CUSTOMER LIFECYCLE MANAGEMENT

2013

Sumit Kalra | IBS BANGALORE

MTSCUSTOMER LIFECYCLE MANAGEMENT

A REPORTONCUSTOMER LIFECYCLE MANAGEMENT

BY:-SUMIT KALRA ENROL. NO.:-12BSP1683

A REPORTONCUSTOMER LIFECYCLE MANAGEMENT

BYSumit Kalra (12BSP1683)

MTS

A report submitted in the partial fulfillment of the requirements of PGPM Program of IBS Bangalore

Date of submission:-

AUTHORIZATION DECLARATION

I hereby declare that all the work shown in my project is true to my knowledge and belief, and the project has been completed at MTS, DELHI circle. I have prepared this project, on the basis of my understanding of the subject matter, and have not copied it from any source. This project and the research study undertaken was conducted over a span of 3 months from MARCH 12th 2013 to 31st May 2013, under the guidance of my company and faculty guide. This project is a result of my extensive research, hard work, commitment and sincerity to my work. This project is meant for a partial fulfilment of the MBA program of IBS Bangalore Business School. All the information used in the project is confidential in nature and is restricted to use for the purpose of project work only.

ACKNOWLEDGEMENT

Armed with only theoretical expertise in hand, the Summer Internship Project in one of the well established Company in India MTS was a wonderful learning experience. The success of the project depends on the encouragement and several others who motivated me. I take this opportunity to express my gratitude to all those who have been instrumental in the completion of this project.I express my sincere gratitude to Company Guide Mr. Pranay Handa (Product manager U&R, Marketing dept.) who gave me this golden opportunity to work in the organization and took special interest for the success of the project. I would like to thank him for his valuable time, advice, and guidance, which enabled this report to occur.I would also like to thanks Mr. Debajyoti Mal (Marketing Head, MTS Delhi Circle) who provided me with such great opportunity to work and learn with MTS.I would like to express my gratitude towards members of MTS for their kind cooperation and encouragement which helped me in completion of this project.I am also thankful to Mr R Harish (Faculty Guide, IBS Bangalore) for his continuous support throughout my training period.

Mr. R Harish Mr. Pranay Handa Mr. Debajyoti Mal Dean (Academics) Specialist, Voice (U&R) Head Marketing Faculty Guide Project Guide MTS Delhi

Table of ContentsEXECUTIVE SUMMARY7BACKGROUND10Sistema Shyam TeleServices Ltd.10BACKGROUND OF THE INDUSTRY AND FUTURE PROSPECTS11Data uptake in India is low by global standards14Low Internet/ broadband penetration15Need and significance of the project20OBJECTIVE:-20METHODOLOGY21LIMITATIONS OF THE PROJECT22Customer Lifecycle Management22Literature behind CLM26Customer Lifecycle Management Through Retailers34Literature Behind CLM through Retailers34METHODOLOGY35Retail CLM Process36Analysis40BR Interview (Main Issues and Feedback)41MARKET SURVEY47COMPETITIVE MAPPING52TARIFF RATES ANALYSIS (DATA)55Prepaid analysis56REFERENCES57

EXECUTIVE SUMMARY

ORGANISATION DESCRIPTIONCOMPANY NAME- MTSADDRESS- A-194 Okhla Industrial Area, New DelhiWORK- Providing Telecom services I did my summer internship program here from 12th March to 31st May 2013 and was placed in the marketing department of MTS.TITLE OF THE PROJECT-Customer Lifecycle managementOBJECTIVE:- The purpose of the project Customer Lifecycle management is to understand the perceptions of customers towards different offers and their satisfaction with the services offered by MTS in particular and to segment the customers according to their usage so as to target them. The project comprises of studying the market potential of MTS with respect to other operators and also the plans provided by MTS in comparison to other operators. This will ultimately help me in finding out the untapped markets and how to exploit it to the fullest and to the advantage of the company. The major part of the project deals with as to how to communicate effectively in the already cluttered telecom market and help the company to extract revenue from the target customer.

