CUSTOMER RELATIONSHIP MANAGEMENT AT AIRTEL by Sanjay Gupta

CUSTOMER RELATIONSHIP MANAGEMENT AT AIRTEL

INTRODUCTION Bharti Airtel Limited ,usually referred to simply as "airtel", is a Indian telecommunications company that operates in 19 countries across South Asia, Africa and the Channel Islands. It operates a GSM network in all countries, providing 2G or 3G services depending upon the country of operation. Airtel is the fifth largest telecom operator in the world with over 200 million subscribers as of October 2010. It is the largest cellular service provider in India, with over 143 million subscribers as of September 30, 2010. Airtel is the 3rd largest in-country mobile operator by subscriber base, behind Mobile and China Unicom. It has a 29.00% market share of the GSM mobile service in India. Airtel also offers fixed line services and broadband services. It offers its telecom services under the Airtel brand and is headed by Sunil Bharti Mittal. Bharti Airtel is the first Indian telecom service provider to achieve this Cisco Gold Certification. To earn Gold Certification, Bharti Airtel had to meet rigorous standards for networking competency, service, support and customer satisfaction set forth by Cisco. The company also provides land-line telephone services and broadband Internet access (DSL) in over 96 cities in India. It also acts as a carrier for national and international long distance communication services. The company has a submarine cable landing station at Chennai, which connects the submarine cable connecting Chennai and Singapore. It is known for being the first mobile phone company in the world to outsource everything except marketing and sales and finance. Its network (base stations, microwave links, etc.) is maintained by Ericsson, Nokia Siemens Network and Huawei., business support by IBM and transmission towers by another company (Bharti Infratel Ltd. in India) Ericsson agreed for the first time, to be paid by the minute for installation and maintenance of their equipment rather than being paid up front. This enabled the company to provide pan-India phone call rates of Rs. 1/minute (U$0.02/minute). Call rates have come down much further. During the last financial year [2009-10], Bharti has roped in a strategic partner Alcatel-Lucent to manage the network infrastructure for the Telemedia Business. The company is structured into four strategic business units - Mobile, Telemedia, Enterprise and Digital TV. The Telemedia business provides broadband, IPTV and telephone services in 89 Indian cities. The Digital TV business provides Direct-to-Home TV services across India. The Enterprise business provides end-to-end telecom solutions to corporate customers and national and international long distance services to telcos. .

VISION To be globally admired for telecom services that delight customers. MISSION We will meet global standards for telecom services that delight customers through:  Customer Service Focus  Empowered Employees  Innovative Services  Cost Efficiency

SELECTING AND MEASURING THE RIGHT COMPONENTS FOR A SUCCESSFUL CRM STRATEGY  Examine the role of Data mining to create differentiators  Determine how CRM is applied in a prepaid business  Using Call Center technologies for one to one relationships  The role of the Front line in CRM success  Measuring the Return on Investment of CRM after its implementation BEST PRACTICES FOR ANALYTICAL APPLICATIONS IN THE TELECOM INDUSTRY  Designing your analytical applications to facilitate:  Useful segmentation methodology and techniques  Effective churn analysis and prediction  Successful cross and up-selling  Targeted acquisition

 Accurate price plan analysis STRATEGIES ADOPTED  Focus on maximising revenues and margins;  Capture maximum telecommunications revenue potential with minimum geographical coverage;  Offer multiple telecommunications services to provide customers with a "one-stop shop" solution;  Position itself to tap data transmission opportunities and offer advanced mobile data services;  Focus on satisfying and retaining customers by ensuring high level of customer satisfaction;  Leverage strengths of its strategic and financial partners; and  Emphasize on human resource development to achieve operational efficiencies. TECHNOLOGY FROM WORLD LEADERS The company has partnered with telecom majors like Siemens, ECI, Lucent and Duraline for its network. While Siemens has provided the digital switching system (Siemens EWSD) with CCS-7, a signaling protocol for faster connectivity, the billing software (Keenan Arbor) has been sourced from Lucent. The Synchronous Digital Hierarchy (SDH) equipment is sourced from ECI.

SERVICE GUARANTEE

Service guarantee is a first-of-its-kind scheme and underlines Airtel’s commitment to provide error free services – ‘Services right the first time and every time’. The service guarantee scheme entails:  Repair of any dead phones within 8 working hours of receiving a complaint  Error Free billing. The scheme is a culmination of Airtel’s efforts in continuously setting new benchmarks in quality by adhering to best quality practices including SIX-SIGMA. In the unlikely event of any failure in this promise, the company will give STD/ISD pre paid calling card worth Rs. 100/- to the customers. VALUE ADDED SERVICES Besides providing world-class voice products and data services, Airtel – Broadband & Telephone Services also provides a host of value added services to its customers. These services, which add a whole new dimension to the meaning of fixed line telephony, include services like Voice Mail Service, Directory Assistance, Call Completion Busy Subscriber, Delayed Hotline, Centrex and the like. The company also provides a host of customized premium services to its customers such as live astrologers, cricket updates, sending jokes and greeting in celebrity voices, music messaging service etc. WORLD CLASS CUSTOMER CARE Apart from the state-of-the-art infrastructure, Airtel - Broadband & Telephone Services is the first to provide a dedicated 24-hour call centre. The company is planning to have a 250 seater call center equipped with the best ACDs, IVRs and Call loggers to provide world class after sales support.

THE ROAD AHEAD 5

It is an exercise in futility to invest in acquiring a new customer only to lose him before even a part of the investment can be recovered. Though retaining a customer might require seven times more effort than acquiring one it definitely makes more economic sense. Even from a long term perspective maintaining a good relationship with not just profitable customers but all prospective customers will pay huge dividends. Only a churn management system can provide a better understanding of the customer, the operators’ most valuable asset. It is important to deliver value to the customer and put in place offers that tie in the customer. New products and services development is essential to ensure loyalty. A churn management solution can help devise more attractive incentives, tariff bundles, loyalty schemes and proactive customer service along with acquisition strategies to attract the right type of customer, thus reducing fraud and bad debt—all key to a better bottom line.

Customer Relationship Management

Customer Relationship Management is a comprehensive strategy and process of acquiring, retaining and partnering with selective customers to create superior value for the company and the customer.

The Emergence of CRM Practice Developing customer relationships has historical antecedents going back into the preindustrial era. Much of it was due to direct interaction between producers of agricultural products and their consumers. Similarly artisans often developed customized products for each customer. Such direct interaction led to relational bonding between the producer and the consumer. It was only after industrial era's mass production society and the advent of middlemen that there were less frequent interactions between producers and consumers leading to transactions oriented marketing. The production and consumption functions got separated leading to marketing functions being performed by the middlemen. And middlemen are in general oriented towards economic aspects of buying since the largest cost is often the cost of goods sold. In recent years however, several factors have contributed to the rapid development and evaluation of CRM. These include : 1.

The growing de-intermediation process in many industries due to the advent of sophisticated computer and telecommunication technologies that allow producers to directly interact with end-customers. For example, in many industries such as airlines, banks, insurance, computer program software, or household appliances

and even consumables, the de-intermediation process is fast changing the nature of marketing and consequently making relationship marketing more popular. 2.

The de-intermediation process and consequent prevalence of CRM is also due to the growth of the service economy. Since services are typically produced and delivered at the same institution, it minimizes the role of the middlemen. A greater emotional bond between the services provider and the service user also develops the need for maintaining and enhancing the relationship.

Another force driving the adoption of CRM has been the total quality movement. When companies embraced Total Quality Management (TQM) philosophy to improve quality and reduce costs, it became necessary to involve suppliers and customers in implementing the program at all levels of the value chain. This needed close working relationships with customers, suppliers, and other members of the marketing infrastructure.

With the advent of the digital technology and complex products, systems selling approach became common. This approach emphasized the integration of parts, supplies, and the sale of services along with the individual capital equipment. Customers liked the idea of systems integration and sellers were able to sell augmented products and services to customers. These measures created intimacy and cooperation in the buyer-sellers relationships. Instead of purchasing a product or service, customers were more interested in buying a relationship with a vendor.

In the current era of hyper-competition, marketers are forced to be more concerned with customers retention and loyalty (Dick and Basu 1994; Reicheld 1996). As several studies have indicated, retaining customers is less expensive

and perhaps a more sustainable competitive advantage than acquiring new ones. Marketers are realizing that it costs less to retain customers than to compete for new ones. There is greater opportunity for cross-selling and up-selling to a customer who is loyal and committed to the firm and its offerings. 6.

Customer expectations have rapidly changed over the last two decades. Fueled by new technology and growing availability of advanced product features and services, customer expectations are changing almost on a daily basis. Consumers are less willing to make compromises or trade-off in product and service quality.

Today, many large internationally oriented companies are trying to become global by integrating their worldwide operations. To achieve this they are seeking cooperative and collaborative solutions for global operations from their vendors instead of merely engaging in transactional activities with them.

A CRM PROCESS FRAMEWORK We develop a four-stage CRM process framework. The broad framework suggests that CRM process comprise of the following four sub-process: customer relationship formation process; relationship management and governance; relational performance evaluation process; and CRM evolution or enhancement process.

CRM FORMATION PROCESS

The formation process of CRM refers to decisions regarding initiation of relational activities for a firm with respect to a specific group of customers or with respect to an

individual customer with whom the company wishes to engage in a cooperative or collaborative relationship. Hence, it is important that a company is able to identify and differentiate individual customers. In the formation process, three important decision relate to defining the purpose (or objectives) of engaging in CRM, selecting parties (or customer partners) for appropriate CRM programs; and developing programs (or relational activity schemes) for relationship engagement with the customers. Formation

Management & Governance

Purpose - Increase Effectiveness - Improve Efficiency

Performance

Team Structure Role Specification

Programs - Account Management - Retention Marketing - Co-op Agreements - Strategic Partnerships

Planning Process Process Alignment Monitoring Process

Partners - Criteria - Process

Relationship Performance - Strategic - Financial - Marketing - Retention - Satisfaction - Loyalty

Communication Employee Motivation Employee Training

Evolution - Enhancement - Improvement

Source : Sheth Jagdish N. and Atul Parvatiyar (2000), Handbook of Relationship Marketing, Sage Publication

(i) CRM Purpose : The overall purpose of CRM is to improve marketing productivity

and enhance mutual value for the parties involved in the relationship. CRM has the

potential to improve marketing productivity and create mutual value by increasing marketing efficiencies and/or enhancing marketing effectiveness.

