In order to create long-term competitive advantage in a maturing market, telecoms operators must transform their business models to extract more value from their customer base.  This is the key finding of “Making Value Management Work, at Last”, a new report by global management consultancy Arthur D. Little that shows how operators can generate two to five percentage points of incremental EBITDA margin by doing so.
As markets reach saturation and customer needs change, telecoms operators must stop focussing purely on customer acquisitions, and instead embrace their most valuable asset – their existing customers.  According to “Making Value Management Work, at Last”, it is imperative for operators to implement highly sophisticated value management techniques to strengthen their customer marketing, loyalty and relationships.
In order to realise the full benefits of value management, Arthur D. Little has identified five key success factors:

• Build a de-averaged fact base of customer behaviours that identify levers for value improvement
• Make the shift to causal performance drivers – instead of just measuring past churn rate, for example, it is more beneficial to design and adopt forward-looking churn propensity index scoring
• Adopt advanced analytical techniques to predict changes in customer behaviour
• Look broadly at customer lifetime value and do not over-simplify the actual dynamics of customer behaviours
• Avoid the temptation to accept short-term gain and transform the organization and business model around customer value

“Old habits of a young industry, where most managers have been raised in a climate of double-digit growth, must be replaced by new habits of managing in a slow-growth environment.,” comments Didier Levy, Director of Arthur D. Little’s TIME (Technology, Information, Media and Electronics) Practice. “Extracting additional value from an existing customer base rather than purely focussing on acquiring new customers will generate tangible bottom-line results while creating a foundation for sustainable growth moving forward.” adds Klaus von den Hoff, Managing Director and Global Head of Arthur D. Little’s TIME (Technology, Information, Media and Electronics) Practice.
To access the full report, please visit:
www.adl.com/Making_Value_Management