Why Communications Service Providers (CSPs) are Turning to Real-Time, Event-Triggered Management of Campaigns and Promotions

Telecommunications carriers today face highly competitive marketplaces in which they’re struggling to reduce churn, increase average revenue per user, attract new subscribers, and create new revenue streams with mobile advertising and partner tie-ins.

An effective means of addressing all of these critical revenue issues is the adoption of a next-generation customer loyalty management platform that can enable personalized and timely promotions to the phone and do so in a quick-launch framework. In this program, leading experts from Gartner and RateIntegration examine the transformational power of event-triggered marketing and its emerging application to customer loyalty management in the telecommunications industry.

What are the biggest customer challenges facing telecom service providers worldwide and what should the telecom operators be doing differently to reverse these trends?

Well, I think their biggest problem is customer churn, people are leaving. The second biggest thing is that the number of new subscribers are actually slowing down. The thing to do about that, I think, is you need to establish a real communication flow with customers.

Start looking at what do they want, creating a two-way communication flow, and actually delivering the things that they’re asking for. And I don’t think that’s in the market right now. Through multi-channel campaign management, I think you start establishing that communication flow.

You get to a point where you are asking what they want and over time you start to anticipate their future needs. Hard to do, but that will start reducing the idea of around customer churn and new subscriber growth.

How specifically are these two recommendations different from what telecom operators do now or have done traditionally?

What telecom operators are doing now is a mass mailing, mass communication blasts, hoping to throw something out and see what sticks to the wall. The problem with that, it’s getting a 2% response rate and declining. Nobody is interested in getting things that are not personalized to them, that’s not relevant to them, so it’s not working.

The change is through multi-channel campaign management, coming up with relevant offers. If you use event-triggered marketing, and that is where you look to see what’s going on in a customer’s buying process, their lifecycle, and you have a relevant offer to put in that, a contextual, relevant thing to say, we see about five times the response rate of that of mass blasting.

So event-triggered marketing, moving closer to real-time, that’s the changeover that needs to happen, and where campaign management is becoming very effective.

What solutions are being used for multi-channel campaign management and how effective have they been in general?

The tools that are being used for multi-channel campaign management are event-triggered marketing and real-time marketing. And it is becoming very effective. If you look at mass marketing, you get about 2% response rate and declining. And it is becoming very effective. If you look at mass marketing, you get about 2% response rate and declining.

If you move to event-triggered marketing, that looks at what’s going on in the events of the customer and business and puts relevant things based on those events, we’re seeing about five times the response rate than that of mass blasting. So bigger.

If you start moving that to real-time, where you’re actually getting real-time information about what the customer is looking for and you have an appropriate response to that, that real-time situation or event that’s being made, we see about 10 to 15 times the response rate of that of mass mail. So huge difference between mass blasting or mass mail or mass communication and much more relevancy and much more response rates, the conversion rates, with event-triggered marketing and moving to real-time marketing.

Where are the biggest challenges facing the established vendors in the area of multi channel marketing and campaign management?

The biggest challenge that is facing campaign management vendors right now is this move to two-way communication flow channel. So from direct mail to things like email, to the call center, to the web, which is huge. That’s where the two-way communication flow actually happens.

The second thing that I think vendors, established vendors are stuck on is the difference between multi-channel interaction and just having multi channels. So you’re not having that two-way communication, you’re not having that flow, that dialog when you’re doing something on email, you’re doing something on the web, you’re doing something through the call center, you’re doing something what have you, that it’s connected, that communication, no matter how the customer is contacting you, you’re able to carry that flow through a true multi-channel relationship, not just a bunch of multi-channels.

Are there companies that are delivering event-driven real time campaign management?

There are companies that are delivering on event-triggered marketing, but it’s few and far between. It’s completely underutilized. National Australia Bank is a great example where they’ve looked at all the things that they were doing at the bank, all their products and services, and there are a lot.

Whether it was a checking account, savings account, whether it was mortgage, whether it was credit card, and they went through the process of what people are looking for, what are they doing, when and why? And they created events around every single line of business and every single product and service that they actually had.