By seeking and

achieving operation goals, such as lower distribution costs, streamlining order processing and inventory management, reducing the burden of excessive customer acquisition costs, and through customer retention economics, firms could achieve greater marketing efficiencies. Thus, stating objectives and defining the purpose of CRM in a company helps clarify the nature of CRM programs and activities that ought to be performed by the partners. Defining the purpose would also help in identifying suitable relationship partner who have the necessary expectations and capabilities to fulfill mutual goals. i)

CRM Programs : A careful review of literature and observation of corporate practices suggests that there are three types of CRM programs : continuity marketing; one-to-one marketing; and, partnering programs. These take different forms depending on whether they are meant for end-consumers, distributors customers, or business-to-business customers. CRM Program Customer types

Mass Markets

Distributors

business markets

Program Types Continuity marketing

• After marketing

• Continuous replenishment

• Loyalty programs • Cross selling

One-to-one

• Permission

marketing

• Affinity partnering

• Special souring arrangements

• ECR programs • Customer business • Key account development

• Personalization Partnering/co-

Business-to-

• Global account programs

• Logistics 11

• Strategic

marketing

partnering

• Co-branding

• Joint marketing

Partnering

• Co-design • Co-development

Source : Sheth Jagdish N. and Atul Parvatiyar (2000), Handbook of Relationship Marketing, Sage Publication

a) Continuity Marketing Programs: Given the growing concern to retain customers as well as emerging the knowledge about customers retention economics have led many companies to develop continuity marketing programs that are aimed at both retaining customers and increasing their loyalty (Bhattacharya 1998, Payne 1995).

For

consumers in mass markets, these programs usually take the shape of membership and loyalty card programs where consumers are often rewarded for their members and loyalty relationships with the marketers. For distributor customers, continuity marketing programs are in the form of continuous replenishment programs ranging anywhere from just-in-time inventory management programs to efficient consumer response initiatives that include electronic order processing and material resource planning. In business-to business markets these may be in the form of preferred customer programs or in special sourcing arrangements including single sourcing, dual sourcing, and network sourcing, as well as just-in-time sourcing arrangements. The basic premise of continuity marketing programs is to retain customers and increase loyalty through long-term special services that has a potential to increase mutual value through learning about each other. b) One-to-one Marketing: One-to-one or individual marketing approach is based on the concept of account-based marketing. Such a program is aimed at meeting and

satisfying each customer's need uniquely and individually (Peppers and Rogers 1995). In the mass market individualized information on customers is now possible at low costs due to the rapid development in information technology and due to the availability of scalable data warehouses and data mining products. By using online information and databases on individual customer interactions, marketers aim to fulfill the unique needs of each mass-market customer. Information on individual customers is utilized to develop frequency marketing, interactive marketing, and after marketing programs in order to develop relationship with high yielding customers. For distributor customers these individual marketing programs take the shape of customer business development.

In the context of business-to-business markets,

individual marketing has been in place for quite sometime. Known as key account management program, here marketers appoint customer teams to husband the company resources according to individual customers needs.

Often times such

programs require extensive resource allocation and joint planning with customers. c) Partnering Programs: The third type of CRM programs is partnering relationships customers and marketers to serve end users needs. In the mass markets, two types of partnering programs are most common: co-branding and affinity partnering. In cobranding, two marketers combine their resources and skills to offer advanced products and services to mass-market customers. Affinity partnering program is similar to cobranding except that the marketers do not create a new brand rather use endorsement strategies. Usually affinity-partnering programs try to take advantage of customer memberships in one group for cross-selling other products and services. d) In the case of distributor customers, logistics partnering and cooperative marketing efforts are how partnering programs are implemented.

In such partnerships the

marketer and the distributor customers cooperate and collaborate to manage inventory 13

and supply logistics and sometimes engage in joint marketing efforts. For business-tobusiness customers, partnering programs involving co-design, co-development and co-marketing activities are not uncommon today .

KEY RELATIONSHIP MANAGEMENT Relationships are not built and sustained with direct e-mails themselves but rather through the types of programs that are available for which e-mail may be a delivery mechanism. The overall goal of relationship programs is to deliver a higher level of customer satisfaction than competing firms deliver.

Managers today realize that

customers match realizations and expectations of product performance, and that it is critical for them to deliver such performance at higher and higher levels as expectations increase due to competition, marketing communications, and changing customer needs. In addition, there is a strong, positive relationship between customer satisfaction and profits.

Thus, managers must constantly measure satisfaction levels and develop

programs that help to deliver performance beyond targeted customer expectations. A comprehensive set of relationship programs includes  Customer service  Frequency/loyalty programs  Customization  Rewards programs  Community building. CUSTOMER SERVICE

Because customers have more choices today and the targeted customers are most valuable to the company, customer service must receive a high priority within the company. In a general sense, any contact or “touch points” that a customer has with a firm is a customer service encounter and has the potential to gain repeat business and help CRM or have the opposite effect. Programs designed to enhance customer service are normally of two types. Reactive service is where the customer has a problem (product failure, question about a bill, product return) and contacts the company to solve it.

Airtel CALL

CENTRE have established infrastructures to deal with reactive service situations through 800 telephone numbers, faxback systems, e-mail addresses, and a variety of other solutions. Proactive service is a different matter; this is a situation where the manager has decided not to wait for customers to contact the firm but to rather be aggressive in establishing a dialogue with customers prior to complaining or other behavior sparking a reactive solution. This is more a matter of good account management where the sales force or other people dealing with specific customers are trained to reach out and anticipate customers’ needs. LOYALTY/FREQUENCY PROGRAMS Loyalty programs (also called frequency programs) provide rewards to customers for repeat purchasing. Such programs have become a competitive necessity. CUSTOMIZATION The notion of mass customization goes beyond 1-to-1 marketing as it implies the creation of products and services for individual customers, not simply communicating to them. The idea is that it has turned customers into product makers rather than simply product takers. COMMUNITY

One of the major uses of the Web for both online and offline businesses is to build a network of customers for exchanging product-related information and to create relationships between the customers and the company or brand. These networks and relationships are called communities. The goal is to take a prospective relationship with a product and turn it into something more personal. In this way, the manager can build an environment which makes it more difficult for the customer to leave the “family” of other people who also purchase from the company.

CUSTOMER PROFITABILITY ANALYSIS- IMPORTANCE The Customer as Financial Asset “Assurance" is telecom's equivalent of the American Idol. “Assurance” usually refers to financial assets – like cash, network equipment, vehicles, and buildings. Squishy things like customer loyalty, meanwhile, don’t fit neatly in an accountant’s general ledger.But while customer “delight” is certainly tough to quantify, it’s a financial asset nonetheless – and as vital to a telecom’s future . In short, telecoms are warming to the idea that customers are financial assets that need to be assured.Telecommunications firms care a lot about "customer assurance". It's just that they know it by many different names. Customer assurance spans an array of business systems and best practices from customer care and analytics. . . to churn management and CRM. Yet no single one of these terms captures the essence of customer assurance in a holistic way. So the definition: Customer Assurance: Strategies that synchronize business intelligence, customer interactions, and marketing programs to optimize customer value. KEY

FUNCTIONS

THAT

COME

UNDER

CUSTOMER

ASSURANCE

UMBRELLA  Profitability Assessment: Tying costs and revenues to specific customer segments to ensure products yield maximum profits.  Churn & Loyalty Management: Predictive modeling & other techniques to proactively retain and increase the revenues of profitable customers.

 Business Intelligence/Analytics: Data warehouse & mining techniques to enhance decision making and uncover profitable data patterns.  Self-Care: Web- and IVR-based techniques for lowering call center and billing costs, keeping customers informed, and making customer interactions more efficient.  CRM/Customer Care: Personal interaction techniques and policies that improve the effectiveness of the call center, trouble desk, and field sales.  Credit/Fraud/Collections: Processes to ensure the financial integrity of customers.  Campaign Management: Coordinating and measuring advertising, direct marketing, and sales programs.  Data Integrity: Detecting, correcting, and maintaining the accuracy of data used in customer assurance. Having said that it should be realised that not all customers are equal. There are some who give bread and butter and others who provide the jam. And there are those who actually take away a good part of the hard earned meal! Evaluation of customer profitability breaks the myth that .all customers, big or small, near or far. are profitable. A good understanding of customers (be they direct customers or trade) and their profitability helps in allocating differential resources towards them. This in turn would translate into higher profits for the organisation as a whole.

Many organizations cannot even begin to improve the management of their customers simply because they lack the information of where to start and where to focus their efforts. Some organisations have made significant investments in IT and tried to take advantage of the benefits on offer. But more often than not they have not integrated their investments. CRM as a concept may be appreciated but its spin-offs have not been measured and adapted for business benefits. In order to assess the profitability of customers, all costs need to be allocated to each of the customer. It is relatively easy to glean direct costs like transportation cost, cost incurred in handling returns, discounts offered etc associated with each customer. The challenge is to allocate overheads in proportion to the resources deployed for each customer. Activity based costing system is used for measuring costs of activities and tracing the customer cost to the activities it consumes. e.g. Sales personnel salaries can be allocated in proportion to the time spent in servicing the customer. Such an exercise can become tedious in AIRTEL. In addition, one must bear in mind that the cost of gathering data for computing customer profitability has to be in line with the benefits sought from the initiative.

They would normally expect the 80:20 rule to apply when discussing the distribution of customer profitability with 20% of the customers providing us with 80% of profits. But it is found that the distribution of profitability in many circles is much worse.

