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The Business Case around Tariff & Pricing Dr. Stefan Schwarz,
Director Telecommunication, Media & Entertainment, Teradata GmbH
26 March, 2015
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Big Data
The C-level view
Brute force vs. selected action
Agenda
© 2014 Teradata 2
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Big Data – a big hype
Fraud detection
Multi Channel
Pattern
New account
activation paths
In store customer
experience Network analytics
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“The business model for mobile
operators in developed markets will
go cash flow-negative within the
next strategic investment cycle.“
McCahill, Tellabs
Therefore two main questions that keep most
telco CxOs awake at night:
1.How can I SIGNIFICANTLY reduce opex?
2.How can I generate additional revenues?
As the days of milk and honey are over operators need to seriously focus on cost and new revenue
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Typical OPEX Breakdown for a European Mobile Operator (% of Total Opex)
Source: Capgemini TME Lab Analysis based on operator annual reports and industry reports
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“On average Telcos spend approx. 27% of their overall opex on customer acquisition & retention!
Source: CapGemini
CapGemini TME Lab Analysis based on operator annual reports and industry reports
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Is this still the right thing to do?
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Subsidy Retail
Commission
Post-pay
Some telcos try to act with brute force …
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But perhaps the axe is not the best tool …
Starting in the late 1880s, the Swiss Army Knife was used to open canned food and disassemble the Swiss service rifle, the Schmidt-Rubin M1889, which required a screwdriver for assembly.
DISCOVERY PLATFORM
INTEGRATED DATA WAREHOUSE
ERP
SCM
CRM
Image
s
Audio
and
Video
Machine
Logs
Text
Web
and
Social
SOURCES
DATA
PLATFORM
Business Intelligence
Predictive Analytics
Operational Intelligence
Data Discovery
Path, graph, time-series analysis
Pattern Detection
Fast Data Loading & Availability
Filtering & Processing
Deep History: Online
Archival
ACCESS MANAGE MOVE
UNIFIED DATA ARCHITECTURE Business Conceptual View
Fast-Fail Hypothesis Testing
Teradata Customer Management Cases
RETENTION VALUE MGMT AQUISITIION
Integrated Comm.,
Price Promo & Subs
Avoiding churn
inducing upsell
Avoid Useless
retention
Low Affinity Products
Under-estimated
Usage Elasticity
Insufficient Retention
Manual Portfolio Mgmt.
Product Cannibi-lization
CEM based retention
Integrated Comm.,
Price Promo & Subs
Avoiding churn
inducing upsell
Avoid Useless
retention
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Example 1: Churn inducing upselling
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Use Case Example 1: Avoiding useless retention
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Avoid useless retention
0,0%
2,0%
4,0%
6,0%
8,0%
10,0%
12,0%
0
2000
4000
6000
8000
10000
12000
10% 14% 18% 22% 26% 30% 34% >38%
Nu
mb
er
of
cust
om
ers
Saving potential actual product compared to competition
Ch
urn
rate
Price independent churn
Price related churn
20.000
16.666
13.333
10.000
6.666
3.333
0
3% 6% 9% 12% 15% 18% 21% 24%
6%
5%
4%
3%
2%
1%
0
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Use Case Example 2: Avoid churn inducing upsell activity
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Avoid churn inducing upsell activity
0,0%
2,0%
4,0%
6,0%
8,0%
10,0%
12,0%
0
2000
4000
6000
8000
10000
12000
10% 14% 18% 22% 26% 30% 34% >38%
Nu
mb
er
of
cust
om
ers
Saving potential actual product compared to competition
Ch
urn
rate
Price independent churn
Price related churn
20.000
16.666
13.333
10.000
6.666
3.333
0
3% 6% 9% 12% 15% 18% 21% 24%
6%
5%
4%
3%
2%
1%
0
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Use Case Example 3: Acquiring customers for the right/best price
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How can you help reducing product cannibilization?
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Value of customer management opportunities
0,0%
10,0%
20,0%
30,0%
40,0%
50,0%
60,0%
70,0%
80,0%
90,0%
100,0%
0,0% 1,0% 2,0% 3,0% 4,0% 5,0% 6,0% 7,0%
Useless Retention
Underestimate
d Usage
Elasticity
Product
Cannibalization
Integrated Subs
& Commisions Insufficient Retention
Manual
Portfolio
Maintenance
Low Affinity
Upselling Offer
Billing errors
Overall potential calculates as 7,1% of total company revenue
Saving
potential [% of
opportunity value]
Value of
opportunity [% of
company revenue]
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Summary & Outlook
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Dr. Stefan Schwarz Director Industry Consulting Telco, Media & Entertainment
TERADATA M: +49-173-74-88381 [email protected]
