PeopleSoft Inc. has launched a customer profitability-management solution for communications companies — including cable MSOs — that it said can help operators sell new services via a more-sophisticated database.
"The software was born out of the highly competitive wireless and broadband space," said vice president of communications and industry strategy Daniel Kenyon. "When you compete with other providers with other services, the revenues and costs need to be in balance."
This is especially true as cable operators compete in phone and data services, he said. "Customer profitability management is so important to cable."
PeopleSoft is familiar with the cable business. Both Time Warner Cable and Comcast Corp. use its suites of financial software for accounting and financial tasks, and Kenyon said PeopleSoft is talking to the latter about the new software.
Customer profitability management is a concept that many cable system general managers would say they can do off the top of their head. Most know the costs of adding a new cable modem or telephony subscriber without having to look it up.
Kenyon acknowledged that and added that cable operators have a better intrinsic sense of cost-and-revenue analyses than their telco competitors.
Still, Kenyon said PeopleSoft's new software adds the elements of behavior modeling and predictive analysis to core customer relationship-management functions.
"The first step is the CRM, to provide a 360-degree view of the customer," Kenyon said. That means any system employee — whether the general manager, marketing manager, a customer-service representative or a field technician — can access a customer's account and see what level of video, voice or data service they've bought, look at their entire housecall history and see all of the phone calls that subscriber has made into the system.
Whether it's the customer-care center or call center or self-service channel, he said, "these access points need to have the same level of customer detail. That information has to reside inside the organization and be constant source of the truth.
"The second step is to layer in predictive analytics," Kenyon added. Such analytics include churn figures and buying behavior, which are then embedded into the CRM application, he said.
"The third step is creating a lifetime value of customer and risk assessment for the future, and basing your sales and support and product development on that information," he added.
Such an analysis helps operators understand which customers are the most and least profitable, and to get a handle on their propensity to purchase new high-margin products.
The data allows MSOs "to target on a segmenting basis, but manage them on an individual basis," Kenyon said.
That level of data sophistication can't be done at present using spreadsheets or billing applications, he said. It can be handled through customized solutions, but those can cost money and are sometimes difficult to outsource, Kenyon said.
"We're trying to create an out-of-the-box solution to have the process become automated and the cost be manageable," he said.
Cable operators, for instance, could assemble information in the software package to target homes that are more than 18,000 feet from a phone central office for cable-modem service.
Although cable operators can keep the profitability score in their heads, new services can bring unforeseen consequences and make it difficult to gauge costs.
"The difficulty comes from hidden and ongoing support costs," such as truck rolls or cable-modem call-center costs, he said. Home networking falls into the same area — the service's prospects look great on paper, until truck rolls and trouble calls are factored in.
"You want to understand the buying behavior of your customers, and you need it in a collective easy-to-use format. Just dealing with data in an organized fashion is important," Kenyon said.
As cable looks to launch myriad new add-on services, such as HDTV, digital video recorders, video-on-demand and tiered high-speed data service, tracking who has a propensity to buy becomes critical. "You have to remove those products from the billing application and put them in a separate product catalog within the CRM," he said.
"The general manager needs to have access to info in real time going forward [on] how effective those campaigns are going," he added. "You want to know how effective you are in various regions. If one product is hot in one region and not another, you need to know.
"You need to have a scorecard so every employee in the company is a CFO."