Airtel also bears in mind that few customers would be unprofitable for reasons such as new customers with high potential., .new product developed for them which is under stabilization. and so on. The solution they adopt by focus on the following three initiatives to improve overall profitability:  Better customer management  Targeted selling efforts, and  Focused customer retention  Subscriber usage patterns  Rate packages and retention incentives  Focused costing model for all customers. These combined elements enable profitability analysis by various groupings and can serve as the basis of effective marketing programs and product and service launches. This approach minimizes churn and maximizes profitability. MAKING CUSTOMER DATABASES MORE PROFITABLE For years, Airtel have attempted to maximize customer value through the use of general ledger reporting systems and segmentation. However, thanks to modern technology, today are seeking to extract even more information, not just from their existing financial systems, but from customer management and operational systems as well. To accomplish this, they are looking for an environment that can help them understand and maximize the profitability of their existing customer base. This is particularly true in the current economic environment where companies can no longer sustain growth through the purchase of customer databases alone. Instead, companies are finding that to be truly competitive in the 21st Century, they must grow profits from existing customers. 20

For Airtel the 80/20 rule, that roughly 20 percent of a company's customer base accounts for 80 percent of its revenues. This formula also implies is the remaining eighty percent of a company's customer base is either marginally profitable or possibly even profiteroding for the organization. So by merely adding more customers to its base through direct acquisition, a company might actually be reducing its value while it's increasing revenue. A potential formula for disaster. Airtel’s need for organization to sustain and grow profits from internal opportunities has led companies to search for retention and cross sell solutions that differentiate service levels based on the total value exchange of a customer. In other words, the customers that drive the most value for the company should be the customers that receive the highest levels of value from your organization in the form of service and product offerings. This means focusing more time on retaining the best customers, while spending less time on marginally profitable customers, and ridding unprofitable ones. For this , it needed a shift in technology. To understand the dynamics of customer profitability, it's important to understand the drivers of profit or loss as these interactions flow through a customer's record and to evaluate the specific risk and spread funding characteristics of individual products and services held by the customer. If only looks at organizational-based reporting measures that average customer revenue, funding, cost, and risk information regarding products and services, it is missing specific information critical to understanding the true behavior based profit of the customer. While organizationally-based information represents a level of "truth" within the organization, it lacks access to deeper levels of customer data to determine true

profitability. Behavior-based analysis offers this deeper level of access to customer actions, reaching its full potential when tied to the big picture. TRADITIONAL ORGANIZATIONAL REPORTING — IT'S ALL ABOUT THE GENERAL LEDGER From the beginning of modern business, organizational information has been based on profit and service center activity, and the financial activity of business units that drive the detail of general ledger reporting. Once the basic available information has been collected, a business can use it for budgeting, planning, and forecasting — all primary financial control tools. This information comes from a Airtel’s business units and is then tied directly to the general ledger. It is both highly accurate about the activity of the business unit and highly aggregated with respect to the underlying details of the customer behavior that drives balances, revenues, and costs for customer activity. Without this valuable information, an organization could not operate effectively. However, as Airtel realize that customer databases can now be turned into goldmines of potential profit, the general ledger system alone has not been able to effectively access this customer information and turn it into bullion. This is where behavior-based measuring comes in. BEHAVIOR-BASED PROFITABILITY — IT'S ALL ABOUT THE DATA To get a deeper view of customer profitability that reflects the profit and loss behaviors of individual customers requires a great deal of data about a customer's activities. This level of information based on a customer's revenue generating and cost-incurring interactions with an organization is stored in the company's database and is driven by the profitability model.

These specific profitability models start from base level profit objects, such as accounts, passenger records, subscription numbers, and shipment figures combined with transaction and interaction information, and other customer details that are required to give a company a full view of the customer's value to the organization. In addition, there are costs and revenues that are not transactional-based — such as the fees and costs of establishing, maintaining, and closing a relationship these must be captured and allocated to get true profitability. To find the true value of behavior-based profitability, it's important to look at four areas within this methodology that can help AIRTEL calculate their most valuable customers, but also identify and track those that are least profitable.  FEE REVENUE Specific fee revenue figures at the account/customer level are usually quite easy to correlate to the general ledger. However, some level of modeling or approximation may be needed to make allowances for small buckets of revenue as the application accounting system or back room operations likely hide the necessary detail needed to account for this revenue. In general, between 95 percent and 99 percent of the detail is available, but 100 percent of detail must be accounted for and allocated to achieve true customer account accuracy.  COSTS Customer activity level costs are often difficult and time-consuming to capture and they are generally not as up-to-date as the figures available for a company's products and services. This is often the case because the time and effort involved in capturing customer level activity costs often lag the organization's creation of new products and channels as they enter the market. Any remaining costs not typically identified in the general ledger,

such as overhead costs that do not directly tie to customers or their level of individual activity, should be apportioned to customers and the activities to which they apply. In order to attain accurate data at this level, it's important that well-thought-out and specific apportionment schemes are in place so the right groups of profit objects get the right amount of cost. In addition, some of the costs of doing business just do not happen at the customer level. For instance, capital for business, market, and operational risks are only indirectly related to customer activity. And fixed assets expense and organizational infrastructure costs arise from organizational mandates and are also very loosely tied to customer activity. But by capturing these activities that are most common and represent the highest amount of cost, the organization can identify and allocate essential costs that both drive and affect customer profitability. Once these figures are captured, additional costing work could then be driven by customer activity levels and product offerings so that the most important costs are always part of the profitability calculation.  RISK-ADJUSTED FUNDING COSTS AND VALUES Customer balances are generally correct to the general ledger, and include both monthly and/or cycle-end balances. However, to achieve detailed level profitability often requires the use of daily average balances for calculation of spread revenue and risk, making this level of information not readily available in general ledger. The actual interest amount paid or received by customers can be tracked in detail at the account level by the application accounting systems.  RISK Just as the attributes of behavior determine revenue and expense, it is the attributes of the profit object that determine the level of credit risk that should be assigned to customers.

Airtel use credit scores to accomplish this task. Profit objects without a credit score can, at a minimum, use a portion of the monthly reserve for losses to approximate the cost of credit risk. There exist many complex and highly accurate ways of determining the risk of loss given default on a specific profit object. Additionally, there are many highly sophisticated and accurate ways of deterring the potential for loss on a specific profit object. All of these methodologies can be reconciled in detail back to the financial results from the general ledger, therefore improving analysis and projections going forward. While all of these areas improve the level of accuracy of behavioral-based reporting, they reach their full potential when tied to a company's general ledger to achieve true customer profitability. MERGING

BEHAVIOR-BASED

AND

ORGANIZATIONAL-BASED

REPORTING — IT'S ABOUT CUSTOMER PROFITABILITY TAKING FLIGHT Maintaining both behavioral-based and organization-based reporting methods can be costly to an organization. Yet, both systems serve essential roles in the organization and neither can be dispensed with. To merge these two methods of analysis, it's necessary to create an environment that captures the detailed data and serves the need of management to plan for people and pencils. Further, this solution must accomplish its tasks in a timesaving manner and be able to be quickly corrected when new and unforeseen issues arise. For successful development of financial management capabilities, whether this is G/L, Risk Management, Budget & Planning, Cost Allocation, Fund Transfer Pricing, Customer Value Management, Performance Management or Statutory reporting — a comprehensive architecture that addresses all financial management needs is essential. Having such an architecture enables an AIRTEL to detect the "white spots" and to prioritize future customer development activities.

CORE ACCOUNTING AND DELIVERY SYSTEM ARCHITECTURE The central piece of a successful financial management architecture is the enterprise data warehouse which brings together all of the essential elements that support an organization's financial needs, including G/L, Risk Management, Customer Value Management, and so forth. As more detail is supplied by the application systems and brought into the structured warehouse environment, the information becomes more consistent and reconcilable. This allows Airtel’s business to have a complete view of its customers and its organization — while supporting the specific financial reporting needs of the company.

By deploying this new type of enterprise database architecture, it's now possible to marry the accounting system information that drives the books as well as the account and

customer level behavior based profitability information that identifies customer profitability. As all components of both reside in this single architecture, the comparison and contrasting of the reporting results are made into one efficient task. And while the results of the profitability metric may not always balance directly to the financial statements, they are certainly reconcilable within this environment. This reconciliation process can provide companies with a roadmap to improve the accuracy of such things as the costing system, operations for the collection of revenue, the tying of a credit score to the provision for losses.

AIRTEL’S STRATEGY — MAKING CUSTOMER PROFITS SOAR It's becoming increasingly clear that typical general ledger environments alone are not enough to support a company's need to generate highly accurate and actionable customer profitability models. Equally, it's clear that pure behavioral-based information is not enough to maximize corporate profitability if it is not tied to the general ledger. However, when these methodologies are merged in a company's enterprise database architecture, organizations are able to maximize products and services to their most profitable customers and reduce or replace unprofitable ones. Together, they are helping organizational profits to soar. Yes, it took mankind thousands of years to realize that a simple shift in technology would allow humans to fly. A similar shift in technology is making it possible for companies to access a deeper level of customer information, helping businesses to better understand and increase customer profitability in ways that were undreamed of just a few years ago. Data warehouse technology — allowing true customer profitability to fly.

KEY FACTORS THAT KEEP COMPANIES FROM ADOPTING AND USING CUSTOMER PROFITABILITY ANALYSIS.  A lack of comprehensiveness. The majority of customer P&Ls lack enough detail to provide a true view of total cost and customer contribution. The most valuable customer profitability analysis captures data across all functions and includes customer-allocated cost metrics related to manufacturing, distribution, logistics, sales, trade marketing, order management, administration and support, and customer overhead.  Manual vs. automated processes. Data for customer P&Ls are typically extracted manually from various sources and entered into a spreadsheet for review and analysis. This time-consuming process creates inconsistent data gathering and analysis and infrequent updates, making its use and value limited. In addition, customer cost and investment data need to be continually updated, as actuals come in to replace estimates. If this continuous feed of data isn’t automated, it’s very likely that it never will be updated.  A lack of integrity and user buy-in. Manual and non-comprehensive processes create results that tend to lack integrity. Data quality compounds the issue, as critical data such as promotion cost/investment may be found only on salespeople’s laptops. Data integrity issues cause business owners to second- guess analytical results — and not use them to engage in a mutually beneficial and productive dialogue with their channel customers. Without sound data integrity, business owner buy-in is a challenge.

 Point-in-time and single use. This needs to be developed and automated for continuous use and measurement, vs. a one-time tactic for negotiation purposes or leverage.  The process is overcomplicated. Customer P&Ls need not be fully loaded and reconciled to corporate financial reporting statements and systems. The focus should be on business use and reporting vs. financial use and reporting.  The “80/20” fallacy. Promotional investment and spending are no longer representative of total investment and the cost of doing business with a customer. Years ago, an understanding of customer specific trade promotion ROI would have provided with 80 percent of the cost category of investment in a total customer profitability analysis. Today, size, complexity and individual customer requirements generate other significant costs and investments critical for accurate analysis, such as freight, inventory carrying cost, HR support investment, displayready pallet cost, “nuisance fees” and so on.  No linkage to strategy. As industries have rushed toward a solution, putting technology before strategy was a key shortfall. Companies must develop a transformation roadmap and plan for how they will use this type of analysis to affect their bottom line. How customer profitability analysis will be used is a key element to developing a strategy. An effective strategy and the use of customer profitability analysis should outline mutually beneficial (to manufacturer and customer), measurable and actionable uses and results. The manufacturer and the customer can engage in reinvestment dialogue, using the analysis to highlight mutually ineffective

and inefficient activities — such as returns, unsaleables, random-case picks and emergency orders — that are driving cost and, therefore, investment that could be more effectively reallocated and reinvested toward mutually beneficial activities, such as consumer marketing, branding and retailer equity development.

