Applying Sonamine Social Network

Analysis To Telecommunications
Marketing
An introductory whitepaper
Applying Sonamine SNA to Telco Marketing

Introduction
Social network analysis (SNA) uses information about the relationships between customers in order to
make better marketing predictions. Common SNA techniques include finding communities, simulating
word-of-mouth
mouth and influence modeling. Such techniques provide a different view of the vast amount
of data that is captured within companies.

Within telecommunications firms, theth phone calls and

messages among g the subscribers provide good insight
into the social connections among the subscribers.
SNA provides a way to leverage this information to
improve marketing effectiveness. This whitepaper
will describe the principles of Sonamine SNA,
different marketing applications and case studies of
Sonamine SNA tools.

Similar people form social groups

People who share the same interests and are simi
similar
lar tend to hang out together. This is the definition
of “homophily”, a sociology concept that has been supported by 20 years of research. While we do not
know the reason behind this behavior, we can easily observe it in our daily interact
interactions.
ions. Traditional
Traditio
brand segmentation has been utilizing the basic concept that there are people with different
aspirations and needs. SNA can extend this segmentation by providing another way to empirically
understand your customer base, even if you only have a sample of data.

This homophily concept is the basis of the Sonamine algorithms of collective inferencing, network
classification and community detection.

Information
formation spreads through a social network
Another central principle in SNA is the word
word-of-mouth phenomenon.
enon. Whether you call it gossip or
networking or just complaining, people share their experiences with their friends and families. When
people make decisions about purchasing or dining, they rely on the information they received from
their friends. Therefore
refore understanding how information spreads through the social network can
provide insight into what types of decisions that your subscribers will make.

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Applying Sonamine SNA to Telco Marketing

If you think
hink back to the last time you were going
to watch a movie or a new restaurant...very
likely you discussed it with some friends before
making your decision.

This word of mouth phenomenon is the basis of

Sonamine algorithms of diffusion and
relationship strength modeling.

Different social roles within each context

Within the social groups, there are different roles such as leaders and followers. Leaders have the
power to influence
uence decisions within groups. This influence could be based on knowledge or other
oth more
subtle social cues such as family connections. Quite often, these roles change in different contexts:
an influential leader in terms of which nightclubs to visit may not be the same leader when it comes to
selecting handsets for the group. This context dependency is the reason why SNA has to be tailored to
each marketing objective.

This concept of roles is the basis of Sonamine algorithms of cascade scoring, eigenvector centralities
and pagerank.

People have relatively stable social networks

Life stage marketing refers to the idea that there are common stages in life that people progress
through. Within each stage the needs, wants and aspirations are common to everyone in that stage. In
SNA, the same concept is applied to the phenomenon that the social networks tend to exhibit a very
stable group of friends and family, and a more transient set of acquaintances. The stable group
constitutes a long-lived
lived social network.

This concept of stable social networks is the basis of Sonamine algorithms tha
thatt measure vertex
similarity.

SNA improves churn prediction and retention marketing

Since the cost of acquiring a new subscriber is high, it makes sense to start by retaining your existing
customers. One way to apply Sonamine SNA is to improve churn predic
prediction.
tion. Sonamine uses the
diffusion, community detection and cascade scoring algorithms to pinpoint these “contagious
churners”. These are subscribers who have not churned yet, but are being influenced by their friends
and social group to churn.

Most telecommunications
ecommunications companies already have existing churn prediction systems that use
demographic, usage and calling-plan
plan data to generate subscribers who are likely to churn. Sonamine
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Applying Sonamine SNA to Telco Marketing

SNA complements these existing churn prediction systems by providing Sonamine SNA variables that can
be used together with the demographic, usage and calling plan data. The benefit is that the prediction
model gets the best results from combining all the available data about subscribers.

By having a more accurate target list of potential churners, your retention campaigns will become
more effective. Not only will you save more potential churners, you will also reduce the “lost
revenue” by offering retention promotions to subscribers who were not going to churn.

Case study : Prepaid churn with European

mobile operator
Problem : Prepaid churn model was not accurate due to lack of
customer demographic information.

Results : Accurately predicted 25% of churners using 5% of

population. Lift of more than 5x.

Increase retention ROI by identifying spinners

One way to improve retention campaigns is to identify revolving spinners. These are subscribers who
continually switch numbers but remain loyal to one telecommunications company. They change
numbers to take advantage of better rates with new numbers. Sonamine SNA can accurately pinpoint
these spinners using the algorithm of vertex similarity because these spinners will have a stable social
network.

