Vodafone New Zealand Ltd. combines Teradata and powerful analytics to optimize customer communications and improve retention.
by Cheryl D. Krivda
Doing business in a growing market may be the surest path to success. But when a market matures and enterprises can no longer rely on a vast
supply of new customers to pump up profits, smart companies adopt new strategies and technology to prevail.
Ten years ago, the market for mobile telephones was in overdrive. Vodafone New Zealand Ltd., a subsidiary of the United Kingdom-based global
telecommunications company, was a small player in a market dominated by the state-owned telephone company. With better service levels and
rising cell phone penetration, Vodafone New Zealand wasted no time overtaking its competitor. By 2004, Vodafone had achieved a 50% market
share and uncontested leadership in New Zealand.
As the mobile telco industry reached maturity, however, Vodafone's customer base plateaued at 2.2 million consumers, with 54% of the national
market. Then conditions changed: The company's competitors began to rally, the government increased regulation of the market and average
revenue per user lagged. Recognizing that the game was different, Vodafone began reconsidering its strategy.
"We're entering a different phase now, where customer retention is the new acquisition," says John Stewart, senior manager of customer
analytics for Vodafone New Zealand. "Now that we have all of these customers, we need to answer new questions: How do we increase our
profit margins? How do we add revenue streams from these customers? And how do we keep them as customers?"
Vodafone executives recognized that tougher market conditions warranted faster decision making based on real-time knowledge of current
conditions. Instead of the gut-level choices made on the fly during the company's growth years, Vodafone needed to make a wholesale shift to
analytical marketing, using business intelligence (BI) that could rapidly provide fact-based decision support. The goal: to help the company
deliver the right message to the appropriate customers when they wanted it, using the preferred channel.
Power to meet new challenges
Vodafone created a customer knowledge and analytics department to perform analytics, modeling, campaign operations, market research and
competitive intelligence on specific customer segments. Yet the increasing demand for customer knowledge revealed a critical weakness in the
company's business systems. "Achieving profitable growth from our existing customer base required a level of sophistication in data management,
analytics and customer relationship management [CRM] that was beyond our capabilities," says Stewart.
Vodafone had been using a legacy Red Brick data warehouse, which was unable to support the transactional analysis, research or modeling
processes that the company needed to meet its goals. The old data warehouse environment included numerous data marts and piecemeal solutions that
were developed as short-term fixes. "It was a jumble of information zones, which significantly restricted our ability to access, compare or
leverage the data quickly or effectively," adds Stewart.
Vodafone replaced the legacy system with an enterprise data warehouse (EDW) from Teradata in 2004. "To be serious about leveraging our data,
there was no other choice," he explains. "We knew that gaining a single view of the business was essential to the success of our analytics
programs. The best-in-class solution to our problem was an enterprise data warehouse from Teradata."
Vodafone also utilized the Teradata Communications Logical Data Model when implementing the solution. The EDW provides such benefits as
multi-variate analysis, hot staging of reports, pre-designed models, query and model performance, and an integrated database that supports
reports, online analytical processing, fixed downstream feeds, comprehensive ad hoc analysis and customer segmentation.
Tools for the team
With the new technology in place, Vodafone next turned its attention to creating a state-of-the-art insights program. "Our vision was to build
our analytics and modeling capabilities within the organization, so we would retain our intellectual property," says Stewart. "We didn't want
to outsource that to consultants. So we worked hard to recruit really good people—smart marketing analysts, modeling experts and marketing
The company doubled the size of its analytics team and tripled the core group of modeling specialists. With the new team assembled, Vodafone
was able to use the power of the EDW to create advanced analytics, research and competitive intelligence. A collection of tools—from vendors
including KXEN, SAS, SPSS and Unica—was also deployed.
Discovering new customer insights
Today several hundred Vodafone employees, primarily from the sales and marketing departments, access the Teradata warehouse. Personnel from
market research, competitive intelligence, analytics, segmentation and pricing are using the EDW to improve campaign and customer insight,
customer offer optimization, campaign channel effectiveness and customer service. With the right team and tools in place, Stewart is confident
that the company can develop data to support enhanced customer marketing and, ultimately, improved retention and corporate profitability.