LIFE TIME VALUE

“What you use to measure your success often defines your vision and your strategy”. According to AIRTEL , if the company’s goal is more customers, one can get them, but they may not be profitable. Airtel are not believing in the idea that sales and discounts are the road to success. They knows that all these may actually be the road to ruin. Lifetime value is the net present value of the profit to be realized on the average new customer during a given number of years. Airtel firmly believes LTV is a wonderful concept, and can be an excellent guide to profitable strategy. The steps they are going through are these:  Get the customers to give the data, and build it into a database complete with purchase history.  Use the data to segment your customers by profitability. The goal of their marketing programs should be to build a relationship with customers whose behavior can be modified, to convert them over time into long run loyal and profitable customers. The process can be measured and tracked by using a lifetime value chart. LIFETIME VALUE BEFORE NEW PROGRAMS Year 1

Year 2

Year 3

Customers

5,000

3,500

2,590

Retention Rate

70.0%

74.0%

80.0%

Visits/Week

0.64

0.69

0.78

Average Basket

$33

$45

$55

Total Sales

$5,280,000

$5,433,750

$5,555,550

Cost Percent

83.0%

80.0%

79.0%

Direct Costs

$4,382,400

$4,347,000

$4,388,885

Labor + Benefits 11%

$580,800

$597,713

$611,111

Card Program $16, $8

$80,000

$28,000

$20,720

Advertising 2%

$105,600

$108,675

$111,111

Total Costs

$5,148,800

$5,081,388

$5,131,826

Gross Profit

$131,200

$352,363

$423,724

Discount Rate

1.00

1.20

1.44

NPV Profit

$131,200

$293,635

$294, 253

Cum. NPV Profit

$131,200

$424,835

$719,088

Lifetime Value

$26.24

$84.97

$143.82

In this chart, they are tracking the performance of 5,000 newly acquired customers over three years. Their initial retention rate is 70%, which means that during the first year, 30% stop shopping with us. The retention rate goes up over time, as loyal customers are sorted out from disloyal ones. The lifetime value of these customers is $143 in the third year. They should note that this is based on the net present value of their profits, adjusted by a discount rate. The discount rate is needed because money that will receive in the future is not worth as much as money that have in hand right now. The rate discounts future money so it can be legitimately added to current profits to get a valid lifetime value. The formula for the discount rate is: D = (1 + i)n Where i = the current interest rate plus a risk factor, and n = the number of years that have to wait to get hands on the future money. The lifetime value numbers are really very powerful measures. They include in a single set of numbers the retention rate, the spending rate, the costs of marketing, and the discount rate. By themselves, however, they are not as powerful as they will be when using them to evaluate marketing strategies.

This strategy is targeting certain customers whose behavior y want to change, and giving something only to them that can afford which helps to modify their behavior.

LIFETIME VALUE USING CUSTOMER MANAGEMENT PROGRAM Year 1

Year 2

Year 3

Customers

5,000

3,750

2,963

Retention Rate

75.0%

79.0%

85.0%

Visits/Week

0,68

0,73

0.82

Average Basket

$38

$50

$61

Total Sales

$6,120,000

$6,843,750

$7,409,213

Cost Percent

83.0%

80.0%

79.0%

Direct Costs

$5,079,600

$5,475,000

$5,853,278

Labor + Benefits 11%

$673,200

$752,813

$815,013

Card Program$16, $8

$80,000

$30,000

$23,700

Customer Specific Marketing

$61,200

$66,438

$74,092

Advertising 1%

$61,200

$68,438

$74,092

Total Costs

$5,955,200

$6,394,688

$6,840,176

Gross Profits

$164,800

$449,063

$569,037

Discount Rate

1.00

1.20

1.44

NPV Profit

$164,800

$374,219

$395,165

Cum. NPV Profit

$164,800

$539,019

$934,183

Lifetime Value

$32.96

$107.80

$186.84

With the resulting savings, they have boosted programs for his valued customers. The retention rate has gone up from 70% to 75%

VARIOUS CRM INITIATIVES

With the increased penetration of CRM philosophies in organizations and the concomitant rise in spending on people and products to implement them, it is clear that AIRTEL see improvements to establish long-term relationships with their customers. However, there is a big difference between spending money on these people and products and making it all work: implementation of CRM practices is still far short of ideal. Airtel is recognizing the importance of creating databases and getting creative at capturing customer information. They Are continous learning how to develop better communities around their brands giving customers more incentives to identify themselves with those brands and exhibit higher levels of loyalty. One way developing an improved focus on CRM is through the establishment or consideration of splitting the marketing manager job into two parts: one for acquisition and one for retention. The kinds of skills that are need for the two tasks are quite

different. People skilled in acquisition have experience in the usual tactical aspects of marketing: advertising, sales, etc. However, the skills for retention can be quite different as the job requires a better understanding of the underpinnings of satisfaction and loyalty for the particular product category. In addition, time being a critical scarce resource makes it difficult to do an excellent job on both acquisition and retention. As a result, Airtel has appointed a chief customer officer (CCO) whose job focuses only on customer interactions. In this organization, the person overseeing the company’s marketing activities, the VPMarketing, has both product management and the CCO as direct reports. The CCO’s job is to provide intelligence to the VP from marketing research and the customer database for use by product managers in formulating marketing plans and making decisions. In addition, the CCO manages the customer service operation. Although it would perhaps seem more logical for the CCO to report to product management, the reporting arrangement to the VP-Marketing is a signal to the company of the prominence of the position. The CCO also interacts with other company managers whose operations may have a direct impact on customer satisfaction. The notion of customer satisfaction is being expanded to change CRM to CEM, Customer Experience Management. The idea behind this is that with the number of customer contact points increasing all the time, it is more critical than ever to measure the customer’s reactions to these contacts and develop immediate responses to negative experiences.

These responses could include timely apologies and special offers to

compensate for unsatisfactory service. The idea is to expand the notion of a relationship from one that is transaction-based to one that is experiential and continuous. As with any decision with substantial resource implications, a cost-benefit analysis of CRM investments must be performed. 36

CREATING A CUSTOMER DATABASE A necessary first step to a complete CRM solution is the construction of a customer database or information file. This is the foundation for any customer relationship management activity. This should be a relatively straightforward task as the customer transaction and contact information is accumulated as a natural part of the interaction with customers. The task will involve seeking historical customer contact data from internal sources such as accounting and customer service. Ideally, the database should contain information about the following:  Transactions.

This should include a complete purchase history with

accompanying details (price paid, SKU, delivery date)  Customer contacts. Today, there is an increasing number of customer contact points from multiple channels and contexts. This should not only include sales calls and service requests, but any customer- or company-initiated contact.  Descriptive information.

This is for segmentation and other data analysis

purposes.  Response to marketing stimuli. This part of the information file should contain whether or not the customer responded to a direct marketing initiative, a sales contact, or any other direct contact.  The data should also be over time. CRM RESPONSIBLE FOR MAGIC AT AIRTEL Though it is continuously spreading its wings, expanding its capabilities, and exploring new horizons, one rule at Bharti remains unchanged: seek out the world’s best technology and put it at the service of customers. CRM is part of this process. WHY CRM FOR AIRTEL 37

In a telecom services company like Bharti, airtime is considered a product. “It is vital for them to manage the expectations of their customers and provide them with innovative products and services in a manner which makes them loyal,”. To achieve this, Bharti needed to have the appropriate means. “To better serve their customers they needed a tool. It is this need that made them to opt for a CRM (customer relationship management) solution”. CHERRYPICKING A SOLUTION Today Bharti is using the Oracle CRM platform. “As part of their vision, they intend to provide AirTel services anywhere and at any time. A customer should get the same quality of service no matter which of our call centres he contacts. This has been the vision, and because of that they have gone in for a centralised application like CRM. The implementation of CRM also helped Bharti in having a unified workflow and unified processes across the country. Before choosing its CRM tool, Bharti evaluated many options. It considered factors like  Proper workflow automation  Facilitation of knowledge sharing  Integration with the billing system. After a thorough evaluation, it decided to go ahead with the Oracle CRM platform. BENEFITS One of the primary things that Bharti has done with CRM is SEGMENTATION OF CUSTOMERS, which has helped in providing customers more value for their money. It is important to understand and segregate customer needs depending on the product and services he is buying.

METRICS The increased attention paid to CRM means that the traditional metrics used by managers to measure the success of their products and services in the marketplace have to be updated. Financial and market-based indicators like profitability, market share, and profit margins have been and will continue to be important. However, in a CRM world, increased emphasis is being placed on developing measures that are customer-centric and give the manager a better idea of how her CRM policies and programs are working. Some of these CRM-based measures are the following:  Customer acquisition costs  Conversion rates (from lookers to buyers)  Retention/churn rates  Same customer sales rates  Loyalty measures.  Customer share or share of requirements (the share of a customer’s purchases in a category devoted to a brand). All of these measures imply doing a better job acquiring and processing internal data to focus on how the company is performing at the customer level. AIRTEL CUSTOMER INITIATIVES In fact, most cellular players to be the leader, left much to be desired in meeting Telecom Regulatory Authority of India’s Quality of Service (QoS) standards. In such a scenario, business intelligence solutions such as analytical CRM can help companies gain a 360degree view of the customer’s needs to address a wide range of customer initiatives ranging from profiling and segmentation, maximising cross and up sell opportunities, customer retention, customer loyalty and lifetime value. 39

Using analytical CRM solutions, companies are empowered with answers to questions such as:  Who are their best customers?  Which customers likely to leave?  What can you do to retain them?  How can you attract others like them?  How can you improve the profitability of all your customers? ANALYTICAL CRM SOLUTIONS WORKS The first step involves creating a central repository of customer data. This is created by extracting, cleansing and transforming data from multiple sources such as the billing systems, call detail records, customer demographic and tariff data. Once all of this data is organised, consolidated and stored in a repository that is scaleable and extensible, it is ready to be used for predicting the propensity of churn for a possible segment of customers or an individual customer. The churn model that is built using predictive capabilities throws up a score or a number that ranges anywhere from 0 to 1 for a particular customer. This number typically depicts the likelihood of a customer to churn. For example a number like 0.9 shows that the propensity of a customer to churn is extremely high. On the basis of such information, and in keeping with various other parameters like the average bill value of a customer, payment patterns, usage, etc., an organisation can strategies on various initiatives to retain the customer. This initiative is increasingly gaining strategic importance in telecom on the basis of the fact that it costs 3 times over to acquire a new customer vis-à-vis retaining an existing one.