The Purpose of the project studying Customer lifecycle management through Retailers is to understand the perceptions of Branded retailers (BRs) towards different offers and satisfy them with different offers by studying their behavior. This would help us in generating extra revenue for the company as well as the Branded Retailers (BRs). The Project involves studying the BRs issues and their perception towards different offers. The project requires to be in constant touch with the BRs to bring out maximum sale of the offers to the customers

FINDINGS AND CONCLUSIONSCustomer lifecycle management (Voice)This project helped me to understand the segmentation process being used by the company MTS or more generally being used in the telecom sector. It also helped me to understand how different offers are being provided to different customers according to their ARPU, Age on network, Maximum denomination etc. It helped me to get customer insights by visiting various markets which also helped me to understand the position of MTS in the market as well as that of its competitors also.FindingsThe low tariff rates offered by MTS give it an edge over the competitors.The presence of MTS in CDMA only act as an hindrance in the sale of MTS sims as CDMA sims work only in particular CDMA phones only but the GSM sims can work in most of the handsets.

Retail BR-CLMThis project gave me an opportunity to understand the concept of Branded retail (BR) stores. Our goals were:- To make the BRs aware about the importance of Retail CLM for BRs as well as the company. To understand the issues faced by the BRs. Increase the CLM tried percentage by the BRs.

FindingsThe major issue faced by the BRs was of customer care and network coverage.BRs were satisfied with the commission structure and the commission paid to them by the company.Conclusion During this project the Retail CLM tried percentage reached the stipulated mark and most of the issues of the BRs were either resolved or were conveyed to the respected authorities for proper action.

BACKGROUND

Company / Business unit Profile:

COMPANY NAME- MTSADDRESS- A-194 Okhla Industrial Area, New DelhiWORK- Providing Telecom servicesDEPARTMENT: MarketingBUSINESS UNIT: Usage and Revenue (U & R)Sistema Shyam TeleServices Ltd.(SSTL) is a venture, involving equity participation bySistema Joint Stock Financial Corporation of Russia (SISTEMA JSFC), theRussian Federationand theShyam Group of India. Sistema JSFC is the majority shareholder in the Company.MTS Indiais an Indian subdivision ofRussianMobile Tele Systems Telecommunication Company headquartered inNew Delhi, India. It provides wireless voice,broadband Internet, messaging and data services in India. MTS India is a subsidiary of Russian conglomerateSistemaand operates across India with over 16 million customers.SSTL is credited to have introduced a number of innovations in the Indian telecom industry. The Company is thepioneer of Half Paisa per Second Calling in the country.SSTL is also the first telecom operator in the country to launch prepaid High Speed Mobile Broadband. It was the first telecom operator to launch High Speed mobile broadband in Jharkhand and Sikkim. SSTL has been focused on creating a strong portfolio of devices catering to customers across various segments .The company has taken mobile broadband to another level with the launch of HSD services on National Highways.

BACKGROUND OF THE INDUSTRY AND FUTURE PROSPECTS

The table below shows how the telecom industry via both the wire line as well as the wireless has shown a tremendous growth over the past few years.Table 1:-Growth of telephone over the years (In millions)

(Table 1) Source: www.dot.gov.in

Changes in structure of composition of Telecom Sector Wire line vs. WirelessThe growth of wireless services has been substantial, with wireless subscribers growing at a compounded annual growth rate (CAGR) of 57.1% since 2004. Wireless has overtaken wire lines. The share of wireless phones has increased from 46.54% in 2004 to 95.54% in December, 2010.