"Having the customer insights and business intelligence units together with these tools gives us the ability to develop holistic insights, which
is key," he explains. "As a team, we're leaning over one another's shoulders, asking questions and providing support. In the process, we learn
from each other, which helps us deliver greater value in the insights we put out to the business. When you bring all of these sources of
knowledge and information together, you can uncover the deeper insights about our customers."
A new project is the automation of trigger-based marketing campaigns. In the past, identifying customer behaviors that should trigger a
marketing campaign was too costly, labor-intensive and required a manual process. With Teradata, Vodafone can automatically identify customer
behavior and quickly send out the appropriate marketing communication to maximize any opportunity.
"It's difficult to pinpoint the effect of this capability on any specific KPI [key performance indicator]," says Stewart. "But we know that
having Teradata helps us reduce customer churn and increases the uptake rates of our marketing campaigns."
Meeting the call for growth
The benefits of the new EDW and analytics solution are many. Less manual handling of data means that company analysts can spend more time
pursuing valuable insights. Vodafone is also using the EDW to further enhance its customer life cycle program, building a scientific base for
optimum communication with customers.
"Now we can get campaigns to the customer more efficiently and effectively," says Stewart. "That's not to say we send out wave after wave of
campaigns, though. It's increasingly targeted and refined in terms of who we campaign to, and the relevance to the customer is greater, too."
Decision makers are receiving more information, faster than ever before. "The call from the business was to use our data to support decision
making," he explains. "When we were in a growth environment, we could get away with making decisions on the fly. As the market has tightened
up, we need to be more certain about the decisions we're making. We're using Teradata to meet that call."
Looking forward, Vodafone plans to continue expanding the use of its EDW and analytic tools. The company is currently developing a contact
optimization best practice, which will optimize both revenue and prioritization of customer offers. Other new programs will follow, with
Teradata as the foundation.
"Our aspiration is to use our data to get the best possible return for the business from the process of campaigning and contacting customers,"
says Stewart. "Teradata is a key partner for us, because they are a critical enabler of our best practices in CRM and analytics. They continue
bringing new partners to us as well as new opportunities for how we can use the data. That's why Teradata will be very much a part of our
future for a long time." T
|Put the right tools in place
KXEN's automated capabilities and full integration with Teradata accelerates performance for the
analytics team at Vodafone New Zealand.
The KXEN tool provides rapid model development capabilities for each customer segment. It allows Vodafone to
create many predictive models, which is necessary in a developing data environment where insights are still
being refined. John Stewart, senior manager of customer analytics for Vodafone New Zealand, and his team can
test hypotheses, quickly ascertain key variables and deploy insights through marketing campaigns.
"We wanted to introduce propensity models and value models to support the targeting of our propositions to the
market," says Stewart. "It was important to do that as quickly as possible, because we wanted to move from being a
bit behind in our analytics and CRM [customer relationship management] to being ahead of the game. The KXEN tool
gives us a very rapid ability to develop sophisticated models and segmentations and then model our data within
|Behind the solution: Vodafone New Zealand Ltd.
Teradata Database V2R6.1.1
Production system: 8-node Teradata 5450 Server
Development system: 2-node Teradata 5380 Server
Logical: Teradata Communications Logical Data Model (cLDM)
Physical: Third Normal Form (3NF)
Total for all systems: 38TB
Teradata Tools and Utilities 8.1: FastExport, FastLoad, MultiLoad, Teradata Dynamic Query Manager, Teradata Manager;
Teradata Utility Pack: ODBC Driver, JDBC Driver, OLE DB, Administrator, BETQ; Priority Scheduler; Teradata Meta
Products from Brio, Cognos, IBM (WebSphere), KXEN, Microsoft, Oracle, SAS, SPSS, Unica and WebMethods
Cheryl D. Krivda has written for more than 20 years about the intersection of high technology and business practices for publications and
corporations around the world.
Teradata Magazine-March 2008