Additionally, business intelligence (BI) solutions can also help to optimize network planning and capacity, analyse, validate and monitor network fraud, run effective and efficient marketing campaigns across multiple channels that result in higher levels of customer satisfaction and revenue stimulation. In light of the above it is important to arrive at a holistic view of BI. BI encompasses customer intelligence, supplier intelligence and organisational intelligence to deliver true enterprise intelligence. Customer Intelligence is thus a subset of BI and includes analytical CRM, marketing automation, marketing optimisation and interaction management is a integral component of BI. Thus in an industry where your customer is your competitor’s prospect and an organisation as good as the last call, it is imperative to maintain optimum levels of customer satisfaction in order to foster customer loyalty and maximise lifetime value. The time for customer intelligence has arrived! DATA ANALYSIS SUPPORT Area of telecommunication sector is predetermined to take advantage of data analysis methods, because it continuously operates with huge streams of data changing dynamically every second when customers are using the services. Competition for every customer is very crucial here, independently if the company is GSM service operator or stationary phone connection provider. Due to wide public access to telecommunication services the number of potential customers is very large, it corresponds with the number of citizens in active age. Furthermore, acquiring and keeping the customers directly translates to company's profit. Therefore the proper understanding and care of customers is essential and this can not be done without intelligent exploitation of the available data. CREDIT SCORING

Credit scoring is regarded as one of the most successful data modeling applications in business area. It involves an evaluation of your customers based on their application and behavioral data. This analysis can be used in various situations concerning any kind of credit offering to a customer, for example renting a valuable products or devices, mobile phones exchange, deciding on new contracts length with the customer, evaluation and tolerance of billing delays, credit scoring for leasing purposes etc

CUSTOMER LOYALTY / CHURN ANALYSIS The goal of this analysis is to identify customers that are likely to leave company and join the competition, what is especially critical in highly competitive market of telecommunication sector, where profit is directly related to number of customers and loosing a customer means he/she will most probably use the competitor's offer. Churn modeling helps to increase the loyalty of customers towards your company in several ways. Discovering the factors causing a churn enables a company to address them properly. Additionally, separating the particular group with high churn likeliness allows to focus more on your loyal customers. SURVIVAL TIME ANALYSIS OF A CUSTOMER Survival analysis estimates life time value of a customer and his/her churn hazard over a time (a churn means a customer is turning to different product provider). The analysis describes distribution of the survival time for individuals in a given population, investigates the strength of parameter influence on expected survival time and allows to compare survival time distributions among different subpopulations. By using this method the company can get valuable insight into customer behavior and find ways to increase his/her survival time. Especially within telecommunication companies, the survival time analysis finds a wide set of applications e.g. deciding when is the best time to update a contract with customer, designing new contract duration and other conditions customized to specific client. FRAUD DETECTION Fraud detection has proved to be powerful method capable of saving significant amount of money to a company as well as maintaining good relations with their customers. Detecting the frauds means identifying suspicious fraudulent transfers, orders and other

illegal activities against your company. Models of fraud scoring can be divided into application and behavioral scoring. Application fraud scoring detects suspicious clients at early stage of signing a contract with the company based on data from the client's application form. Another model - behavioral fraud scoring, is built on data collected during the client'slife time activities e.g. billing data, usage of services or history of actions. Fraud detection is often applied to avoid telecommunications fraud (various misuse of communication services), computer systems intrusion, Internet transaction fraud, telemarketing fraud, identity theft etc.

CRM IMPLEMENTATION TAILOR-MADE SCHEMES

SEGMENTATION OF CUSTOMERS - AirTel is now able to give its customers more value for money.  Able to provide customers different schemes and services depending on airtime usage.  Customer is a heavy user then they have some specific schemes; for normal users they have other schemes.  They have also managed to segregate their workflow with the help of the CRM tool. CHALLENGES - Roll it The biggest challenge for Bharti was to have a unified process in place. Once this was done they faced the challenge of imparting training. “When you go in for such a largescale implementation you will definitely have problems,” . They

also had certain

technical difficulties during implementation, but were able to overcome them. CRM STRATEGY: The CRM strategy at Airtel revolves around two aspects:  Operational CRM  Analytical CRM. Operational CRM is about helping their call centres in the workflow part, helping them in their day-to-day activities. Analytical CRM provides staff with the required information on customers; this is used for business development activities. Altogether they help Bharti provide better services to its customers. MANAGING CUSTOMERS FOR VALUE ENHANCEMENT 45

AIRTEL believes in , “don't talk about exceeding customer satisfaction - that's passe - the time has come to `dazzle the customer'. But to do that, first you must get customer relationship management (CRM) in place. “ For Airrtel , "Managing customer relationships is not only complex but is also multifaceted and thus calls for an inter-disciplinary approach." Particularly, as in the New Economy, the customer has become very demanding and the emphasis needs to be on being consumer-centric. "Technology solutions as applied to various front-end functions could aid in building a viable link between the organisations and customers irrespective of geographical separation. This has to be backed with appropriate systems and processes to mine the right type of data by the right function in an organisation." Besides technology, systems and processes, another important link is human resource. ONCE CRM IS IMPLEMENTED, WHAT MAKES IT CLICK "The success of CRM hinges on how it is implemented". Uneven focus is bad for its implementation. Also in the new economy, targets and objectives change every few weeks. The priorities then become very different,'' he added. The solution lies in putting in place a set of people across the organisation focused on implementing CRM. What is required is building relationship over a period. This could be the most integral approach and go a long way in harvesting CRM profitability. For CRM to succeed, enterprise-wide solution is required - this was the common refrain at the meet. BECAUSE GOOD RELATIONS MATTER In a competitive telecom marketplace, where operator service offerings look deceptively similar, the only differentiator is the quality of customer contact responsiveness through

improved internal process management. The expansive nature of the operators’ business processes coupled with an ever-increasing subscriber-base unwittingly introduce service errors, which could adversely impact customer retention. Customers would unlikely talk of a satisfying experience but would definitely let out a customer service failure, impacting operator credibility.

PEOPLE STRATEGIES AT AIRTEL

"If CRM is the key, HR would be the nerve centre for any CRM activity." ESOP now a vibrant tool for attraction and retention : Lowering of attrition. WORK CULTURE The work culture at Bharti Mobile is one that is open, informal and performanceenabling. 'Speed' (chosen over Perfection), innovativeness, respect for people, empowerment with accountability and entrepreneurship are some of the key ingredients of the organization culture. SKILLS THAT ARE IN DEMAND AT AIRTEL AT ANY POINT OF TIME Airtel strongly believe that 'softer skills' are extremely important to deliver error-free service to customers.  Working in teams  Inter-personal skills  Communication skills  Creative thinking  Entrepreneurial skills etc.  Basic domain knowledge  Certain functional skills like Network Management, Revenue Assurance, Risk Management and Collections PEOPLE WITH WORK EXPERIENCE OR A FRESHER The pace at which the company are growing demands more people with requisite experience across functions. However, do employ freshers as a strategy to have trained 48

people for the future growth needs. This year as a group hired Engineer trainees and Management Trainees from top management institutes for various group companies. RECRUITEMENT PROCESS  As a Corporate policy, Airtel works with a select panel of Consultants/ Search Agencies across the Country.  Also attracts a lot of people applying to us on email, by post and walk-ins.  Apart from this, also have employee referrals coming in.  They have a documented process for recruitment. Airtel primarily look for candidates with high energy levels, with a value system aligned with ours, and having the 'softer skills' mentioned above. Only such candidates are further interviewed. TRAINING - POST RECRUITMENT 

All new employees undergo a comprehensive induction programme.



Also take formal feedback for continuous improvement.



For employees joining in Customer Services, provides job training for two weeks

ending with certification. This year, for Management trainees, we have drawn out a detailed 52-week training schedule. The assignments to be carried out are well scoped and with clear learning objectives and have name of the guide and the names of 'Mentors' for each of the trainees. CAREER TRACKS OFFERED Bharti strongly believes in adding value to employees' experience. They have, in a planned manner, moved people both laterally and vertically within the company and within the group companies. Being in a very exciting expansion and growth phase

currently, career enhancement opportunities for employees at all levels/ all functions are huge. STEPS TAKEN TO ENSURE THAT PEOPLE HAVE A GOOD EXPERIENCE IN THEIR WORKING ENVIRONMENT A good working environment is a fundamental requirement in our business. Airtel ensure that the employees are 'at ease -at work' and have no constraints coming in their way of 'delivering error-free service', be it to external customers or internal. The key challenge here is to make every step in the process that much more simpler and easier for their employees to follow. The launching of a 'Quality Movement' across the organization last year has been highly successful in  Mapping and establishing 'processes'  Establishing role clarity, resulting in reduced 'hassles' for all. IMPORTANT ELEMENTS OF A GOOD WORK ENVIRONMENT  Informality  Fun  Work life balance  Basic welfare facilities They have evolved, over the last one year, into a strong, well-knit one big family of people with a mission to provide 'world class service' to their customers. One other important factor is 'employee communication'. The management strongly believe that sharing company information, performance, plans, listening to employees' views, recognizing teams and individuals in an open forum, helps developing credibility

and thereby mutual trust. This impacts the work environment very positively. Also, the facts -that Airtel had huge successes in the last one year and that 'Bharti' is always in the media - also compliments efforts to boost the morale and help employees take pride in working with Bharti Mobile. Unique HR policies Unique policy like 'HR Reach out'. Every HR member is assigned a department. He/she works with the department very closely not only to proactively enable employees perform but also to partner with the business and influence business processes and policies. Few more would be the 'Customer Contact Programme'. Once a month, all senior managers reach out to customers to get a first hand feel and feedback from them. Similarly, some senior managers go and meet channel partners, meet walk-in customers to gain feedback on their experiences with AirTel. Also have forums like 'Knowledge Management Meets' wherein the heads of a specific function from other mobility circles in the group meet to share best practices. BUILDING OF COMMITMENT FACTOR IN EMPLOYEES Airtel know that only motivated and empowered employees give 100% commitment. The role of HR in Bharti Mobile is to align organization goals with employees' aspirations, develop commitment, passion and a positive attitude, build employee capability and so on. Thus, their strategies and objectives flow from our role. Few key objectives have achieved and are working on, are to have clear job descriptions, performance objectives, training to enhance job performance and managerial skills, ensure internal equity in compensation and benefits, have a sound rewards and recognition scheme, involve employees in reviewing and influencing policy and process changes through team

working, have open communication forums where in employees are encouraged to ask questions. Also conduct  Employee Satisfaction Surveys  Departmental strategic matrices developed to work on employee feedback, etc. These initiatives have helped immensely in building credibility with employees and gain their 100% commitment to performance. PREPARE PEOPLE TO DO IT RIGHT THE FIRST TIME ITSELF The essential pre-requisites are a right attitude, commitment to quality and knowledge. Airtel formally rolled out a 'Quality Movement'. If they have to 'deliver error-free services right from the first time, every time', then need to consistently conform to requirements of the customer. The aspect of 'How to' is addressed by the 'Quality Education Series' (QES) sessions, which all employees go through. This and the other programme on QC Tools & Techniques helps employees develop and document processes using the process model worksheet, enter into 'service level agreements' with internal customers and conform to their requirements. Appropriate reward and recognition programmes to support this initiative, customer contact programmes, customer meets, visits to AirTel Connects, to upcountry locations, cross- functional knowledge building, customer-first training module, various teambuilding initiatives helps to deliver error-free services to their customers. ATTRITION RATE & EMPLOYEE RETENTION Attrition rate annualized is 18%. This may be far lower than what it was a year ago, but are still hopeful of bringing this to around 14 to 15% over the year.

