control based on legal, regulatory and market factors, policy control technology enables Content Controls to be flexibly configured, offering users greater controls over their usage experience. Being able to enforce content categorised urls enables multi-tiered, default policies to be created. This allows useful categories to be created for example to define Child (up to 12 years old), Young Teen (13-15), mature Teen (16-18) and adult (18+). parents and employers should be able to override any universal policy to allow or disallow sites or category types such as restrict access to gaming, gambling or pornography sites completely or during work hours or based on location or device, using a self-care portal to manage these settings. as more communication and entertainment services are delivered over Ip customers now , have the flexibility to go over the top to buy services, applications and content, bypassing the operator. notwithstanding individual country regulatory or net neutrality concerns, this is another revenue generating use for policy controls. while regulators work out the details, being able to prioritise traffic is an important step to ensure applications have the Quality of service (Qos) they require. an emerging opportunity, especially in markets where operators have set tightly-capped download limits, is the area of personalised online content. policy controls can provide tremendous scope for access and bandwidth to personalised online content using, for example, recommendation engines, providing operators with an alternative revenue stream and delivering relevant and meaningful content choices to subscribers. Furthermore, if regulations permit, operators may set up partnerships with content providers such that the subscriber is guaranteed a high quality experience when consuming a partners content. The purchase could entitle the subscriber to access to that content for a defined period (for example, 3 days), and the service delivery guarantee is included in the cost of the content. The operator and partner may share the revenues, while the subscriber receives the content via an enhanced experience.

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additionally, it is important to stress that usage and content controls can be applied to multiple members of a wide group that access communications services from multiple devices and in different ways. This could take the form of a pool of available products, bandwidth or data which is available for a number of individuals to use, with subsequent controls or rules specific to individual group members. There are numerous controls that can be applied, e.g. for children in a family group rules could state: no usage by children during school hours, no surfing, explicit white lists (e.g. only allowed to make calls during the day to mums mobile number), an allowance of 10 texts per day per child plus with any of mums allowance made available for the child to use if she doesnt use them up. Its also possible to include a black list for incoming calls for group members e.g., parent being able to block incoming calls and messages to their childs mobile to prevent cyber-bullying.

HOW CONTROLS DELIVER AGAINST BUSINESS GOALS?

Business goals Examples of tactical goal supported Enforce maximum subscriber-specific bandwidth speeds set volume caps and duration periods package or exclude applications (e.g. exclude bit-torrent from data plans) Address network specific conditions (e.g. time-of-day peaks) Enforce device-specific plans Throttle out-of-bundle usage during congested periods, for a day or to next billing period Throttle selective services, when usage quota has been used

Operational: maintain Qos and maximise use of resources

Commercial: increase revenues and maintain profitability

enable subscribers to instantly change tiers Create on/off-peak offers and dynamically assign bandwidth enable optional add-on purchases (e.g. voIp) enforce surcharge on overages suspend services for persistent out-of-contract usage remove accounts from high-speed internet service actively manage subscriber-sessions against usage allowance Zero-rate usage for quota purpose (e.g. Operators mobile Tv service, captive portal usage) re-direct to promote additional services drive network consumption to off-peak hours through speed-based promotions provide greater choice of service/price level Support customer self-defined controls (to help avoid bill shock events) - resulting in less dissatisfaction and greater loyalty (customer invests time in setting up controls) notify subscribers of usage and threshold breaches Provide controls aimed at supporting needs of specific customer types (e.g. parents or businesses)
Figure 5: source: Telesperience 2011

Customer: increase customer satisfaction and loyalty

5: Personalised Promotions, Advertising and Loyalty Options

policy and charging controls can enable operators to offer personalised, dynamic, subscriberaware promotions to up-sell and cross-sell services. In-session redirections are usually the most efficient way of ensuring a user sees a notification, as they enable a subscriber to associate their usage with the offer being made, in real-time. Subscribers may define their preferences for receiving promotions, advertisements, offers, etc., and these preferences are factored in to every decision to trigger a notification. additionally, the use of loyalty points and personalised rewards as a marketing tool is becoming increasingly popular with operators, as they utilise the unique insight they have with their subscribers to offered personalised rewards, either from their own services or from content or retail partners. For example, operators can offer personalised content recommendations based on opt-in information stored in their subscriber data. Operators can also deliver geographical and context based marketing and loyalty offers to their subscribers

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by understanding where the customer is and what theyre doing. For example, using locationbased data to offer customers coupons for restaurants or fast food outlets in the immediate area at lunch time, or to know they like dIY and to let them know their local dIY store has a sale on and heres a personalised deal, or to see they regularly travel to brazil on business, notice theyre at the airport in sao paulo and offer them a brazil roaming package. In order to achieve this, operators can combine location-based data, historical customer data, preferences, and third party deals or offers data. The customer gets texted an offer voucher (notification) and he/she should be able to spend the e-coupon easily in store (it could be preloaded onto a loyalty card so that when the stores sales representative scans the card its applied at the point of sale).

About OPENET
Openet is the most innovative provider of service Optimization software (sOs) to tier one communication service providers, and a world leader in proven policy management solutions. To succeed, todays operators must know their customers, deploy innovative business models and control the allocation of network resources. Openets offerings are engineered to attract subscribers and provide an optimal experience, minimize the cost to serve them and maximize revenuemaking the most of every network and customer. ranked #1 by Infonetics, Openets policy manager and associated software has been deployed by operators in the united states, europe, asia, africa, the middle east and latin america. For more information, please visit www.openet.com.

6: Personalised Proactive Customer Care

policy and charging mechanisms can trigger customer care actions based on real-time events or conditions, such as current location, and current session. Customers can be re-directed to self-care portals to receive personalised notifications about roaming charges, or data cap breaches. Or they can receive regular reminders to renew a data plan, or to top-up a pre-paid balance via an automated, and timely communication. Notifications may be based on the subscribers language and format preference, for example, send text message in spanish. The operators promotional and up sell messages may be triggered based on a subscribers profile and usage history, and also on whether they have opted in to receive such marketing messages. personalised proactive customer care is also about what a customer needs. For example, if the customer is of an advanced age, do they need bigger text or to speak to someone? Or which channel of interaction do they prefer/are most responsive to? How valuable are they to the operator, hence how much support is the operator prepared to give? If the customer calls to complain how much is the operator prepared to give away based on how valuable they are? What could they benefit from as a customer so when they call or go to the operators portal the agent has a deal, offers and help available proactively to them? For example, we notice youve been getting a lot of dropped calls, so the agent can offer diagnostic tests or compensation.

COnClusIOn
personalisation is a fundamental business tool that offers operators the ability to generate new revenue streams, make the most of business opportunities and facilitate the implementation of a different type of sales and marketing strategy, at a time where differentiating yourself from competitors is not a nice to have, but a must have for survival and future success. personalisation moves operators away from the vicious cycle of price-based selling and handset wars theyve found themselves trapped in. Initially, the personalisation journey begins with the ability to support a wide range of new charging and control scenarios as outlined above. This doesnt require a major IT transformation, but can be achieved through leveraging existing infrastructure, supplementing it with new technologies that complement the existing systems, and through a logical progression that will provide results today.

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