Segmentation Applications in Telecommunications - Data Mining Techniques in CRM: Inside Customer Segmentation - page 296

Table 7.2 Mobile telephony segmentation: summary of implementation methodology.

Critical point Decision

• Behavioral segmentation: MSISDNs - subsequent aggregation of results
at a customer level
• VBS: two-way approach, MSISDN and customer level

Segmentation
level

Segmentation
population

• Residential postpaid MSISDNs, currently active (or suspended) with
usage activity during the last three months

Data sources • Mining data mart and MCIF

Time frame of
used data

• Six months

Segmentation
fields

• Behavioral segmentation: usage KPIs contained in the MCIF (percent-
ages, averages, etc.) summarizing usage of the last six months
• VBS: value index (MARPU) summarizing MSISDN's profitability

• All fields of interest: usage KPIs for the last six months, demographics,
contract details, etc.

Profiling fields

Technique used • Behavioral segmentation: clustering technique to reveal segments

• VBS: binning

and according to the organization's specific segmentation priorities, the marketers
arrived at a limited list of clustering fields, which is presented in Table 7.3.
Obviously this list cannot be considered a ''magic'' approach that covers all the
needs of all organizations. It represents the approach adopted in the specific
implementation, but it also outlines a general framework of potential types of fields
that could prove useful in similar applications.
The selected fields indicate the marketers' orientation toward a segmentation
scheme that would capture usage differences in terms of preferred type of calls
(voice, SMS, MMS, Internet, etc.), roaming usage (calls made in a foreign country),
frequency of international calls (calls made in home country to international
numbers), call day (peak vs. off-peak), and hour (work vs. non-work day) of usage.
For the needs of value-based segmentation, the only field used was the
value index. The mobile telephony operator had already implemented a relevant
project for the calculation of ARPU (Average Revenue Per User) and MARPU
for each MSISDN. ARPU is a revenue-only index. It does not take into account
costs, but covers all types of revenues (e.g., monthly fees, activation fees, outgoing
usage revenue, incoming usage revenue, i.e., interconnection costs paid by other
operators to recipient's operator) and possible discounts. In MARPU, however,
all costs of providing products and services (e.g., interconnection costs, roaming
costs, acquisition/renewal costs such as handset costs, distribution/dealers' costs,
retention costs) are taken into account and subtracted from ARPU.
The full list of used fields is presented in Table 7.3.