Case study: Telefonica Ireland uses business intelligence to reduce churn
O2 Ireland, part of Telefonica, has been using Teradata’s data warehousing and Cognos BI to stop customers leaving and entice them with location-based offers
Churn is an obsession in the mobile telecoms industry. Focus is shifting away from simply winning new customers, moving instead to the retention of existing ones. This raises the question: Should the business try to stop all customers leaving, or are some not worth the effort?
For O2 Ireland, part of Telefonica Europe, the answer came through analytics.
A proportion of customers who buy a pre-paid SIM card might only use it for a business trip and leave the country in a few days, muses Peter McKenna (pictured), head of business intelligence at O2 Ireland.
“Given their array of behaviours, it doesn’t make sense to invest in all customers in the same way. We want to invest in the customers we can influence and the customers who are really engaging with us,” he says.
An analysis of the use of pre-paid SIM cards revealed where it would be best to target marketing efforts. “We have been able to identify the 65% of the customer base who really have a relationship with O2, and make sure we put all our investment in those guys," says McKenna
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Unified data warehouse strategy draws data together
O2 Ireland uses Cognos business intelligence (BI) tools and a Teradata data warehouse to analyse customer behaviour.
Prior to 2007, says McKenna, O2 Ireland was faced with a situation common in analytics: disparate data, with little overall data management.
“We had a lot of systems across O2, capturing lots of information and analysis across the business, using all sorts of different systems. The upshot was a very high-cost IT infrastructure, decisions that did not make sense and data latency. An event might be analysed up to 10 days after it happened, by which time the opportunity to do anything was very limited,” he says.
With its unified data warehouse strategy, O2 Ireland was able to bring all the data from all the processes on to a single infrastructure. This meant new applications could be built without needing new databases and other infrastructure, dramatically lowering total cost of ownership, says McKenna.
“We paid back the cost of Teradata with some business wins in year one. We brought the applications to the data,” he says.
O2 Ireland delivers data from more than 130 different processes to its data warehouse every day. It replicates its entire billing and customer relationship management (CRM) system onto the data warehouse every day, and some processes within 15 minutes of events occurring.
But to accrue business benefits from the centralised system, the mobile telecommunications firm had to change its company culture, he says.
Building a culture of analytics through training
Although there was interest in analytics at a senior level of management, some saw it in isolation, he says. “What a lot of them were looking for was a project; a box to tick. What we need to do is to make sure that they realise it’s a way of working. That takes education.”
A breakthrough for O2 Ireland came when the CEO replied to a business-wide email requesting attendance on BI courses. “That was a big milestone in terms of C-level sponsorship,” he says.
The telecoms firm has created a set of questions to guide business users through analytics projects to help them achieve their goals through business intelligence.
“Analysis should not be limited to the data scientist in a dark room who is smarter than everyone else. Everybody needs to have an ability to analyse data and understand how to interpret and make knowledge-based decisions,” he says.
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Measuring success and expanding the BI infrastructure
The standard framework includes a statement of business goals and measures of success, which ideally should be limited to a single indicator, he says.
It ensures business users also suggest lead indicators of success, he says. “Many times, measures of success can be lagging six months. We don’t have time for that; we could have lost huge opportunities if we wait six months.”
The framework also asks users what they will do differently as a result of BI and identifies a business owner responsible for the project.
In this way, the BI team promotes its own services to the business and tries to help decision-makers benefit from them. “It is part of our core role to make sure that we communicate the purpose of BI and evangelise the opportunities, not just to build systems based on what we’re asked,” he says.
O2 Ireland tries to regularly introduce new applications to its business intelligence infrastructure. Over Christmas, the telco used it to launch location-based marketing offers to customers who were passing its retail outlets, provided they had opted to have their data used in this way, he says. “It was a very effective initiative in driving people in [to stores] at the right time.”
Despite the successes, McKenna says his team must ensure that senior management sees BI as an ongoing process, rather than a single project.
“The world keeps getting faster, and the competition keeps getting smarter. The most important thing is to ensure that C-level management sees business analytics as a way of working which needs continuous investment and a knowledge-driven culture throughout the company.”