And they were able to say, what is going on in in the customer’s life cycle, how do we put those feelers and detectors out there and all the channels that we connect to the customer, so we can take advantage, that we can come up with the right thing to say at the right time? Now this is not necessarily real-time analytics, real-time marketing, but it’s just-in-time marketing.

And I think companies don’t realize the true value of just-in-time marketing. Yes, you want to get to the point where it’s real-time where if the customer is engaging you, you have the best thing to say right there and most appropriate, because they’re going to take advantage of it. And the response rates and the conversion rates go very high.

With event-triggered marketing, it still is very high, if you’re – if a customer in terms of telecom – if a customer is not using their phone any more, something has happened, there’s a change of state, being able to detect that and then saying, let’s look at what we have.

Maybe it’s another plan, maybe there’s a problem with the phone – that you’re making those connections, you’re seeing what is relevant to us as a business and what is relevant to them as a customer, putting those detectors in each channel, now you’re being more relevant, now you’re part of that two-way communication flow.

And I think event-triggered marketing is the key to success for making those connections. Event-triggered marketing, totally underutilized. Not many people know how to set it up, what those events actually mean, so what are the real events that make sense to both sides and what are the detectors that we can put in there so when that event happens, we can take advantage of it?

What are the primary market challenges that your telecom customers face?

Well, our telecom customers, in general, and the wireless customers, specifically, are facing some increased challenges out there in the marketplace. These challenges are primarily due to the commoditization of their services, as well as the increased competition. So the first challenge is churn itself, which is at an average of about 20% annually, as the subscriber acquisition costs continue to increase.

The second challenge is the average growth of new subscribers, which is slowing down worldwide. The third is the average revenue per user, which is at a steady decline of 2% worldwide. The fourth is a new emerging opportunity which is to generate revenue through mobile advertising and revenues through their partners, which the operators are still having difficulty of choosing.

So how do the operators turn this around? In our view, the solution is to improve customer loyalty. Now that’s easily said, however, despite heavy investments in traditional forms of marketing over the years, the metrics haven’t turned positive as of now.

Why aren’t the large investments in Marketing and Campaign Management at the operators successful in reversing these trends?

Well, as we’ve discussed with our customers, and as Gartner’s research shows, the traditional practices in campaign management have centered around mass marketing and traditional forms of segmentation.

The campaigns themselves tend to be driven completely by the company, rather than based on the customer’s behavior. The campaigns tend to be one way and primarily driven by IT reports and different forms of campaigns. And what Gartner’s research shows, as well as our customers are finding, that the uptake is very low and the mass marketing or traditional forms of segmentation and reporting used to do these campaigns, have just not been successful.

What are your customers doing differently from the Traditional Campaign strategies?

Over the years, as we’ve worked with our customers, we’ve observed an increased maturity in terms of their requirements for campaign management and loyalty management. It started with a form of traditional promotions which included mass marketing and the mass marketing was based on demographics like geographic area and spend levels.

Now carriers have long recognized that the penetration for these kinds of promotions is very low. The other kind of traditional promotions that we found, were typically based on traditional segmentation and here, promotions were launched at the end of the day, the end of the week, or the end of the month, based on static reports.

Now even these forms of promotions were not find to be very effective because they were not really timely and they were certainly not personalized. So customers really felt the need to move beyond traditional promotions. We consider these kinds of promotions at the second level to be dynamic promotions.

The key parts of a dynamic promotion are, there’s active real-time listening of all the customer behavior. Second, based on this customer behavior, there’s actual triggers that generate personalized promotions. So what’s different about these dynamic promotions than the traditional promotions, is that they’re both personalized and timely, based on real-time customer behavior.

The third level of promotions are what are referred to as super segmentation. Here, the operator is leveraging various forms of viral marketing, network marketing, and community-based marketing to drive an increase in their subscriber base beyond just increasing the average revenue per subscriber. The fourth kind of promotions category that we’re seeing is partner promotions.

