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MONITORING CUSTOMER SATISFACTION IN TELECOM INDUSTRY: A CLUSTER ANALYSIS APPROACH

PRESENTED BY: Sudhanshu Ranjan Santosh Koppada
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AGENDA
INTRODUCTION BUSINESS PROBLEM METHODOLOGY AND DATA DESCRIPTION CLUSTER ANALYSIS CONCLUSION BUSINESS IMPLICATION
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INTRODUCTION

Customer satisfaction can be defined as a customers perception of the degree to which customers requirements have been fulfilled (ISO 9000:2005).

Customer satisfaction in the service industry can be a measure on the basis of service quality.

We have analysed the customer satisfaction based on information from

customer and sale databases.

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BUSINESS PROBLEM
Why customers are switching (CHURNING) to other service providers? How to prioritize/retain the customer who is more loyal? Which segment of my customers are most affected due to bad service? Whether these customers will be more profitable if we provide better service or are they likely to leave? How to prioritize where to invest new capacity in my network on the basis of our loyal customer profitability and revenue?

In which zone are my customers calls mostly routed to another operators

network, which is costing me extra expenses?

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METHODOLOGY DATA DESCRIPTION

Information gathering :Historical data from selected time period Dividing the data into customer group: Cluster analysis ; K-Means (Centroid-based) Exploratory data analysis: Analysis of every cluster
Determination of the average customer group profile (Avg. Minutes call, Account Length, Type of services used, etc.) Level of customer group satisfaction ( Leaving the services, Change to offered services)

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METHODOLOGY DATA DESCRIPTION CONTD..

No. Of Cluster: 6 ( Using Optimize Parameters ) Dataset: 3333 records ( *)

21 attributes, both numerical and categorical attributes No missing values After analysis of variables we have decided to use 10 variables for cluster analysis

Tools Used:
Rapid Miner 5.3.015 and Advanced Excel

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Dataset Variables
State* Account length: Number of months the customer has been with the company Area code* Phone number* International plan: yes/no Voice mail: yes/no Number of voice: Average number of voice messages per day Total (day, evening, night, international) minutes: Average number of minutes charged Total (day, evening, night, international) calls* : Average number of calls made Total (day, evening, night, international) charge*: Average amount charged per day Number customer service calls: Number of calls made to customer support in the last six months Churned: Did the customer switch long-distance carriers in the last six months
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* Not used for analysis

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CLUSTER ANALYSIS
AVG. CALL DURATION (IN MINUTES) The result of the data exploratory analysis of 6

Cluster 6
important

clusters

is

that

we

dont

detect

Cluster 5 Cluster 4 Cluster 3

differences charges.

in number of calls

and calls

The major difference is in the number of minutes

call used during a day, evening & night and account length.

Cluster 2

Cluster 1
0
Night Mins

100

200

300

Eve Mins

Day Mins

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CLUSTER ANALYSIS CONTD.. ON Z SCALE

Z Scale
40.00 30.00 20.00 10.00 0.00 Account Length -10.00 -20.00 -30.00 -40.00 VMail Message Day Mins Eve Mins Night Mins Intl Mins CustServ Calls

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CLUSTER ANALYSIS CONTD..

Cluster 1 & 4 :
-- Customer groups with the most satisfied customer -- Shortest account length (New Customer)
Customer Churning Rate (In %)

10.1% 12.6%

Cluster 2:
-- Customer group with highest rate of leaving customer -- The highest average number of total minutes call -- 99 % of non- activated International plan service customer having International calls

11.6% 10.6% 14.1%

41.0%

Cluster 3, 5 & 6 :
-- Customer group with average number of minutes call -- Longer account length (Older customer)
cluster 1 cluster 4

cluster 2 cluster 5

cluster 3 cluster 6

This leads to the idea, Which can be used as a marketing tool for increasing the customer satisfaction in all customer groups.
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CLUSTER ANALYSIS CONTD.. : Description of customers groups

Customer Group

Description
Most satisfied Customer The lowest average minutes of night calls Highest voice mail message & international minutes call use Customer with the second shortest length of service use 16 % of all customers in the analysis The highest average number of total call minutes Highest international plan activated customers 35% of total min call are from days call (Highest) Medium Account Length 17 % of all customers in the analysis

Customer Leaving Rate

10.1 %

41.0 %

The Lowest average number of total call minutes The lowest average minutes of day call 3 Lowest international plan activated customer 14.1% Highest customer service calls 15 % of all customers in the analysis +55 44 8956.888800, W. GEORGIA AVENUE, 175 VANCOUVER BC, CA GETIN@COMM.CA WWW.GETCOMM.CA GET IN TOUCH.

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CLUSTER ANALYSIS CONTD.. : Description of customers groups

Customer Group

Description
Second most satisfied customers Customer with the shortest length of service use The highest voice mail plan activated customers 40 % of total minutes call are from night call (Highest) 18 % of all customers in the analysis

Customer Leaving Rate

10.6 %

The highest average minutes of evening call Customer with the second longest length of service use Second lowest voice mail message & international minutes call use 17 % of all customers in the analysis
Customer with the Longest length of service use The lowest average minutes of evening call 16 % of all customers in the analysis
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11.6 %

12.6 %

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CONCLUSION
We might focus retention efforts on Cluster 2 : High day minutes Low international minutes but high international plan subscribers Cluster 3: High customer service calls Using international minutes but low international plan subscribers Cluster 6: Longest length of service.

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BUSINESS IMPLICATION
CLUSTER 1: This cluster consists of people with the lowest use of their mobile services, considerably new users of this network. They have the highest number of voice mail messages and international minutes usage which means that they dont use their phone often and if they do its only for international calling. This cluster may contain users who have family/friends abroad and use this service only for international calling. This cluster has the lowest churn rate which means that most of the users are satisfied as of now

and have used the service for no more than 6-8 months.

CLUSTER 2: It consists of heavy users of their mobile services as they have the highest average number of

calls and billing amongst other clusters . It could be that a large chunk of the users are youngsters / students in the age of 15-30 who nowadays are hooked on to their mobiles and probably with a limited budget to spend, and unhappy with the amount they are being billed probably because of wrong selection of calling plans which explains this cluster having the highest churn rate.

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BUSINESS IMPLICATION CONTD

CLUSTER 3: The users in this cluster have the lowest usage of services, least number of international calling activations and the highest number of calls to customer care. These are probably users who are old/senior citizens or people who have no knowledge about usage of mobile services, that should explain the low usage and number of calls to customer care. This cluster does not have an alarming churn rate but it needs attention as to why the users need assistance. It could be network issues or plan issues

which need to be analysed and sorted out.

CLUSTER 4: This cluster consists of very new users of this service provider and with not a very high churn

rate. These users are people who make a lot of calls during the night, probably to friends and family. This cluster could be analysed further to see what plans fit these users best as they are new users, so an effort should be made to satisfy their requirements and in turn reduce the churn rate.

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BUSINESS IMPLICATION CONTD

CLUSTER 5: The users in this cluster have been the second most loyal customers as they have

been with this provider the longest. Usage in the evenings is the highest which suggests that it could be people who are in service and make a lot of calls to friends after work.

CLUSTER 6: Users in this cluster have been the most loyal to this provider as they have the longest

period of usage. Although they are not big users of their mobile services, some action can be

taken to retain these customers such as giving them some special plans, putting them into a
platinum users bracket where they get additional benefits etc.

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