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A Better Yardstick

A wireless carrier improves its marketing measurement and management to grow business and gain greater returns

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Abstract

To help achieve its strategic growth goals, a wireless telecommunications company wanted its marketing investments to drive a better return and higher recurring revenues. Increased industry consolidation, market saturation, and other trends made that a tall challenge. The wireless carrier had begun shifting its investments from traditional media like TV, print, and radio to digital platforms such as search, mobile, and social media. However, the effectiveness of its new investment mix was hard to measure. Deloitte Consulting LLP was engaged to help with the client’s marketing transformation initiative.

The Challenge

As a regional player in a rapidly consolidating wireless industry, the client faced a market that was growing more competitive. In addition, the client sought to develop industry-leading capabilities in using data analytics to gain insight and improve the effectiveness of its marketing investments.

Marketing ROI systems require companies to collect and report data in a standardized manner. While this may be easier and more straightforward in some categories, such as TV, it can be more difficult in others, such as sponsorships and field marketing. An additional challenge for the client was that its data did not have a structure which allowed for analysis of its marketing investments.

Two important financial indicators also pointed to increasing challenges for the client. In recent years, gross adds (which measure the total number of new subscribers added to the company) and average revenue per user (ARPU) were either flat or had decreased slightly.

How We Helped

The client engaged Deloitte to improve its marketing by measuring category-level effectiveness for media channels, such as TV and mobile and identifying opportunities to better leverage the total investment. This meant collecting data for more than 30 investment categories, such as TV, print, digital, email and social; monitoring various marketing activities, including pricing, promotion, creative and media; managing more than $200 million in annual investments; and improving the acquisition, upsell and retention of millions of subscribers per year. The methodology included four steps:

Architecture. We helped create a way to look at the entire marketing program on a comparable ROI basis.

Standardization. We helped the client collect, secure and standardize more than 100 sources of data and sorted them into 20+ categories.

Analysis. We calculated the current ROI and the improved future ROI for every marketing dollar that was invested. We did this by using a detailed multivariate regression analysis that incorporated several factors to determine an effective marketing mix.

We analyzed the impact of marketing investments, promotions and offers, consumer confidence and competitive pricing/device launches on adds (new subscribers) and saves (renewed subscribers).
We then used optimization to determine an effective marketing mix by taking “real world” operational limitations into account.
These results were applied geographically based on regression results showing the relative effectiveness of each marketing investment in each region.

Dashboard. We also built and delivered a customized dashboard to allow our client to work with the new marketing ROI analyses and tools.

Solution

Deloitte performed the work within the first three months of the project. We then helped our client in their efforts integrate the methodologies into their business processes, which took an additional month. With Deloitte’s support, the client then executed a cycle of advertising planning, followed by advertising execution, and then analytics.

The in-depth regression model predicted both the addition and loss of subscribers based on marketing investments and industry dynamics. The model also showed that our client could significantly improve marketing effectiveness by executing on two primary recommendations:

Shifting the marketing mix. We emphasized more investments in radio, out-of-home (e.g., billboards), retail, field marketing and targeted digital advertising such as search and mobile.
Changing the geographic focus. We advanced a strategy to distribute investment across geographic clusters with lower density rather than concentrating it in certain underperforming high density urban centers.

The marketing team used the dashboard for all its future planning efforts, such as measuring the total number of adds, and adds and saves, for each quarter and marketing category. The dashboard is designed to help assess cost-per-add and cost-per-add-and-save by marketing category and help the team improve the effectiveness of its spending for total adds, or total adds and saves.

Results

The Marketing ROI system established during the project provided an analytical foundation, allowing our client to make more data-driven decisions. As a result, the system helped the client identify opportunities to increase marketing-driven adds up to 10 percent and up to $100 million in incremental revenue in the first year from additional adds and saves.