Here, the operator is looking to leverage mobile advertising, based of context and location-sensitive information to drive higher amounts of revenue through their partners. So essentially, it’s become very clear that the traditional forms of marketing have very low effectiveness and the operators need to move beyond that to the kinds of promotions we’ve just discussed.

These requirements seem obvious. What difficulties have your customers reported in trying to address these requirements?

Well, first and foremost, there are billions of events and transactions coming out of the network that really represent customer behavior. Now, these events have been traditionally going into the billing systems and so the first instinct within the operators was to try and address loyalty management and campaign management in the billing system.

But the challenges were, number one, the billings systems weren’t necessarily gathering this data in real-time, and number two, since the telecom industry is so dynamic and the number of promotions that needed to be launched sometimes were 25 or 30 per month, it required the billing system to be continually changed. And of course, the billing systems were really not designed to be changed as frequently as the number of promotions that were coming out of the marketing department.

The second area that customers attempted to implement loyalty management was in the CRM system. Here, traditional segmentation was used in the CRM system so one could identify his customers by geographic location or spend level to deliver customer lists from which promotions were generated.

But here again, the problems were that it wasn’t real-time and it was very difficult to change the CRM system as often as was necessary for promotions. The next area that was looked at was the data warehouse itself, where different kinds of static segmentation could be generated by the data warehouse, but the data warehouse certainly could not generate the triggers that were necessary to optimize and maximize the effectiveness of promotions.

So the challenges in a nutshell were that the traditional systems that the operators used to solve the problems of campaign management and loyalty management were that telecom was real-time and telecom was so dynamic and the existing body of systems simply could not support this.

How does RateIntegration’s solution address these two major challenges that customers face?

The first major challenge that customers have discussed with us is the fact that the mass marketing and the static segmentation and report-based promotions were simply not effective. The solution, as Gartner outlines in their report, required real-time listening for all the events in the network that reflected customer behavior, and then based on that real-time information, being able to trigger timely and personalized promotions for customers.

The second major challenge was that the operators needed to launch at least 20 to 25 promotions a month and speed-to-market was vital. And this was very difficult with the CRM or billing system or a data warehouse-based solution. RLM actually empowers business users to be able to define, publish, and execute any kind of promotion with no IT programming.

So the combination of these two capabilities, which was to be able to interact and listen to events on the network in real-time and deliver timely and personalized promotions, combined with the software’s ability to be able to define, publish, and execute promotions, with no IT programming, entirely by the marketing department, were the key foundation stones to the solution that we’ve been able to deploy for our customers.

What are the primary functions that the product supports?

The RLM suite has three components. So the first component, which is called the Catalog Manager, allows the marketing department to define any kind of loyalty plan or promotion which includes receiving any form of transaction, defining eligibility rules and benefit rules.

The second component is the real-time engine that executes the loyalty plans by listening for customer behavior and developing a profile based on which timely and personalized promotions could be triggered.

The third component is responsible for generating notifications of loyalty benefits and awards.

What do you see as the fundamental differences between the traditional loyalty management approach versus rateintegration’s approach?

The traditional loyalty management programs were primarily based on mass marketing and traditional segmentation. Here, the static profile of customer behavior was developed, which resulted in a list of customers that needed to be acted upon for promotions.

The promotions were primarily IT driven and required extensive custom programming for new loyalty concepts. Furthermore, it required interfaces with the billing system and the CRM system, it did not support new subscriber additions, because the data and customers were not already in their databases, and it did not include support for partner-based promotions.

The RateIntegration Campaign Management and Loyalty Management system, was different in that the fundamental engine is a real-time engine that listens to all the events in the network and is able to trigger promotions based on this real-time profiling of customer behavior.

Here, the promotions are actually driven by the business users within marketing and do not require any IT programming, which allows them to launch the 20 or 25 promotions to keep up with the dynamic nature of the telecom industry. Furthermore, the RLM system comes with the Interface Supervisor which allows for interfaces with the CRM and billing systems, and full support for partner-based interfaces, all in all, creating a full end-to-end loyalty management that allows you to define, publish, and generate promotions.