Source: www.dot.gov.in (Figure 1)After years of splendid growth, wireless subscriber base shrunk by 7.7 percent during June 2012-January 2013, primarily due to removal of inactive subscribers. Active subscribers continued to grow modestly at 1.8 percent over June 2012 - January 2013 period but nowhere close to the growth of 11 percent recorded during the same period a year ago. Industry estimate expects total subscriber base will continue to slide in FY14 and recover mildly in FY15. Active subscribers will continue to grow though at much lesser pace than their historical average.One of the biggest inhibitors for growth of VAS industry is inverted revenue-share model where telecom operators keep 60-70 percent of VAS revenue, which needs to be reversed.After reduction in 3G tariffs by 70-80 percent in May 2012, the traffic has gone up exponentially. Partial roll-out of 3G has been one of the key reasons for poor adoption as 3G BTS deployment is just 12 percent of total.FY12 saw the continuance of growth for the Indian telecom market, which witnessed a 12% year on year increase in its subscriber base during the 12-month period. At the end of March 2012, the countrys total telecom subscriber base (fixed plus mobile) stood at about 951 m. Source: - Care research report (Figure:-2)Growth remained robust in the GSM mobile space. GSM added 115 m subscribers during the year. After a robust 46% year on year increase in subscriptions during FY11, the growth in GSM industry has slowed down to 17% year on year in FY12. The year saw the apex court of the country cancelling the disputed 2G licenses that were issued in 2008. The cancellation caused the exit of Etisalat and Batelco from the sectorDuring FY12, India's mobile subscriber base grew by 13% year on year, from 812 m to 919 m, while the fixed subscriber base declined by about 7%, from 34.73 m to about 32.71 m.Trend in TeledensityTeledensity is an important indicator of telecom penetration in the country. There has been phenomenal spurt in the growth of teledensity in the country with the evolution of new wireless technologies.The tele-density level stood at about 76% by the end of the fiscal.

Source: www.dot.gov.in (Figure 3)

DATA SEGMENTThe data/broadband story in India has always remained just a nice story. While the telecom industry in the rest of the world obtains 35-50% revenues from non-voice services, India derives only 18% of sales from non-voice/ data services. We see a number of key factors of the data supply chain falling in place and believe India is on the verge of a data revolution. Data growth could help offset the slowdown in voice revenues for the industry, by adding 500 bps to revenue CAGR over the next three years.

Figure 4: Expect data to thrive over half of incremental revenues over next three years.

Data uptake in India is low by global standards

Globally, the telecom industry obtains only 50-65% of its revenue from plain voice services. The rest of revenue (35-50%) comes from non-voice services (SMS, retail and corporate data, Internet, VAS etc.). As seen in the Figure 10 below, this is true even of EMs like China and Malaysia. However, India seems an outlier with less than 18% of telecom industry revenues coming from non-voice services. This manifests in the form of low Internet/ broadband penetration.

We believe this is an unsustainable position, and data revenues should start picking up, taking India closer to world average especially given the recent launch of 3G services in the country.

Figure 5: Data contribution to Indian Telecom Industry revenues is unsustainably low

Source: Company data, Credit Suisse estimates

Low Internet/ broadband penetrationUnlike the rapid uptake in mobile voice telephony by India in recent years (penetration 68%), the broadband industry remains a poor cousin of its mobile voice counterpart. Internet penetration is struggling to even reach 10% a third of the world average of 29%.In fact given its size India is actually helping pull down the world average by around 400 bps.