One of their key strategies focuses on Retention. They work very hard to retain key contributors. They acknowledge their efforts and provide fast track growth, additional percentage increase in compensation, etc. A detailed retention policy is being worked upon currently which for instance will include inviting such employees to meetings meant for senior managers, additional leave, additional bonuses etc. FACTORS THAT ATTRACT JOB SEEKERS 'Speed' is the main ingredient for success and when communicate this to prospective candidates, they are very attracted to this way of working. Also, their brands AirTel and Magic are very powerful, have been conceived very well, have high visibility and recall. SEVEN STEPS TO PERFORMANCE THROUGH PEOPLE  Leadership that Moves People  People Relationship Management  Alignment and Communication  Training  Measurement  Technology Error! Hyperlink reference not valid.REWARDS OF PEOPLE PERFORMANCE MANAGEMENT Organizations focused on fostering customer loyalty via a motivated work force will outperform those that aren't. BENEFITS The benefits include:  Higher profit margins

 Increased sales  Increased market share  Greater net income per employee  Lower costs  Better asset utilization  Increased innovation  Fewer Accidents

BUSINESS PROCESS SUPPORT

As the leading provider of mobile services across India, Airtel is an Indian wireless “super brand” within a fiercely competitive mobile telecommunications market. When the company needed a single enterprise-wide billing system to support the acceleration of its postpaid mobile business, it turned to CSG Systems to deploy its Kenan billing and order management systems. While the Kenan system ensured that Airtel delivered the high-quality customer service and products it is known for, the operator sought to do more to continue to maintain its No. 1 status in the market. Airtel wanted to optimize every point within its infrastructure to further enhance operational efficiencies and maximize its investment. By infusing industry best practices into its organization and leveraging its billing operations to its fullest potential, Airtel knew it would be able to stay ahead of its competition. To assist with this challenge, Airtel turned to CSG’s billing experts to work side-by-side with Airtel staff on-site to meet its objectives. By leveraging CSG’s expertise in billing operations, Airtel could focus on what it does best: delivering unparalleled mobile services to the Indian market. CHALLENGE: OPERATE TO ACCELERATE While the Kenan systems were in place to run Airtel’s entire business using a two instances billing and order management platform for postpaid and wireline business, decentralization of Airtel’s business made the operations—and optimization—of these systems more challenging. Under India regulation, each business region, or “circle” was, essentially, a separate business entity with distinct business owners, thus opening the door for duplicative, competing, and/or redundant processes. 55

Under this de-centralized organization, Airtel realized that it needed to deploy a cohesive and coordinated approach to operating its systems. Airtel also wanted to ensure its longerterm self – sufficiency and not build a model that relied on third-parties for support. Airtel turned to CSG experts for help. Under a six-month engagement, CSG’s Professional Services team worked with Airtel staff to design to develop a world class billing operations organization across India and provide comprehensive day-to-day support for its Kenan®/BP billing engine and Kenan®/OM order management systems. CSG also played a key role in coordinating numerous other strategic initiatives, such as developing standard operating procedures, enhancing business processes to optimize efficiency, providing best practice recommendations on revenue assurance and creating/implementing an overall architectural framework for its billing and order management infrastructure that will scale to support Airtel’s rapid growth over the coming years. SOLUTION: OPERATE, ALIGN, AND TRANSFER  Bharti’s Airtel engaged with CSG’s Professional Services Organization through the Operate, Align and Transfer arrangement, a model by which CSG manages billing operations on a short-term basis and then transfers it to the operator.  Under this model, CSG assumed temporary ownership for Airtel’s postpaid billing operations. During this timeframe, Airtel’s operations team reported into CSG, learning on-the-job best practices and tuning processes daily. What ensued was a complete analysis of the organization (design & capabilities), the processes, the underutilized components of the solution, the revenue leaks, and the implementation of critical business projects to optimize Airtel’s investment and build a solid, centralized operational foundation for Airtel’s future.

 The Operate, Align and Transfer model is part of CSG’s™ Outsourced Operations offerings, which leverages the company’s world-class expertise in managing and operating billing and customer care systems and extensive product portfolio to deliver a comprehensive solution to telecommunications operators worldwide. CSG™ Outsourced Operations includes a variety of approaches including day-to-day management on-site, remote application management, managed applications and hosting and traditional service bureau.  CSG’s Outsourced Operations offerings are tailored to meet the unique business needs of an operator by delivering a wide range of outsourced services and solutions. With this approach, operators can rely on CSG to manage all or segments of their billing and customer care infrastructure through on-site or service bureau models. Through this offering, operators can also choose if and when they wish to take over the day-to-day operation of these systems. RESULTS: Leveraging CSG’s Professional Services Team, Airtel made numerous enhancements to its operations, including: IMPROVED OPERATIONAL EFFICIENCIES AND QUALITY OF CUSTOMER SERVICE  Increased rating timeliness by 90%. This enables Airtel to provide current details on what the customer has spent, and as a result gives the operator better fraud and bad debt management capabilities.  Created a Zero Billing Delay environment across all circles, providing a more predictable and reliable revenue stream for the operator.

 By streamlining online data management and reducing the level of communications required between ordering systems and switches, Airtel reduced the amount of time it took to provision an order by 60% (from 12 minutes to less than 5 minutes).  Improved rating, roaming & billing performance from 50%-800%  Enabled business reporting intelligence by deploying automated intelligent business reporting tools, reducing the number of daily reports from 1,300 hard copy reports to just 83 that can be viewed via the Web across Airtel’s organization.  The CSG team worked with the Airtel sales & marketing teams to explore software functionality previously underutilized by Airtel (rate plans, discounts, payments, revenue treatment) and develop strategies for how these tools could be used by Airtel to significantly improve Airtel's competitive advantage at little to no additional cost.  By centralizing the way in which its billing and IT operations were managed, Airtel was ahead of its competitors when the Indian government enabled operators to obtain a universal license that allowed for a more centralized business structure. OPTIMIZED SYSTEM AND RESOURCE PERFORMANCE TO STREAMLINE COSTS  Reduced the number of bill cycles by 80% and engineered an on-time billing delivery pan-India to improve cash flow and resource utilization.  Implemented industry best practices via on-the-job training and effective knowledge transfer program. AirTel now has in place a sophisticated internal billing operations team trained to optimize system performance and fully tap system capabilities. Besides operational efficiency and cost-savings, this also enabled increased time-tomarket with innovative market offerings.

 Engineered and implemented a multi-year hardware infrastructure to fully optimize the company’s hardware investment.  Designed best practice revenue assurance processes and utilities.  Implemented more than 30 standard operating procedures with clearly defined roles and responsibilities.  Delivered end-to-end system performance improvements CRM REFERENCE MODEL

This reference model is logically layered model that includes touchpoint, business application, process, CRM, Data management and Decision support layers. It was developed as a result from customer feedback and extensive research in the marketplace on Enterprise

TOUCHPOINT AND PRESENTATION LAYER This layer presents information to the business end-user through a communication channel-specific device. The presentation and navigation displays a consistent “look and feel” for input and output information in the format required by the device (e.g., browser, terminal, keyboard, keypad, phone) that is consistent across different business processes and their functions. Navigational aids will be presented to human interfaces; buttons, hotspots, etc on windows or browser (HTML) based interfaces, menus or other simpler interfaces such as 3270 terminals, or interactive voice for voice channels. The navigation function of a front-end helps the user to control the usuage of, or switch between different elements of the presentation surface, e.g., activate a specific window with the mouse, or a select a presentation object specific function with the right mouse button. In addition, this layer will determine the kind of communication channel being used, and will transform the information going to and from the process layer to the required interfacing of this communication channel, e.g., Text-to-speech for Phone/IVR, CGI/Java for Internet, etc.

It will also prepare the user identification and process selections required by the next layer. BUSINESS APPLICATION LAYER This layer determines the communication touchpoint being used, and transforms knowledge from the touchpoint to the Application such as Billing. PROCESS LAYER The process layer provides services to different communication touchpoint- specific devices, from a single implementation of that specific device. The process layer is separated into a Contact, Context handler and personalization. The user accesses information through a communication channel-specific front-end; the user’s authorization and profile together form a context under which all interaction between the user and IT functions that form and support a business process are carried out. The Contact and Context Handler initiates and terminates the communication channel/user dependent context with a process/routing engine. It registers the context to the Contact Management, Segmentation, Routing, Resource Management and Channel Management making it known to the underlying layers. Personalization executes the business logic initiated from specific context and selects a set of business rules specific to the business process.

CRM LAYER This layer represents databases that consist of the single customer view, integrated contact/dialogue, customer profile, and content information. This layer also provides for the ability to perform analytics and reporting on the customer experience by using the variety of knowledge gained from all customer activity.

DATA MANAGEMENT LAYER The data management layer is the first layer that has no direct link to the business processes. It represents purely IT centred objects: Transactions (get data x for user y and reservation z), direct read/write operations (read user profile u), etc. Its main function is the separation of data storage from business process functions. This is done by wrapping the calls to the new or legacy systems and presenting them as objects to the higher layers. Here, wrapping means transforming data in a predefined (unchangeable) format to the object representation required by the object oriented environment. This layer may also use existing data warehouse management services. DECISION SUPPORT LAYER The AIRTEL has been a leader in implementing various decision support applications in order to determine who their best customers are and what best services to offer them. Regulatory changes have made this industry so competive that many existing databases, campaign management applications, etc. exist and need to be leveraged in the upper layers of this model. VERTICAL LAYERS The vertical layers of this reference model provide services that are required by all the horizontal layers. DISTRIBUTED APPLICATION AND SECURITY COOPERATION SERVICES In order to support the mangement of objects between the various layers some generalized support will be required. DCE-services, Name-services, etc. are other examples of distributed services. Security services establish an end-to end secure 62

environment for network and system infrastructure, applications (business processes and underlying activities), and the data layer. The following services have to be provided (following the definitions of ISO 7498-2): Identification and Authentication, Authorization,Protection, Management, Audit, and Non-repudiation. IT SERVICE MANAGEMENT All components in the model will have to be managed for availability and performance (Service Level Agreements). IT management processes and technology must be in place in order for an IT organization to deliver quality services to its customers .

