A large communications service provider (CSP) that serves more than 50 million individual, business and government subscribers was faced with the challenge of optimising its customer acquisition policies by offering new customers equipment and service packages tailored to each individual’s credit risk. This is a critical new battleground for telecoms operators as markets exceed saturation and the fight to attract new customers centres on making attractive, tailored propositions.
The days of build it and they will come are long gone in many industries and telecoms is no exception to this new reality. Providing customers with consistently excellent service in a highly saturated and competitive market requires continual and expensive improvements. Successfully operationalising the process starts with giving business experts the means to quickly develop, test, scale and improve analytically driven automated strategies.
The key driver for business profitability is effective cost management in acquiring and retaining customers. The acquisition cost for customers in the telecoms industry is very high, with customers familiar with and expecting device subsidy accompanied by attractive content deals. However, there is a danger that these become little more than sideshows in a race to the bottom on price. This season’s winning offer is next month’s table stakes.
Strategies that balance the complexities of this process to ensure customers are attracted to the telecoms provider but in a sustainable way are therefore a significant operator requirement. In addition, it’s vital that these processes can adapt as customer needs change over time, enabling the operator to combine a range of factors and capabilities that add up to true competitive advantage.
How the CSP is now able to please customers and maximise profits
Hundreds of thousands of new customer applications are processed by the CSP every week. The credit analytics team is responsible for analysing these applications, determining credit risk and crafting appropriate offers based on the results.
“FICO solutions help us optimise credit policies so we can make the right offer to the right customer every time,” explains the credit analytics manager at the North American CSP.
Based on customer credit score and other credit information, scenarios are generated that maximise both profitability and customer satisfaction with the offer made. Included in this list of considerations and decisions are whether a deposit is required and how large it will be, how many subscriber lines they need, how many devices are offered and whether these devices are tablets or handsets.
Prior to partnering with FICO, an optimisation application was used to help set appropriate credit policies across multiple customer acquisition channels — including the internet, retail stores and third-party vendors — but the product imposed too many constraints on reporting and optimisation techniques.
A switch was therefore made to the FICO Xpress Optimization Suite with FICO Optimization Modeler. The Xpress Optimization Suite offers best-in-class tools for solving large, complex optimisation problems, and Optimization Modeler adds the ability to rapidly deploy highly customisable optimisation models as powerful applications without the need for supplementary development efforts.
The CSP has certainly benefited from its relationship with FICO, and the Optimization Modeler is performing as expected. The operator now generates multiple customer scenarios very quickly, limiting their exposure to high-credit-risk customers while simultaneously boosting activation rates with lowcredit-risk customers. This increases profitability without increasing acquisition expense, which is a big priority for this CSP.
Make the right credit decisions every time
- By offering each customer a credit-appropriate package of equipment and services, this industry leader increases profitability without increasing acquisition expense
- The CSP can quickly adjust credit policies to respond to changing market dynamics
- The CSP uses FICO tools to improve customer retention and reduce churn, an essential business requirement
Driving success with a strong relationship
The CSP has been pleased with the capabilities of the FICO software, and has developed a close working relationship with FICO consultants that has helped drive a rapid development cycle and successful implementation.
A collaborative working style and deep understanding of client goals helped to keep the team aligned and on-schedule. Realising the depth of the bench that FICO offers contributed to the speed of the CSP’s success.
Bringing greater analytic insight into decisions about customer acquisition helps it gain customers and build profitability over time. With a fast, accurate optimisation solution in place, it is better able to adjust credit policies quickly to respond to changing marketplace dynamics and meet the twin goals of superior customer satisfaction and corporate profitability.
Customers are at the heart of the operator’s decisionmaking, and FICO solutions help the company optimise credit policies so the company can make the right offer to the right customer every time.