Figure 6 : Internet penetration in India is far behind the world average

Source: Company data, Credit Suisse estimates

Potential for Further GrowthFigure 7:-outlook of telecom sector

According to the industry estimates the voice and data tariffs will need to be rationalised in 2013 to sustain the telecom industry. Operators will leverage on innovative pricing strategies and launch new tariff plans to position themselves competitively in the industry.Voice and text revenues are declining or becoming stagnant but operating costs are increasing exponentially. An increasing number of operators and the implementation of regulatory policies like mobile number portability lead to increased churn rates. The likely, loss of almost 10% of revenues from loss of intercircle roaming charges will further hit the operators in 2013. Competitive pressure and price wars are forcing operators to reassess the pricing of voice and data services. Although consumers are signing up for mobile broadband in record numbers, often encouraged by flat-rate pricing, networks are becoming congested and are either running slowly or denying access entirely. Data traffic is not translating into equivalent increase in average revenue per MB. Also, the quality of service has gone down in order to comply with the new EMF radiation norms. Poor quality of service translates into poor user experience. Unhappy customers are voicing their displeasure but seem unwilling to pay more to improve service. There is a strong need for more rational pricing, especially in the mobile market. Firstly, this is forcing operators to move away from unlimited plans and promotional offers. Secondly, this is pressing them to consider an increase in the tariffs in urban areas to compensate for the rural operations47.However, Industry estimates expects that the tariff hike will be gradual in 2013 - either in the form of removing discounts or increasing tariffs nominally, so as to prevent a sudden drop in volumes due to a significant hike48.This trend has already begun with many operators discontinuing the promotional offers and freebies49.They are gradually increasing the voice and SMS tariffs of both, prepaid and postpaid plans, to support network infrastructure upgrades. The consensus view on global data pricing has been that the only way to attract subscribers is to offer unmetered data. Moreover, the consensus also suggests that once made, the offer of unmetered data pricing can never be withdrawn without enormous customer backlash50.However, Deloitte predicts that in 2013 network operators in India both wireless and wire line are likely to stay away from unlimited data pricing plans and become stricter towards fair usage policies. Specifically, power users will almost certainly be billed for how much data they use, and may be even charged for when they use it and also what kind of data is being used. Moving away from unlimited is only the first step a key question is what kind of metering will work best. Should charges be similar to utilities such as water or electricity? On the other hand, a pure metered pay per byte used could dramatically reduce revenues for carriers. Many service providers offer tiered service, with various caps on total bits used in a billing period. But, once these caps are exceeded, each additional bit can be prohibitively expensive or the speed is likely to be drastically reduced to few kbps. These coverage charges may make sense from the carriers perspective as they create an incentive for the consumer to opt for more expensive plans. However, it leads to unhappy customers either due to bill shock or due to poor user experience after the capped usage. In order to stop the subscriber loss and to grow market share, Deloitte predicts that in 2013 operators will be leveraging on innovative pricing strategies to position themselves effectively against their competition. For example, recently an operator had launched a unique All Share Postpaid Plan, which allows up to 10 members within a family or group to enjoy free sharing of voice, data and SMS on a single bill51. Having one contract, stops users from picking different tariff plans from different operators and also helps providers to acquire and manage a single account instead of separate subscriptions, eventually reducing subscriber acquisition and management costs.Also to develop targeted services and tariff plans, operators will increasingly leverage on the customer analytics, which provides a more detailed view of the customers usage patterns, leading to new revenue sources. Continuous innovation in the telecom sector has enabled operators to provide telecom service to people at lowest tariff rates. Operators have been continuously reducing CAPEX and OPEX through innovative business models (outsourcing core network operations and network sharing) and marketing service offerings (per second billing, bundling offers, micro-prepaid).

Figure 8

Figure 9

Need and significance of the projectOBJECTIVE:-The purpose of the project Customer Lifecycle management is to understand the perceptions of customers towards different offers and their satisfaction with the services offered by MTS in particular and to segment the customers according to their usage so as to target them. The project comprises of studying the market potential of MTS with respect to other operators and also the plans provided by MTS in comparison to other operators. This will ultimately help me in finding out the untapped markets and how to exploit it to the fullest and to the advantage of the company. The major part of the project deals with as to how to communicate effectively in the already cluttered telecom market and help the company to extract revenue from the target customer.

The Purpose of the project studying Customer lifecycle management through Retailers is to understand the perceptions of Branded retailers (BRs) towards different offers and satisfy them with different offers by studying their behaviour. This would help us in generating extra revenue for the company as well as the Branded Retailers (BRs). The Project involves studying the BRs issues and their perception towards different offers. The project requires to be in constant touch with the BRs to bring out maximum sale of the offers to the customers

The Purpose of the project Competitive Mapping is needed to understand where MTS stands among the major players in the market. The changes if any from other players will help in differentiating it with their features and can be used to make a strong hold in the market. The Project involves gathering data of different companies through market visits and some secondary data will also be used. The comparison of different products will help us in making changes to our current portfolio and help us to serve the customer in a better manner.

METHODOLOGY Conducting marketing surveysMarket surveys were conducted so as to know about the various schemes offered by our competitors in the market. Interviewing customers as well as retailers to get useful insights into the customer behavior.Customer feedback is most important to a company because it lets the company to focus efforts on understanding the needs of the customers, meeting or exceeding those needs which will help company get the benefits of customers future patronage and that of many new customers.. Analyzing the data about the customers and segmenting the customers into various homogeneous groups.The customers or the subscribers of the company are segmented into various homogeneous groups according to various criterias for example according to Age on network. Segmentation is basically done to study the behaviour of the various homogeneous groups which show same characteristics so that specific offers can be provided to the customers according to their requirements.

