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Telecoms Profitability IG

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Another question from the first IG meeting that we didn't have time to get into: how do you assign costs-to-serve? One participant noted, "The models I build assign costs-to-serve to the customer that incurred the costs not the segment.”

This is an interesting Question. And the Cost-to-Serve is a generic name, but if I take a few examples:

Shops (Enquires), Call Center (Layer 1, Voice, Social Media and Chat), Problem Tickets (Layer 2 and 3)

Typically we can get these Events by Customer. With the exception of the Call Centre Voice, we do not get the actual duration.

So like Gary said we use a form of ABC, first split by the Type of Activity and then by the time taken per Event, for example:

Shop Selling:

- PrePaid SIM (5 Minutes)

- Selling a PostPaid Plan (20 Minutes)

Customer Care, Enquires

- Billing issues (15 Minutes)

- Promotion (5 Minutes)


Then, we aggregate these by Product, Tariff, Channel and Customer Segment.

It is also worth pointing out that this is actually much simpler to do at the individual Customer level, as we can “lookup” the Customer details and only allocate them to these Tariff, etc.

Doing this with aggregated data is much harder as the source of this data is CRM, and the details entered by the Agents are often not very good quality or accurate.

The additional problem is that often the Events are by Tariff, so allocating to the individual Products in the Tariff such as Voice, Data, and Content, is harder, and we then normally use a combination of Volume (Usage) and Revenues.

So overall quite complex to do accurately, but most software solutions will allow this to be automated quite easily.



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