And in November 2008, Vodafone's Chief Executive, Vitorio Colao, issued a statement saying: "We will drive operational performance through customer value enhancement, rather than revenue stimulation, and cost efficiency. We are confident that by targeting our offers, we can deliver more value to our customers and have a better financial outcome for Vodafone."
Turning subscribers into fans
The aim of customer centricity reaches past simply providing attractive products and services, to creating fans that rave about the level of service they get whenever they deal with the CSP. This means building operations and processes around what customers want instead of letting products and services drive business development.
"This takes a shift in thinking about services and how they are managed," explains Araceli Del Rio Sastre, Strategic Marketing, Nokia Siemens Networks. "Rather than managing only the lifecycle of each service, the customer centric approach focuses on the customer lifecycle and how end-user demands change over time. A customer that has just joined a CSP is unlikely to have the same expectations two or three years later."
Customer insight is vital
Clearly, this approach demands an understanding of end-user needs at each stage of the customer lifecycle. A holistic view of end-user insights across the organization enables CSPs to build better customer relationships, increase customer spending and raise customer loyalty throughout the relationship. Yet, 87% of CSPs do not have a unified view of all their customer data, making it hard to achieve a fully customer centric business.
One of the first steps along the road to customer centricity, therefore, is to combine all subscriber data into a single database that can be accessed through open interfaces by any application and by any part of the CSP's organization. Such a unified and real-time view of subscribers gives the CSP a detailed understanding of a customer's value, needs and behavior at each stage of the lifecycle.
Focus on the most valuable customers
A pinpoint focus on the value of each customer is also vital. Nokia Siemens Networks estimates that 20% to 30% of a typical CSP's end-users generate 70% to 80% of the Customer Lifetime Value (CLTV). There are also cases where 10% of end-users generate 90% of the profits.
By analyzing the actual expenses incurred by each end user, such as device subsidies, call center costs, service and call delivery costs, a CSP can develop a comprehensive view of user behavior, costs and profitability.
"When such analysis is conducted, the results show that the CLTV varies widely, even among high-revenue users. This contradicts the belief that high-revenue customers deliver the highest profits," says Del Rio Sastre. "Rather than treating all customers as equal and all network traffic as equal, a better approach is to focus on the highest value and most profitable customers based on real insights into their demands."
There are five key factors that affect the quality of the customer experience: brand, cost and billing procedures, network and service quality, portfolio and the efficiency of customer service. Getting any of these factors wrong can lead to increased churn, while getting them right encourages customers to stay loyal and increases CLTV.
"One of the most effective ways to enrich the customer experience quickly is to invest in those areas in which the CSP is weakest, yet which are seen as being most important by end users," says Del Rio Sastre.
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