TECHNOLOGY NETWORK INFRASTRUCTURE - IT

Like any other telecom service provider, Bharti also considers information technology a key driver of its business. “For telecom, IT is like bread and butter. IT plays two significant roles  It works as a support system  It can also be a business driver. Thus IT is very important at Bharti. The service provider has a WAN set-up in place; it has a mix of leased lines and E1 and E3 lines for wide area connectivity. The company also has an extranet in place through which it extends different applications to its dealers and partners. They have an extremely large infrastructure based on products from multiple vendors. This includes a range of high-end servers from Sun and HP. “In the telecom business volumes are very large. Have millions of records and have to process them everyday, so for at Airtel storage is in terabytes”. Bharti also has a storage area network (SAN) in place, and has selected EMC as the storage provider for the SAN. The main data centre is located in Gurgaon, Haryana. The company uses high-end routers from Cisco, and is in the process of implementing a disaster recovery (DR) set-up. As far as software is concerned, some of the applications that are running on its network are  billing  fraud management  revenue assurance and data warehousing.

They also have some internal-facing applications like Oracle Financial and Oracle HRMS. TOOLS: Airtel has been one of the earliest adopters of software to control churn in the Indian market. The company implemented SAS Institute’s customer retention solution . Business Intelligence (BI) is an umbrella term for a set of tools and applications that allow corporate decision-makers to gather, organise, distribute and act on critical business information.BI applications include the activities of online analytical processing (OLAP), report generation, decision support systems (DSS), query and reporting (Q&R), statistical analysis, forecasting, data warehousing and data mining. Some of the popular BI tools are:  Multi-dimensional analysis software, which is also popularly known as online analytical processing (OLAP) tools. This software gives the end user an opportunity to look at the data from various angles.  Data Mining Tools - The software automatically searches for significant patterns or correlation in the data  Query Tools - They allow the user to ask questions about patterns or details in the data. For Airtel, Business intelligence is the process of getting enough of the appropriate information in a timely manner and usable form, and analyzing it so that it can have a positive impact on business strategy, tactics and operations. BI applications allow users to quickly and easily view data on essential metrics such as sales, inventory and customer activities. This information can be dispersed through a dynamic interface, preferably one

that is web-enabled. If a dynamic interface is implemented, users can explore the data from different perspectives or levels of detail. CUSTOMER RELATIONSHIP MANAGEMENT - GIS In today's competitive telecommunications market, for AIRTEL , customer service is the number one differentiator for companies. Customer relationship management (CRM) applications improve the relationship between the company and its customers. Timely service provisioning, response to customer queries, and reporting on network performance are aspects of CRM. With GIS, call center operators can access all the information on a customer and the associated network based on location. Databases containing information on outside plant infrastructure, signal quality, and equipment can be integrated using GIS and made available using a corporate Intranet. In CRM, Tier 1 handling means the customer's issue is resolved with the initial call. Tier 2 calls require initiating a trouble-ticket and obtaining additional information. Carriers who have successfully implemented GIS support for CRM achieve higher Tier 1 handling and customer service is performed more quickly and economically. With CRM contacts at an all-time high, improving CRM operations can make a big impact on the bottomline of a carrier. In the wireless sector, "churn" refers to the rate that customers jump from one service provider to another. For many carriers, customer churn is the single largest cost factor. GIS improves the speed and quality of contact handling, augments customer satisfaction, and reduces churn. BUSINESS CONTINUITY STRATEGIES FOR CUSTOMER RELATIONSHIP MANAGEMENT With the growing adoption of Customer Relationship Management (CRM) initiatives in

just about every type of industry, call centers today are much more than cost centers. They are increasingly considered strategic business assets." Call centers helps the company achieve customer-centric objectives as well as provide world-class customer service and technical support. CRM is designed to optimize profitability, revenue and customer satisfaction by organizing the business around customer segments and encouraging customer-satisfying behaviors. For many companies, call centers represent the principal link between their customers and themselves. But for Airtel , it’s a Successful call center differentiate companies, directly impact their annual turnover and competitive position, and are critical in achieving CRM goals. As a key element in CRM, call centers use three building blocks to satisfy their customers:  People  Technology  Process.  People - The human element is probably the most important component in a call center.  Technology - Call centers use network services to connect customers with the call center, telecommunications systems including Automatic Call Distributors (ACDs) and Interactive Voice Response (IVR) systems; and IT products such as workstations, computing platforms, Local Area Networks (LANs) and Computer Telephony Integration (CTI).

 Process - To make everything work harmoniously and cost-effectively, and to satisfy CRM objectives, a series of processes are needed to define how systems and people work together. With the increased emphasis on customer service, the bar has been raised on customer expectations. Customers expect 24x7 availability, as well as e-mail and Web integration. Access and availability are among the keys to top-drawer customer service. But what about the relationship of these three elements? For today's high-tech call center, people, technology and process are truly integrated. The loss of any of the key elements - whether accidental or deliberate - can put call centers at risk. RISKS TO PEOPLE Successful call centers base their success on how well their staffs perform. If call center staff members are unable or unwilling to perform their assigned tasks, the call center is at risk. RISKS TO TECHNOLOGY Call center systems such as ACDs and IVR are at risk from fires, floods, loss of power, system failure, component failure, loss of data (with no backups), vandalism, and human error. Voice network services are at risk from cable cuts, power failures, security breaches, and service interruptions. Data communications equipment at risk includes routers, hubs, switches, and power supplies. Data network services, such as switched or private circuits, or Internet-based services, face the same risks as voice networks. Business applications require hardware, such as mainframes, mid-range systems, and servers, plus business applications, utilities, and web-based programs. Threats to hardware are the same as for telecom equipment, while human error, viruses, security breaches and theft of information threaten software.

RISKS TO PROCESS Without documented procedures on how to operate, call centers cannot function smoothly. The overall business process, e.g., Customer Relationship Management, is comprised of numerous sub-processes and functions, each of which link together in various combinations.

CRM STRATEGIES

PRINCIPLES FOR BUILDING STRONG CUSTOMER RELATIONSHIPS

How to acquire, strengthen, and retain strong customer relationships in the era Principle 1: By knowing more about the customer value and anticipating relationship needs better than when the customer was involved in a high-touch relationship. Principle 2: Consolidate and make available all customer interaction information from all channels/touchpoints Principle 3: Develop a customer centric infrastructure that can consistently support the customized treatment of each customer. Principle 4: Assign dedicated people, process and technology resources to achieve profitable results AIRTEL’S CUSTOMER RELATIONSHIP MODEL Developed a Customer Relationship Model based on experiences attained from CRM project engagements globally. The Model shows that the customer relationship is strengthened by Relationship Building tactics, which are continuously measured through time. The end result is a strong customer relationship, which lead to acceptable customer loyalty, profitability and retention. Success criteria such as share of wallet, profitability and cross-sell rations are also applied as part of the continous measurement to ensure that Business Case requirements have been achieved.

SOLVING

CUSTOMER

RELATIONSHIP

MANAGEMENT

INVOLVES

ADDRESSING A PRINCIPLES-BASED VALUE CHAIN

Technology Data Warehouse/Data Mart

Extract & Transformation Database OLAP Data Mining tatistics Query & Reporting Warehouse Management Metadata Management High-End Servers IT Infrastructure Networking Network & Systems Management nternet Web Warehouse ecurity Integration Technologies Operational Data Stores Call Center & Messaging Middleware

People & Activities

Data & Applications Application Specific Data Model External Data Providers Data Hygiene / Enrichment

Business Strategy

Business Process Reengineering Change Management Cleansing & Conditioning Project Management Householding - Application Implementation - Segment of One Marketing - Data Warehouse/ Data Modeling Customer Valuation Warehouse Architecture Customer Risk Analysis Logical, Physical Design Profiling and Segmentation Channel Integration Predictive Behavior Modeling DB Implementation Targeted Marketing & CampaignManagement - IT Infrastructure Customer Contact Management IT Architecture Customer Profile Network Design, Planning & Implementation Content Management Network & System Management Catalogue Management -On-going Customer Support

CHURN MANAGEMENT What are the commonest reasons for customers to switch from one service provider to another? Some of the common driving factors for churn are  poor performance,  poor customer care,  rate plans and  handset issues - GSM or CDMA service. Regarding churn, something interesting that’s been noticed is that it’s much higher in the case of pre-paid services, with a churn rate of 8:1, than in post-paid service where the rate is 3:1. The idea of pre-paid cards is that the customer will mature to become a post-paid one and so it pays to retain him too. After all, it’s five times more expensive to acquire a new customer than to retain an existing one. HIGH CHURN RATES The industry standard is around 2 percent a month. The cost of acquiring a new customer is more than that of retaining one. The cost of acquiring a new customer is more than five times that of retaining an existing customer. Even if you calculate a churn of 2 percent a month, an operator is losing 24 percent of its customers every year. Whatever the numbers, the fact remains that the telecom industry’s bottom line is getting affected significantly thanks to the high churn rate. WHY IT HAPPENS Usually, such a high churn rate is witnessed in more mature markets where operators try to attract customers from competitors since market growth is saturated. But with one of 72

the lowest telecom penetrations, the Indian market is anything but mature. Then what are the reasons for this trend? Many subscribers shift to another vendor due to brand image. Beyond the brand image, higher churn is generally attributed to the numerous tariff options available to customers. A customer may also churn due to billing disputes with a particular vendor—billing fraud also comes into play. More than tariff plans it is the quality of customer service that prompts a customer to churn or remain loyal. In the current market scenario there is hardly any difference in offerings, prices and quality of service offered by different operators. Cut-throat competition has ensured that there is not much difference between the tariff plans offered by different vendors. This is where customer service and valueadded services come into play. If an operator doesn’t anticipate market needs or does not provide value-added services offered by the competitor, then the customer is likely to churn. Other than this, some of the key factors that encourage churn are inadequate network coverage, which includes dropped calls that occur in places where network coverage is thin and blocked calls that occur when the demand for network services exceeds capacity. The churn problem is more prevalent in the prepaid segment, which today accounts for the vast majority of Indian cellular users. The prepaid customer is more price-sensitive than the post-paid one. With rentals as low as Rs 300, customers with low usage prefer prepaid cards. Also, students and those who like to experiment with different networks prefer the prepaid offering. Bharti Cellular reduced its churn from 3 percent to 2 percent with immense positive impact on its bottom line after deploying the churn management solution SAS. Today, they can predict with 80 percent confidence, which customer will churn. Internationally

they have reached accuracy levels of 90-95 percent. But customer variables keep changing. Hence the solution has to be continuously fine-tuned to improve accuracy. SAS offers a total end-to-end customer retention solution, which supports the whole process of managing churn—right from gathering and warehousing data to predictive churn modeling to reporting and distributing actionable results to decision makers. The solution enables an operator to gain a better understanding of the variables that influence customer churn. The solution predicts a customer’s likelihood of cancellation or switchover by scoring them on a scale of 0 to 1. If a customer scores 0.73 it means there’s a 73 percent chance of his churning. The lower the score, the more content the customer. Once the scores are known, it is easy to figure out which customers are likely to switch. The solution provides the telecom company with a sliced and diced view of the customer base, thereby empowering it to treat each customer differently as per needs. The customer attributes typically considered in a churn analysis can be broadly categorised into customer demographics, contractual data, technical quality data, billing and usage data and events-type data. But the most commonly used historic variables include the time a customer spends on air, the number of calls he makes and the revenue generated from that customer. The predictive information becomes crucial as it gives the service provider a window to proactively fix the glitches in service and contain churn, thereby improving bottom lines. The solution also helps identify cross-sell and up-sell opportunities, which can have a further positive impact on the operator’s bottom line. Once they have identified the customers who are likely to churn they can take immediate measures to retain at least 85 percent of them.

