Hicham Fadel, principal at Strategy& (formerly Booz & Company) comments on the opportunities that Big Data offers to telecoms operators in the Middle East and Africa region.
The seemingly infinite amount of internal and external information available to companies can easily lead to analysis paralysis. Companies can search through large data sets, but can end up with few insights that are useful for identifying growth opportunities. Instead, by using digital visualisation techniques to transform the mass of customer data into small micro-segments, companies can produce offerings tailored for individuals, using the most effective channel to reach that particular person.
Customers will be more likely to respond positively to these approaches, with growth resulting from the pooled profitability of each micro-segment. From the company’s perspective, it enables investment on marketing campaigns to be channelled productively, and helps to increase customer ‘stickiness’ and loyalty.
In the past, segmentation for marketing purposes has been based on broad demographic criteria, such as age, gender, income and education. The huge expansion of data at companies’ disposal makes it possible for this demographic material to be supplemented by numerous other factors which differentiate one customer from another in their needs and preferences. For example, we can determine which days and time an individual is more likely to be active online, which websites this person habitually visits, his product preferences, and the frequency of using smartphones to make purchases.
Data visualisation facilitates micro-segmentation. By experimenting with a multitude of variables, discrete and homogeneous micro-segments start to emerge in vivid graphic form out of the plethora of data. Marketers can actually see niche groups comprising customers with a very similar demographic and behavioural profile.
Companies can then build or tweak products for the relevant micro-segment. This distilled data can also be used to identify exactly how to convey offerings to the micro-segment so that the chances of a successful sale are maximised. For example, if such customers tend to visit a particular sports site just after their favourite team has played, a well-placed and well-timed advert on that site may reap dividends.
The telecoms industry offers one example of a sector which can benefit greatly from micro-segmentation. In many emerging markets, the industry has reached saturation point. Poring through crudely segmented data is costly and inefficient because excessive attention is paid to the many customers now generating little return, with insufficient focus on those offering the likeliest prospect of growth.
By adopting a micro-segmentation process, companies can locate specific demand with more precision and speed. For example, if a niche group of customers in the United Arab Emirates are frequently sending texts to friends in Oman, the mobile phone operator can detect their behaviour and offer an additional service with discounted international rates to Oman. If another micro-segment is downloading its favourite shows on tablets, the mobile operator can suggest an additional service to improve viewing quality and speed of download.
The revenue impact of this targeted formula can be dramatic. By 2011, Turkcell, the largest mobile operator in Turkey, had been confronting a continual fall in customer retention, and flattening subscription growth. In response, the company introduced an initiative which presented a new real-time view of the data from all its 34 million customers. Turkcell started to offer them the right product at the right time, based on their individual needs and preferences.
This solution resulted in the marketing cycle time being drastically reduced, and in an increase of approximately $15 million in gross revenue in 2011. By breaking down the mass of amorphous information into homogeneous chunks in this way, companies can wrest control of the data environment for their own strategic benefit, rather than allow themselves to be intimidated and paralysed by it.