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Mobile Service Provider Case: Core Communications Business and Beyond

Client: Leading wireless operator in Central America. Situation for 2010 (before implementation). Churn rate: 28%. Average Revenue per Customer (ARPC): $4,2. Total yearly revenue: $23 480 000. Financial Services Division generating all of the corporate profit while the core business was losing money. Outcome within year after implementation: Yearly churn rate: 14,3%. Average Revenue per Customer (ARPC): $7,2. Total yearly revenue: $33 520 000. The Financial Services Division increased revenues by 17%, and the core business showed a profit of over $4 000 000. Business summary: The clients core business was beginning to falter, while value added services (mainly money transfers) were looking to expand and grow. The growth of the value added services was viewed as vital to keep the overall business healthy. Objectives: Find ways to improve the commercial performance of the core wireless business; Put in place an organizational and technical infrastructure to allow for mobile lending services; Find and provide guidance for implementation of additional revenue generating opportunities.

Case Study
Initially, the client came to Scorto seeking to expand the offerings of its financial services division. Through partnership and consulting services provided by Scorto, it was soon realized that there were actually 4 different opportunities which could be taken advantage of in order to solidify the core business, but also take advantage of additional revenue streams which the company was in good position to take advantage of.

For more information: www.scorto.com, sales@scorto.com. Scorto Corporation. All rights reserved. This case study is for informational purposes only. SCORTO MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY.

Addressing the core business


In 2009, yearly churn rate was 28%. With customer acquisition cost of $6.20, this led to monthly losses of about $810 000. Additionally, ARPU had fallen from a high of almost $50 per user to under $4 per user which was causing large problems with cash flows and the health of the business. Almost immediately, Scortos consultants realized this was due to some flaws in customer acquisition and treatment strategies which were ultimately caused by over-reactions to competition when the market surpassed saturation levels (in terms of penetration). Scortos experts were able to advise the senior management on some alternative policies and strategies which were ultimately adopted. One of the steps the client took was to comprise a dedicated analytical team of 6 professionals devoted to market trends and customer satisfaction. With help of Scorto Behavia, a data mining tool for processing customer data, the team analyzed subscribers behavior for the previous 12 months and comprised reports detailing why customers would be loyal, leave, spend, or show interest in additional services. These reports presented customer satisfaction level, factors that have influenced customer satisfaction, customer spending behavior, their product preferences and history of their interaction with clients front office. Scortos consultants also recommended breaking out the results by vertical (individual, enterprise, government, etc.) so that the results and insights would be laser fine in terms of accuracy. This led to multiple insights. For example, the majority of reasons for customer dissatisfaction appeared to be for reasons other than network problems. Additionally, through inexpensive surveys based on some of these results, it was learned that customers would have been more loyal if they understood that there was a pricing plan which would ultimately be less expensive for them than the competition was offering (which in most cases there was), and would have therefor allowed them to take advantage of greater air-time accessibility. The results have been amazing. Other than some of the metrics mentioned above, a simply remarkable feat has been to increase customer loyalty from 5.3 onths at the start of 2009 to over 18 months as of the close of 2011. A Similar approach was introduced for new business origination. Instant pre-screening of potential subscribers allowed Scortos client to estimate success of the future deal and to determine most suitable subscription type. This also allowed them to project (with great accuracy) the profitability and take rates of proposed new pricing plans and marketing campaigns.

Instead of dumping and engaging in price wars company has brought in a customer-oriented approach focused on customer loyalty AND shareholder value. The combination of experience, expertise, creativity and work ethic demonstrated through the partnership of Scortos consultants, the clients personnel, and Scortos Customer Intelligence System, Behavia, has proved that this is possible beyond the shadow of a doubt. A system of advanced data analytics combined with the skills and alents of the project team enabled the client to grow their business through delivering an exceptional experience to their customers while at the same time growing revenues and subscriber additions. As a result, the companies key indicators (top-line revenue, customer loyalty, subscriber additions, etc.) are on track to all reach record highs in 2012. As a result of these better-than-expected results, the clients parent company is looking at taking similar actions and approaches in several of its other markets around the world.

Gaining market intelligence insights


Through Scortos consultations as well as Scorto Behavia, the client has learned to take advantage of various types of data about their customers, information about their personal preferences and spending patterns. This allowed the client to raise additional revenues in the form of selling market intelligence and providing advertising services. Using predictive analytics and the data already on hand, the Client has mined, formatted and package bulk data to be provided to marketing companies and other types of entities. This has added tremendous value to these companies in putting together their marketing campaigns, and defining their target audience. Data was provided in the form of reporting that helped detail behaviors and patterns of certain market segments (based on geography, age, spending patterns, or combinations of various factors). Since no data was provided about specific individuals, there was no concern of privacy laws being broken. Within 12 months after the implementation, the Client has brought up additional revenues of $1,224,000 through the outlined marketing insights solution. Roughly 64% of this revenue was garnered from providing bulk marketing data to various businesses throughout the country, and the rest was created by selling advertising (SMS, web-banners, etc.) to businesses of all industries and sizes.

For more information: www.scorto.com, sales@scorto.com. Scorto Corporation. All rights reserved. This case study is for informational purposes only. SCORTO MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY.

Providing Credit Scoring Services


Another powerful revenue stream was providing Credit Scoring and application processing services, offering process automation and advanced risk management. Subscribers among Credit Unions and Microfinance Institutions appreciated having a cloud based loan origination system that would allow them to approve or reject applications in a matter of minutes. In addition, they could be provided with a risk score and fraud detection services (either as a separate service or in addition to the application automation services) to minimize their risks on each loan granted. There was no need for the client to go through the hassles of convincing banks to share their data, or many other obstacles that credit bureaus typically deal with. Most of all, the company has established a core and loyal subscriber base to support the growth in this business unit. So, in effect, the company had more data on more individuals and businesses than any bank or credit bureau in the company. So, the ability to provide credit scoring services was already present, however it was through Scortos consultants and Behavia solution that this service was enabled. With a fee of $1.50 per application processed, revenue from application processing services constituted 2% from the companys total revenue within 12 months of the implementation. Scorto leveraged its extensive experience to design an initial set of credit products and risk models for the Client. Scortos consulting helped the client to develop the processes and infrastructure necessary. Currently the client has a staff of 4 risk analysts supporting this business, and is using Scortos Loan Decision to power the application processing automation. Overall, company records show that this is the fastest growing business unit of all the services this client provides to its customers.

Conclusion
Data available to mobile service providers has tremendous power. Leaders who appreciate role of technology face valuable opportunities: from watching behavioral trends, extracting market insights to providing lending and credit reference services. The right strategy, derived from strong leadership can provide success stories even greater than this one when the endeavor is also armed with the right tools and expertise to turn company goals and desires into reality.

Providing mobile lending services for Clients user base


Responding to emerging demand and leveraging their already world renowned financial services division, the company started providing mobile lending services to its clients. Within the first year, 6.8% of the subscriber base had applied for a loan. The basic model of the loan was monthly, with an application fee and interest applied to the amount due at the end of the period. Application fees were charged regardless of whether an applicant was approved or declined. The amount was deducted from the amount on the clients mobile account.

For more information: www.scorto.com, sales@scorto.com. Scorto Corporation. All rights reserved. This case study is for informational purposes only. SCORTO MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY.

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