It does appear that RateIntegration is addressing the major challenges for real time campaign and loyalty management. Tell me about a couple of recent customer implementations.

Well, in order to protect customer confidentiality, I will not be mentioning names or specifics, but one of the most recent case studies that we could talk about is a major European carrier where about 33% of their subscribers are post paid and 66% are prepaid. The operator was being affected by the fact that new competition coming in was really impacting their churn and RPU numbers. In order to react to this, they wished to launch new promotions, particularly in the pre-paid domain, but implementing these new promotions was taking very long and expensive IT projects.

Marketing also wanted to launch multiple promotions per month in order to address the entire base. Many of these promotions required real-time interfaces and real-time triggers of these promotions. After selecting the RLM Suite from RateIntegration, the implementation of phase one was completed in six weeks.

They were able to launch their first loyalty campaign within the first week of implementation and today, marketing is able to define and launch new promotions with no IT programming.

Another recent case study is a major tier-one Asian carrier. Here, there’s about 90% of the base is prepaid and the rest, 10%, is postpaid.

The requirements here were that the promotions needed to be triggered immediately upon recharge, or upon a specific event. The promotions also needed to be triggered through multiple channels like SMS, CSR, IVR, and the system needed to easily access data from existing billing system and the existing CRM system.

One of the requirements here was the data that was existing in the billing system and CRM system needed to be used seamlessly by the loyalty management system. The RLM Suite was implemented in this carrier, leveraging data from these existing systems and enabling them to launch the promotions that they wished with no custom or IT programming.

Implementation in SIX Weeks or less sounds very rapid. What’s the integration and implementation strategy?

There’s a reason we decided to name the company RateIntegration, although we’ve never every intended to be a systems integration company. And that reason is that since the inception of the company, significant R&D has gone into building the RateIntegration integration and Interface Supervisor, also called RIS.

RIS was built from the very first days of the company’s inception to allow for rapid interfacing with any of the third-party systems we were likely to encounter at the operators. The R&D into RIS is also helping RIS to operate at wire speed in all the tier-one operators. RIS includes an entire set of standard plug-in libraries, as well as custom libraries for a series of the standard BSS, CRM, and telecom network equipment that one is likely to encounter at a telecom carrier.

With RIS, we’ve been able to interface and integrate with third-party systems and the operators in a very, very rapid fashion.

There’s clear value proposition here that can be implemented rapidly. Why haven’t more operators started implementing real-time loyalty management systems?

Although the value proposition is clear, the challenge for the operators has been the high cost of licensed software, the long implementations, and the very costly ongoing customization to keep up with marketing’s requirements.

This is why at RateIntegration we’ve started offering RLM in a software-as-a-service or pay-as-you-grow model. The monthly fee includes the RLM license, standard maintenance and support for upgrades and releases, the implementation, application support to help the marketing team with their troubleshooting, and above all, application customization in order to help and launch any of the new promotions or loyalty concepts.

All of this together is offered as a monthly fee, which delivers a very high and compelling ROI. We recently ran the ROI model for a carrier with 2 million subscribers. Using the real-time capability of RLM, the increase in revenue was about 2 million and yields a 796% ROI and a payback period of 41 days.

Tell me about the history of the company’s Loyalty Management journey.

RateIntegration was founded in 1999, the company’s headquarters and R&D center is in Research Triangle Park, North Carolina. The company’s core team is a Ph.D. level engineering organization and we’ve had an investment of millions of dollars in the core intellectual property for real-time loyalty management.

There’s over 25 global customers using the product around the world, including majors like BT and Vodafone and others, as well as emerging market carriers. In the early days, although we were helping carriers reduce churn and increase RPU, it was not really called loyalty management.

Loyalty management and campaign management came into their own only in the last two, three years and accordingly, in the last two releases, we have rebranded our suite from its former names, which included PriceMaker and ARS, to the RII Loyalty Manager, or RLM. It’s the same engine, it’s been processing billions of transactions around the world, and it’s being implemented by partners worldwide.

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Why Communications Service Providers (CSPs) are Turning to Real-Time, Event-Triggered Management of Campaigns and Promotions