The appliance of data science

By:
James Pearce
Published on:

Understanding and maximising data has been key to the success of the internet giants, but operators also have a data goldmine, according to Juvo CEO Steve Polsky

This century has seen more than half of the names on the Fortune 500 list disappear to be replaced with new companies and, according to research from Accenture, the rise of digital business models has been the principal catalyst of change. 

Those surviving, large, highly-successful companies that pre-date the digital revolution are nevertheless being hunted from all sides by internet giants and fast-moving start-ups.  The stakes could not be higher, and digital transformation is the new watch word for these long-standing institutions that want to maintain their place and compete with the new breed of companies that are the digital natives of the corporate world. 

Mobile technology has been at the heart of the digital revolution.  Recognising, adopting and maximising the power of the mobile is a common characteristic of the rising Fortune 500 stars.  Given the importance of mobile technology in the transformation, the mobile operators ought to have a fighting chance of being in the vanguard of the change. In fact, they are equally vulnerable. Just like all the other big businesses, the operators are struggling to compete with fast-moving Internet companies that are exploiting new ways of delivering services and doing business.

Indeed, operators are faced with the challenge of maintaining ground in service provision, not only to the small agile over-the-top (OTT) players, but also to the giants like Facebook and Google. Who, it turns out, are much more adept at making money from the networks that the operators have built. 

Today, mobile operators are challenged to innovate increasingly commoditised communication services. Even their own global trade body, the GSMA, admits that the majority of its operator members are only at the “relatively early stages” of digital transformation. The oft-predicted demise to ‘dumb pipe’ status is edging closer to reality.

Despite the gloomy reports, some operators are embracing digital transformation fuelled by data science. These operators are turning to the experts and using advanced machine learning, business analytics, and data-driven growth strategies – especially around mobile financial services – and getting some dramatic results.

Understanding and maximising data has been key to the success of the Internet giants.  Google processes some 20 petabytes of data every day.  Without data science to help analyse and process this information, Google would not be the company we know today.

But the go-ahead mobile operators recognise that they too have a data goldmine.  They acknowledge that with expert support they can use that data and their consumer relationships to find new revenues, grow their businesses and improve performance.  One area that is particularly ripe for the use of data science is the vast pre-pay market. According to the GSMA, some 77% of mobile customers are pre-paid customers, identified only by their SIM cards and phone numbers.  That’s more than three billion unidentified consumers ripe for digital inclusion, based on the application of expert data science techniques.

We have shown how operators can use data science to better understand these customers, from tracking their smartphone behaviour to building their digital identity.  We are able to use the data to create ‘identity scores’ for customers that provides operators with actionable insight and allows new services to be offered to otherwise anonymous customers.

For example, data science can be used to expand access to financial services, creating a financial identity for a pre-paid customer that enables operators to fundamentally change the way they offer pre-paid services, making pre-paid as convenient as post-paid, and enabling consumers to consume significantly more mobile services via leveraging data driven credit based services.  Based on further analysis of data and behaviour, operators can then unlock access to upstream financial service offerings based on these financial identities, driving incremental revenue and dramatically reducing churn, with significant impact on retention and lifetime value.

Juvo Consumption ARPU

Juvo’s research has shown  that using data science in this way can help operators to unlock an additional $70bn of revenue from the global pre-paid market.  That’s an operator pipe which looks pretty smart to tap and pretty dumb to ignore.

And while the GSMA says that most of its operator community are at the early stages of transformation, the operators we are working with are already beginning to reap the benefits.  Our partners are experiencing a 10% average increase in ARPU based on digital profiling and identity scoring.  Perhaps equally important though is the 50% reduction in churn, as customers are proving far less likely to switch service provider if the services they are receiving stretch beyond simple connectivity. 

Those factors are combining to deliver a predicted two-fold increase in customer lifetime value.   It seems clear that the appliance of data science by an expert can help operators transform their business – resulting in happier customers, higher incomes, and a brighter future.