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The future of customer value management is analytics-driven

4 min. Read

We were excited to read McKinsey’s views on personalization

The February 2022 view of McKinsey’s Technology, Media & Telecommunications practice, “Unlocking the value of personalization at scale for operators” offers excellent advice for telecoms operators.  It describes what this McKinsey practice calls “the key driver of future growth.” 

Here at Intent HQ, we agree with the sentiment and recommend you review the article for yourself.

Personalization and customer value management are already a key growth driver for telecoms.  McKinsey says about 70% of Telecoms have at least a pilot project underway and many are successful.  But only about 5% are unlocking the full potential.  McKinsey estimates revenue gains of 10% and customer satisfaction increases of 20% to 30% are feasible.

McKinsey cites an earlier study of theirs saying, “Across industries, our research has found, companies that excel at personalization generate 40 percent more revenue than average players.“

Intent HQ enable personalization at scale

Intent HQ have been working with telecoms clients for years to implement personalization at scale.  When an operator moves away from “spray and pray,” and adopts more customer-centric messaging, the results can be impressive.  For those who get all the way to “true personalization with privacy guaranteed,” it will be a compelling competitive advantage. 

Consumer data protection and the need to inspire customer trust was barely mentioned in the McKinsey article, but at Intent HQ we think any discussion of personalization should start with privacy.  EU law requires privacy by design and default, and we have seen that privacy protections must be designed-in, not bolted-on after problems arise. 

Our experience agrees with McKinsey’s suggestion to start “leaning into data and analytics” by “starting small.”  In the case of a major U.S. operator,  “small” was about 10m of their roughly 70m mobile customers.  10m is more than enough “big data” to take advantage of sophisticated analytics and AI models, but enabled more speed and flexibility.  A crawl, walk, run approach permits necessary shifts in other parts of a company’s operations.  This client is now on track to deliver tens of millions of dollars in incremental revenue from their personalization efforts.

Personalization works primarily by making messages more relevant and memorable, so customers are more likely to act.  Instead of a broad promotion of phone accessories as a Mother’s Day gift, we helped the client create and refine four sub-audiences.  This enabled more relevant targeting (e.g.: “new moms” and “music-loving moms”).  This campaign generated 21% more sales.

Can a message be highly relevant to a large segment of customers instead of just a microsegment?  Of course!   “Killer new products,” “best sellers” and major new service announcements are examples. However, these broadly-relevant messages can support only a fraction of a telecom’s goals.

You might think that “back to school” has this kind of broad-segment appeal.  But by helping our client to identify separate audiences with special creative and offers (to middle school, high school, and college parents) our client saw higher open rates, decreased unsubscribes, and more sales.

A well-selected microsegment lends itself to relevance and can stimulate creativity.  Personalization can be based on “specific actions” (as mentioned by McKinsey) or by other factors, including psychographics, brand affinity, interests, or intent.  Telecoms operators already build models based on these kinds of attributes but can profit from refinement.  One client, a major UK telecom, had a good internal model for optimizing contract renewals and used a variety of premium offers to drive renewal.  One of those offers was a yoga app.  By augmenting their model with added insights (customer interests related to yoga), we helped the client to target the same number (1.9m) of renewing clients, yet increased the number of renewals by 63%.

Becoming more agile

The “agile” type of operating model recommended by McKinsey can be valuable.  Operationalizing data insights to activate true personalization requires insights to be accessible.  Teams responsible for customer service, products, markets, communications “creatives”, media and metrics professionals, and others can all contribute more to company successes when they have these insights at their fingertips.  We are working with our clients to democratize and reduce the time to operationalize insights from months to just a few weeks.  So, in our experience, McKinsey’s key idea is to connect the “brains” with the “legs” of personalization.  We would add: also connect these with the creative “heart” in between.

Read McKinsey’s article  “Unlocking the value of personalization at scale for operators” or contact us to discuss it in more detail.