Teradata Profitability Analytics Bolsters Profits

Teradata Profitability Analytics Bolsters the Bottom Line for Mobile Communications Companies

Actual behaviours, transactions and activities analysed for precise, integrated profitability measurement

SYDNEY, AUSTRALIA – Teradata, a division of NCR Corporation, has announced the availability of its Profitability Analytics software aimed at bolstering the profitability among mobile communications companies.

The software suite consists of Teradata Value Analyzer, which precisely measures current profitability, and Teradata Lifetime Value, which predicts lifetime profitability. Teradata Profitability Analytics enables mobile communications companies to develop customer relationship management (CRM) strategies with value as the foundation.

“With the number of wireless users growing each day, mobile communications companies must now determine not only how to improve retention rates, but also how to maximise the value of these subscribers,” said Jim Powell, Teradata vice president for communications industry in Asia Pacific.

“Recent Yankee Group research has indicated that the current economic and competitive environment is forcing wire-line and wireless communication service providers to better understand the profitability of their service customers and sales channels,” said the Yankee Group’s David Hawley.

“Mobile communications companies have led the charge for a wireless phone in every hand,” Powell said.

“But as penetration rates begin to peak, many of these companies are shifting their focus to retaining customers and encouraging higher spending to drive revenue growth. In doing so, they need to determine not only which customers are likely to spend more money, but which customers are more valuable to retain,” Powell said.

Most mobile companies measure their business on average revenue per user (ARPU), which is fine during rapid growth mode. But today’s market requires different standards. Measuring revenues without analysing affiliated costs – everything from network usage, customer care expense and incentives – doesn’t give a true picture of each account’s contributions to the bottom line. Actual margin per user (AMPU) is the optimal measure, as it enables mobile communications companies to build and implement plans based on actual customer value..

“With Teradata’s Profitability Analytics, communications companies can now measure the profitability of each wireless customer and use this information to guide marketing, sales and service decisions. We expect Australian telecommunications providers to follow the path of their international counterparts in trying to understand their customers and their usage behaviour,” Powell said.

Teradata Value Analyzer is an end-to-end solution that pinpoints profitability calculations across five distinct components at the fundamental level, the billing telephone number. These components are: revenue (direct and indirect), interest revenue/expense, direct expense (applied to customer behaviour or events), indirect expense (cost of doing business) and risk provision (applying the cost of credit and other potential risks and fraud). To boost speed, Value Analyzer calculations are completed inside the Teradata warehouse engine, rather than consuming time by moving large amounts of data in and out of the data warehouse as it is processed. This also heightens accuracy as Teradata allows for an exhaustive review of all data, not just a sample that may offer misleading clues to customer profitability and behaviour.

Mobile communications companies can utilise Teradata Value Analyzer to proactively manage their business by tracking profitability by customer segment, rate plan, channel and geographic market. Customers can be segmented by behavioural profitability as opposed to revenue, and marketing campaigns can be designed to change the overall account mix, capitalising on the attributes that characterise higher-margin customers.

Decisions on investments in new applications, products and services, network expansion and phased service rollouts can be prioritised.

Teradata’s Lifetime Value Solution provides mobile communications companies with business intelligence that allows them to measure the ongoing value of any object – everything from customers, products and delivery channels to the sales force, geographic regions and customer service centres. The Teradata Lifetime Value Solution identifies patterns and trends by applying complex mathematical models to detailed customer-behaviour data. Those patterns and trends are linked to customer-attrition projections, demographics and propensity to buy data to provide insights into customers’ lifetime value. Measuring actual behaviour provides reliable results and can provide insight into the challenges and opportunities that lie ahead. Teradata Profitability Analytics is available for immediate delivery.

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