Customer data equals dollars

Carriers know their customers well already, but they will soon be able to know them much better. Customer data will help carriers, as it always has, to understand specific segments and usage trends. In addition, however, carriers will soon be able to tell their customers a good deal about themselves and provide valuable insight to others that serve these customers. Both will improve the customer experience and yield potential new revenue streams.

As carriers press consumers to take part in the “information revolution,” these same carriers must ensure that they are also taking full advantage of the tremendous power of information. Consumers who rely on advanced networks for communication, information, entertainment and commerce certainly provide carriers an important direct revenue stream. Often overlooked, however, is the indirect value of rapidly growing information on consumer usage patterns and preferences. As the key facilitators of countless electronic transactions, carriers are ideally positioned to monetize this information by embracing new mindsets and business models.

Carriers already mine their customer data in various ways. They have segmented their users on the basis of their spending, their family structure, their ages, their geographic location and their lifestyles. Data from these segmentation activities drive product, marketing and pricing activities.

But there are many additional types of data that carriers will be able to accumulate — data that can benefit customers directly. Contextual data, for example, will enable a carrier to tell its customers what IPTV program is the most watched one on Tuesday at 8 p.m., or on Tuesday at 8 p.m. in Boston, or on Tuesday at 8 p.m. for families in their area with children between ages 8 and 10. Carriers may tell customers what program is most likely to appeal to them, based on their previous patterns of TV usage. Contextual data is not new: Amazon will e-mail you when a book or CD comes out that is similar to others you have already bought, while Netflix offers a list of most-requested DVDs. Carriers will soon be in a position to deliver similar suggestions in a variety of areas, covering everything from e-mail to entertainment.

Finally, carriers can make information available to other organizations that serve their customers. Wireless entertainment providers can learn what types of entertainment appeal most to users of specific handsets or to users of specific communications features. Marketers can learn what patterns of spending on communications or entertainment link with various demographic characteristics. And so on.

This last category must be handled with great care. Of course no information from the regulated communications entity can be included, and even fully deregulated data must be kept impersonal — groups of people, not individuals, must be the focus.

If carriers do not take advantage of their huge storehouses of data, others will undoubtedly step into the breach, garnering the available advantages. These others may not have the same breadth of opportunity, but they will find ways to accumulate a share of the information and will find ready uses for it. Carriers must, therefore, think hard about these issues from the start. They need to determine what platforms and processes will be essential for thorough information development and assessment and ensure that these are built into their equipment and their partnering arrangements. New services are only the beginning: Each new service enables new insight into customers and new potential for using that information.

David Young is a manager at CSMG, and Andrew Cole is president of CSMG, the management consulting division of TMNG. They can be reached at (617) 999-1000 or at David.Young@csmg-global.com and Andrew.Cole@csmg-global.com.