Wednesday, August 26, 2009

Getting To Know You! - Part I

Getting to know Customers and their preferences can be a daunting challenge for a Company that serves many, if not millions of Customers. The challenge lies in that because of the large number of Customers, the relationship between Company and Customers can be almost anonimous or impersonal.

Take the case of a mobile carrier, like AT&T (I chose AT&T for no other reason than they are my service provider and only to exemplify) with close to 50M subscribers or Customers: how does AT&T know that +14075551212 is a preferred Customer worth keeping?
Consider that I
  • use my mobile phone as my only phone
  • make many international calls, particularly to Latin American countries
  • am not a frequent text messaging user
  • rely heavily on e-mail for business
  • am not a surfer of the web on my phone
  • access the internet through the 3G data service.
Since data services (text messaging, internet access and e-mail) are more profitable than voice services (local and international calls), AT&T would like to explore how to entice me to increase my data usage. Also, AT&T would like to keep me as a Customer (I am guessing - my monthly phone bill is about $350) and make sure that upon contract expiration, I don't jump to T-Mobile or MetroPCS.

More importantly, AT&T would like to know how many subscribers with the same behaviour and profile (demographic) are there and how to obtain the same results for that group of Customers.

The answer lies in computer based tools. Some are referred to as Customer Relationship Management or CRM and others are known as Customer Behaviour Analytics (CBA). These tools rely on collecting and processing information about each customer. The information ranges from basic demographic info like address, preferences, payment method and history or place of employment to detailed information about the use of the product or products.

CRM allows for recording of interactions between the Customer and the company through the Customer service representatives, maintaining a history of purchases, returns, complaints and so forth. Everytime an Advantage American Airlines customer makes a reservation, American Airlines knows to assign an aisle seat or type of meal (in the olds days passengers used to get meals during flights - Ha!). For a description of CRM benefits and advantages I recommend the following article:

CBA tools, on the other hand, rely on massive amounts of transaction based data generated as result of a Customer transactions such as phone or credit card usage. Everytime a phone call is made, the network generates an electronic detailed record of that call: CDR. As result of usage, a company like AT&T using CBA tools can analyze and draw inferences on the behaviour of millions of subscribers, at the same time and with great confidence that the results will be accurate. A company can get a glimpse of how often a Customer uses the product, how and where. The company can also determine what similar services the Customer uses and is likely to use. For additional info on CBA try this link:

On my next blog I will discuss usage of CRM and CBA for small to medium companies: Getting To Know You! - Part II

1 comment:

  1. CRM evolution is interesting topic.
    The original concept of a CRM was wonderful. A tool for sales people to better manage their customer relationships. I've sold Microsoft's CRM systems and I have used many others. As CRM has evolved, it has become a sophisticated micro management tool as much as a sales tool.
    Combined unrealistic objectives with management presure and a sales force will spend valuable time entering creative garbage into the CRM while their looking for other jobs. When they are replaced, the next sales person finds all that garbage. I think the top management in many companies needs to be better educated about the the original purpose of CRM so; it will be used only in constructive ways.