Designing offers to the customers according to their usage so as to increase the usage by the customers and ultimately revenue of the company.In telecom industry after acquiring the customer and segmenting them according to various criterias like ARPU,FAVORITE LEG etc, offers are provided to the customers which suits their needs and help to realize revenue for the company, that is customized offers are provided to the customers which benefit both the customers and the company.

LIMITATIONS OF THE PROJECT

All the information about the customer behaviour cannot be collected accurately. The behaviour or pattern of customer usage may change over time. The data collected from customers for a particular area may not be applicable to the customers of other areas The scope of the project is only limited to the Delhi circle of the company. Performance measurement is done on the basis of facts provided by the retailers and websites only. Inadequacy of data maybe another problem, in such a situation actual data may be substituted with estimated data on certain assumptions. There may be judge mental error.Customer Lifecycle Management

Generally Customer Lifecycle Management, or CLM is the measurement of multiple customer related metrics, which, when analyzed for a period of time, indicate performance of a business.Key idea behind CLM is managing the customer lifecycles to maximize customer retention and profitability rates.CLM is often misunderstood to be the same principle idea as CRM.CLM however has a key difference from CRM-the added factor of time .A brief definition of CLM can be the measurement of the success of the companys CRM programIn the past, operators looked to the quality of the network, then later to products and services to provide the necessary market differentiation. The result is that, although today's telecoms customers now have a huge choice of high quality services and products, paradoxically they see little difference between the offerings of each operator. They do not know the products and they feel a lack of customer service.Today's telecoms customers are very demanding. With so many competing operators offering similar services and products, combined with number portability and handset subsidies, they have little loyalty and will churn at the earliest opportunity to get a new handset or slightly better tariff. Heightened competition and overcapacity are pushing down prices for telecom carriers, putting higher pressure on margins and profitability. To address this multitude of challenges, telecom leaders need to focus on core performance, understand customer segments, and develop sustainable business strategies.Research has shown that improving the customer experience, i.e. how a customer feels about the way they are approached by a company, has a significant, positive impact on revenues and long-term customer value.The customer life cycle is a term used to describe the progression of steps a customer goes through when considering, purchasing, using, and maintaining loyalty to a product or service.The customer life cycle can be broken into seven distinct steps: reach, acquisition, hand holding, customer maintenance, fulfillment services, service enablers and retention. In layman's terms, this means getting a potential customer's attention, teaching them what you have to offer, turning them into a paying customer, and then keeping them as a loyal customer whose satisfaction with the product or service urges other customers to join the cycle.

Reach:It is to draw a potential customers attention by introducing our product to them.Customer Acquisition:Customer Acquisition is the process of identifying and attracting potentially profitable customers. The customer contacts the CSR (Customer Service Representative) and the CSR engages the customer with the various products and services offers by selling them to the customer. A customer who is purchasing the products & services needs to be activated in the system and for this various details about the customer are required: The customer may have to fill up an application form providing personal detail. Validate the identity of the customer in order to prevent fraud. Service Provider need to carry out a credit check on the customer and assign appropriate credit class based on credit history and monthly income tec. Offer appropriate products which are provisioned at the network to provide the service.Hand Holding/On boarding:Refers to the mechanism through which new customers acquire the necessary knowledge, skills, and behaviors to become aware of the products, features of the products and services offered.Customer Maintenance:Once the customer is acquired, it is required to manage and retain the customer which involves: Interacting & communicating with the customer for sales and collection activities. These interactions can be recorded in different formats like Notes, voice recordings etc., This data can be used to analyze the behavior of the customer and helps the service provider to better services in order to retain the customer Handling trouble tickets raised by the customer against any problem they face with the network or invoice etc. This data can also be used to analyze the behavior of the customer and helps the service provider for the betterment of the services in order to retain the customer. Handling any bill disputes and adjustments rose in between the customer and service provider. Query Management is also taken care under it.