POSTPAID CHURN SOLUTIONS THAT WORK  Optimising subscriber acquisition costs  Managing retention costs healthily  How do you keep your customers with an effective pricing dimension?  Matching the right customer profile with the right marketing bundle creatively  Learning points from past campaigns EFFECTIVE

CHURN

MANAGEMENT

AND

PERFORMANCE

MEASUREMENT FRAMEWORK  Exploiting historical churn data and optimising the churn prediction  Structuring a strong churn management framework Measuring the effectiveness of your churn management strategy in terms of:  Methodology  Results MINIMISING

CHURN

BUILDING

CUSTOMER

PROFITABILITY

 Using new customer induction and expectation management as a retention tool  Managing monthly payment cycles to minimise defaults  Engaging channels to expand your reach for your retention programs  Customer retention  Revenue stimulation  Direct customer communication All these enhancements successfully changed the customer retention paradigm from a reactive to a proactive one resulting in a continuous decline in postpaid churn over last year leading to an all time low churn. BEST WAYS TO PREVENT THESE HIGH RATES OF CUSTOMER CHURN  Effective customer service could be a deterrent to churn.  Branding and service differentiators also help in taking customers away from competitors.  proper operational and analytical CRM tools in place that would help segment and analyse customer behavious and predict their propensity to churn.  It is necessary to proactively strategise and service customers so as to retain the high value ones. For Airtel , Analytical customer retention solutions would help identify the high-, midand low-value customers and the valuable ones who are most likely to cancel services, and their reasons for doing so. They would also help in better campaign targeting and a more focused strategy. The multidimensional data base (MDDB) that Airtel has, let internal sales and marketing groups research customer information from their desktops .

CUSTOMER ACQUISITION Steps:  Identification of potential customers  Influence the target customer buying behavior  Customer acquisition STRATEGIES: Introduction of a new tariff plan with different slots like leisure lifestyle, executive and premium for postpaid customers. AirTel also offers different tariff plans to different segments like students, professionals, etc. Airtel has also implemented an e-CRM platform to create a central database of customer information, to enable pan-India access and service delivery.

OTHER MEANS Airtel has introduced a plethora of value-added services to increase customer ‘stickiness’. The common services offered by the operator include SMS, group messaging, voice mail, caller line identification, Hello tunes, GPRS and even multimedia messaging. Other than this, different service providers have introduced unique services for certain segments of customers, depending on their usage patterns. Operators have also introduced closed user group (CUG) services for corporate that want to provide employees with cell phones but also want to restrict their usage. Operators even offer special pricing for calls made within a limited group. Airtel also offers various mobile banking services like balance enquiry, cheque book requisition, bank statements, etc, free of cost. CUSTOMER DEFECTION Customer-focused marketing technology is developing rapidly: The term “customer database” is outdated. It has been found that companies, which reduced customer defections by 5 per cent, could boost profits from 25 per cent to 85 per cent. Today, the consumers are smarter and they expect more.As the general population becomes better educated, consumers approach purchase decisions with greater scrutiny, and they have access to more data for comparison purchasing. The Internet has led to disloyalty: The Internet as a distribution channel for product sales and information has caused many consumers to change buying habits and methods. Researchers report record-low consumer loyalty in the Internet environment. Price-based switching: the customers prefer those services or products which are offered to them at much competitive prices. Hence it has become very essential for the companies to stop the consumers from switching.

The global market introduces new competitors: As the global economy opens, our companies are seeing increased competition, and many sectors are facing foreign competition for the first time. 6 TYPES OF DEFECTORS  Price defectors, who switch to a low-priced competitor  Product defectors, who defect to a superior product offered by a competitor  Service defectors, who leave due to poor service  Market defectors, who are lost but not to any other business - they may go out of business or to another market  Technological defectors, who switch to products offered by companies outside the industry,  Organisational defectors, who switch due to internal or external politics. Analysing complaint and service data is a good method to identify problems and understand why customers defect. Analysis should be statistical and should be fairly detailed

order

understand

the

underlying

patterns

the

problems.

Strategic bundling is another way of erecting a barrier against defections that can lead to enhanced customer retention. A bundle is a group of products or services offered as a single cost saving and convenient package. A customer who opts for a bundle will not switch to a competitor even if he is offered a better deal on a single item of the bundle. Usage analysis is a method that can be effectively used to help in customer retention. Segmenting markets by consumption can provide valuable insights into the mix of customers. Heavy users are more valuable than the medium or light ones and appropriate marketing strategies have to be devised to retain them. Similarly in the business context, we find the Pareto Principle or the 80/20 rule in operation. Key accounts that comprise

about 20 per cent of the business customers are responsible for about 80 per cent of the sales generated. Such heavy and key users are prone to poaching by competitors. Hence it is important to concentrate advertising, promotion, sales and communication efforts on this segment. Medium customers should be targeted with revenue enhancement strategies through phone calls and e-mails. The light or unprofitable customers should be served in new ways to upgrade them. In some cases, the unprofitable customers might also have to be ignored. The strategies for retaining customers are a function of the nature of the product, the stage of the product life cycle, and the buying behaviour of the customers. Customer value affects customer satisfaction, which in turn affects loyalty. Customer loyalty affects customer retention. Loyalty of the customer increases with customer satisfaction at an increasing rate. Segmentation of customers should be done by satisfaction levels, prior to the strategising of retention activities. Airtel is also trying to prevent its customers to its competitors such as: Hutch and Idea. The company is establishing a strong CRM system. CUSTOMER RETENTION Airtel maintains its leadership with its effective churn controls in India. Gaining new customers is good news for any company, the flip side is the loss of customers—or churn, in industry parlance. So mobile players are putting churn management systems in place, which can almost accurately predict the behavior of fickle customers.

Churn

widely-recognized

problem

today

for

most

mobile

telecommunications providers. In simple terms churn refers to customers cancelling their existing contract only to embark on a relationship with a competing mobile service provider.

The cost of acquiring a new customer is more than five times that of retaining an existing customer. Hence it is advisable for any company to try to reduce the churn rate of its company. The churn rate of Airtel is about 2% which is at parlance with the industry figure. But if you calculate a churn of 2 percent a month, an operator is losing 24 percent of its customers every year. Whatever the numbers, the fact remains that the telecom industry’s bottom line is getting affected significantly thanks to the high churn rate. Optimizing the Level Of Customer Retention Costs (CRC) To Increase Customer Lifetime Value:  Defining customer life time value  Establishing a customer life cycle perspective  Assessing proven methods to apply customer lifetime value to define customer CRC  Ascertaining how to make CRC an investment in the future customer value

MEASURING CRM PROGRESS

CUSTOMER COMPLAINTS When the customer pays for a product or service, it is assumed that the product will work correctly or that the service received is as promised. Ideally, the customer will be satisfied, and there will be no complaints. But at times, the customer is not satisfied with the services since the expectations do not meet with the results, this causes customer complaints.

Airtel has toll free numbers for handling customer complaints. A separate division is meant for customer care, where, the customer care executives are present to handle any type of customer complaint. These customer care executives are specially trained for the same purpose. TYPES OF CUSTOMER COMPLAINTS  Letters  Spoken Word to Employees  Phone Calls  Email NEED TO LISTEN TO CUSTOMER COMPLAINTS  Development  Loyalty  Lost Customers  Employees  How to Solve Customer Complaints  Listen  Always Offer a Solution ENCOURAGE CUSTOMER COMPLAINTS  Open Details  Friendly Staff  Comment Slips Do Not Forget!

No matter how bad a problem is, no employee should be subjected to any personal insults or threats from a complaining customer. Encourage complaints rather than silence, but customers must not be allowed to threaten your employees in any way. INDICES The ultimate indication of success of a CRM initiative is the change in attitude and behavior that an organization exhibits toward its customers. To determine if the initiative is successful is to independently develop an index and monitor the progress. A Customer Loyalty and Velocity Index (Customer Love) has been done. The index's intention is to determine if the CRM initiative is successful from a quantitative view. Components of the index are:

Marketing  Response rate to marketing promotion  Sales leads generated by promotion  Conversion rate of responses  Effectiveness and cost of channels (web, TV, radio)  Product offerings (customer interest)  Sales by product offering  Market share  Product positioning  ROI on marketing expenditures

Sales  Customer turnover (rate of new customers to departing customers and the active customer base size)  Customer acquisition costs  Average order frequency and size  Revenue per rep ratio  Sales profits per customer and per contract or deal  Win rate  Number of completed sales calls per rep  Number of sales calls within a selling cycle Customer service:  Average speed of answer  Percentage of abandoned calls  Frequency of all trunks busy  First contact resolution  Number of training days per customer service representative  Average cost per customer service employee

CRM BUSINESS STRATEGY

In fact, Airtel has seen that CRM actually represents a business strategy that involves focusing knowledge, business processes and organizational structures around customers and prospect for the whole organization. Surrounding this business strategy is an information technology infrastructure consisting of data warehouses, decision engines and integrated middleware for touch points/channels in order to better understand customer behavior and

respond in a timely and relevant manner.

Today’s consumers’ can no longer be treated as a “homogenous collection of revenue generating units”†, but rather as individuals whose specific wants and needs determine unique behavior (buying patterns, channel usage, etc.).