Fifth C develops behavior-based analytical solutions

BANGALORE, INDIA: Markets consist of customers with similar needs, but the customers are not the same!

Businesses that understand the nuances of the exhibited behavior of their customers and act effectively on its basis have the best chance of retaining them, and maintaining growth and profitability.

Traditionally, customer attitudes and needs have been determined using standard methods such as questionnaires and focus groups on a small sample of the customer base. However, neither of these methods is foolproof as they rely on stated behavior.

The definitive way to establish customer attitudes is to analyze behavior exhibited through actual transactions (billing statements, types of product purchases, size of transactions, etc.) and locate customers in a “space of behavioral attributes”.

Bangalore-based Fifth C has developed proprietary methodology for deriving customer behaviors from their purchase transaction data in a manner that is tailored to products and their attributes in an industry sector (E.g. fresh produce for a grocery retailer, calling minutes for a telecom service provider or travel and hospitality merchant for a credit card provider).

“Our algorithms and methods are scalable to large numbers (households, products, transactions) that enables us to capture insights using a comprehensive set of inputs,” says Krishnamohan, founder and CEO of the company.

Recently, a large telecom operator from India has engaged Fifth C to provide a churn prediction model and identification of key risk factors to preempt attrition in the retail post-paid customer segment.

“With the government looking at introducing number portability among the telecom networks, most of the telecom operators are now looking at addressing the attrition issue rising out of it. Normally, telecom companies face around 3-3.5 percent churn (moving from one operator to another) every month. If number portability comes in to place, churn will increase drastically. However, operators are fearful about the churn in the top layer of the subscribers.

“If we look at the Indian telecom market, 85 percent of the subscribers are in the prepaid model. Churn in this is very normal, however, there will be a significant churn happen in the top layer of 15 percent who are main revenue generators for the telecom operators, if number portability come in to effect,” he says.

Normally, the  ARPU in the prepaid model is around Rs 250 to Rs 500, but ARPU in postpaid model is over Rs 850. And, these are the customers who normally go for more value added services.

“Telecom service providers have two core marketing focus for their customers: managing attrition to acceptable levels consistently and growing revenues per user. In this highly price competitive industry, it is imperative that the key to sustained business growth is understanding and predicting customer behavior in a manner that is timely and actionable,” says Krishnamohan.

For instance, it is well understood that retaining a customer is much easier before he has slipped into active or passive attrition. The key to attrition management is to continuously track shifts in individual exhibited behaviors of at-risk customers and pre-empt churn before the customer disassociates with the service provider actively (E.g. skip payments) or passively (pattern of reduced usage of services). Given the high cost of customer acquisition in this competitive industry, effective attrition management retention programs can provide measurable and higher return on investments than spends on fresh acquisition to fill the void created by churn, he adds.

This privately held company has come out with solutions for the retail, banking and financial institutions, and telecom sectors.

“These are the sectors, which has large customer transactions. We are working with a retail giant in the US and a large global IT company,” says Krishnamohan.