Fulfillment Services: Customer usage is collected from the network and then it is rated based on the defined rate plans and billed to apply product rentals and required discounts, adjustments etc. Once a bill is generated, it is delivered to the end customer demanding for the revenue against the services provided. Customer makes the payments against the received invoices. Back office supports in fulfillment of services also takes care of transaction processing.Service Enablers:Segmentation:Market segmentation is a concept and a process well known and largely used worldwide, in most business environments.It is basically a process of grouping customers into homogenous groups in order to optimize the use of resources and increase efficiency, be it in terms of product adoption, communication and branding, distribution or pricing.

Retention:It costs significantly less to retain an existing customer than to attract a new one. Sound Telecom develops provenCustomer Retention Programsthat involve personal calls to existing customers to remind them of the benefits your company provides and prevent them from leaving. Your customers will appreciate the effort and youll retain their business.

Literature behind CLM

My project CLM (VOICE) aims to understand the customer behavior so as to increase the revenue of the company.The Project includes the following:- Customer on boarding Customer handholding Micro segmentation Customized offerings Usage and revenue enhancements

Customer on boardingCustomer on boarding includes all steps from Customer acquisition to building trust and customer loyalty early in the relationship.MTS customer acquisition model includes following phases:-1. Preparation In this phase the product and services to be offered are determined or decided and the difference between our services and the competitors services is determined. Next the proper ways to communicate the products and services is decided along with whom to target2. Evaluation This phase is about KNOWING OUR CUSTOMERS Here aim is to gain confidence of customer and understanding competition Also understanding what creates value for the customer

3. Presentation Here we try to provide information about our product and company to the customer so that the customer can decide what product or service to buy. Care is also taken to ensure that the solution s to the problems of the buyer is also given.Customer handholdingCustomer handholding is providing very close support, showing a customer for example, exactly what to do, step by step as opposed to giving them general guidelines and letting them make the decisions.In Telecom and other industries also the first 90 days of the customer lifecycle are considered crucial for building for building a good and long lasting relationship with the customer.MTS provides customer handholding to the customers who are in the early stage of relationship that is whose AGE ON NETWORK is less than 90 days.Special offers are provided to these customers or special care is taken of them as these customers qualify for BABY CARE (as called in MTS)MICRO SEGMENTATION The customers or the subscribers of the company are segmented into various homogeneous groups according to various criterias for example according to Age on network. Segmentation is basically done to study the behavior of the various homogeneous groups which show same characteristics so that specific offers can be provided to the customers according to their requirements.

In MTS segmentation of the customers is done according to the following criterias:-ARPU (average revenue per user)Customers are segmented according to the average revenue generated from each customer or subscriber which are- Fringe Mass High usageAge on network (AON)AON for a customer is the duration (in days) since customer has joined the networkFavorite LegCustomers are segmented according to their calling patterns. For example some people mostly make local calls, some STD etc.

CUSTOMIZED OFFERINGSTelecommunications companies are perfectly positioned to learn about their customers because these customers provide personal information every day. Telecoms are at the center of their customers digital universe. No other industry has access to the wealth of digital information about their customers on a daily basis. What websites they visit, what topics they search for, who they call, what apps they download all this information is being passed across the telecommunications network and can be analyzed and evaluated to determine a customers preferences .Apart from this the information about the customer calling pattern also helps to provide customized offers to the customer.In telecom industry after acquiring the customer and segmenting them according to various criterias like ARPU,FAVORITE LEG etc, offers are provided to the customers which suits their needs and help to realize revenue for the company, that is customized offers are provided to the customers which benefit both the customers and the company.USAGE AND REVENUE ENHANCEMENTAfter acquiring customers and segmenting them according to various criterias, Customized offerings are provided to the customers which are beneficial to the customers as well as the company.The offers are provided to the customers such that the usage of the customer is increased leading to the increase in the revenue for the company. Providing offers to the customers helps to retain customers hence decreasing the churn rate providing a strong customer or subscriber base to the company which helps to drive the revenue for the company.

A sample grid showing how the segmentation is being done in case of voice in MTS:Figure8a Acquisition and Baby Care

AONMax DenoFav Leg

On-netoff-netSTDBalanced

AON < 30 daysAll50 pe 70

AON > 30 days