Since these spinners would seek out better rates but stay with the telecommunications company, it is
not necessary to send them retention campaigns. By removing these spinners from the retention
campaigns, loyalty managers can improve the effectiveness of their campaigns. The benefits could
come in the form of lower campaign costs and higher save rates.

Increase conversion rates of cross-sell and up-sell campaigns

Cross-sell and up-sell campaigns are key marketing initiatives because additional product purchases can
increase the ARPU of existing customers. Common practices include generating a target list of
subscribers for a product promotion. These products could include anything from games to music to
handsets to accessories like headsets.

Sonamine SNA can improve the target list of cross-sell and up-sell campaigns by using the diffusion and
relationship strength modeling algorithms. These algorithms simulate a word-of-mouth regarding the
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Applying Sonamine SNA to Telco Marketing

product being promoted. The target list generated by Sonamine SNA include subscribers who are most
likely to have heard good things about the product through word-of-mouth, and therefore more likely
to respond to the product promotion.

Acquisition through SNA member-get-member campaigns

Recent studiesi have shown that a subscriber’s decision to switch to a different mobile operator is
highly affected by the social group. Specifically, when there are more social group members who use a
specific mobile operator, the subscriber is more likely to switch to that same mobile operator. This
social or peer pressure effect can be used by telecommunications marketers to improve their
subscriber acquisition campaigns.

Using both community detection and centrality algorithms, Sonamine SNA can pinpoint the subscribers
who can “get” new subscribers from their social group. Marketers can then design member-get-
member campaigns that target these subscribers. Member-get-member campaigns provide incentives
for the current subscriber to “sign-up” other people in their social group with your company.

Viral marketing by targeting influencers

Product promotions involve a cost in the form of subsidies. In the case of handset or accessories
promotions, these costs can be substantial. As a result, it would be beneficial to target these
promotions to the most valuable subscribers as a sign of recognition of their loyalty. Additionally it
would be very useful to target these promotions to subscribers who can influence other subscribers to
purchase the product. This combined target list achieves two objectives at the same time, providing a
retention effect to high value subscribers and a marketing effect via influential subscribers.

Sonamine SNA uses both the centrality and cascade scoring algorithms to identify the influential
members within your subscriber base. These influential subscribers may be different for different
contexts such as video products or handset accessories.

Case study : Cross-sell promotion with US

telecommunications company
Problem : Needed to increase cross-sell of a new product.

Results : Target list generated by SNA had 340% higher conversion

rate than control group. Conversion rate is the percentage of the
target list that purchased the product.

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Applying Sonamine SNA to Telco Marketing

Value segmentation using social network revenue

Common value segmentation methods in the telecommunications industry revolve around grouping
subscribers together based on their ARPU. Depending on the tariff plan, such a method may not
accurately reflect the value of each subscriber. For example, a low ARPU subscriber may be
generating a lot of revenue because her friends call her a lot. This associated revenue could be direct
mobile originated revenues from on-net friends or inter-connect fees from off-net friends. Since
telecommunications is a network-based service, by losing such a low ARPU subscriber, you also lose the
associated revenues of her friends.

Sonamine SNA allows you augment your existing value segmentation models by identifying such low
ARPU but high network revenue subscribers. These subscribers should be classified into the high value
segment. By highlighting the contribution of and catering to the needs of that these subscribers, you
do not cannibalize your own revenues.

Prepaid subscriber demographic profiling via SNA

The lack of subscriber demographics is a pervasive problem in prepaid telecommunications markets.
The ability to buy and start using a new account without providing accurate information limits a
marketer’s ability to understand and predict the behavior of the customer base. For example, in trying
to optimize the product mix, a marketer would want to make sure that all customer segments are
covered. Another example is using subscriber age to estimate their life-stage and hence the
appropriate marketing offers.

By leveraging the concept that similar people form social groups, Sonamine SNA can estimate the
demographic profiles of your prepaid subscribers. Researchii has shown that these techniques work
well even when only you have less than 10% of post-paid subscribers. You can then use these estimated
demographics in product planning and target list generation.

Case study : Age estimation at Asian mobile

operator
Problem : Needed to use subscriber age for product planning and
development.

Results : For the test group of 450,000 subscribers, accurately

predicted age for 73% with a +/- 1 year error margin.

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Applying Sonamine SNA to Telco Marketing

Sonamine software and services

Sonamine provides software that can be installed and operated by the Information Technology or
business intelligence departments of any telecommunications company. We specialize in very large
scale network mining and analytics.

Sonamine Graph Scoring Engine (SGSE) is a SNA software that you can install and run on a single server.
Depending on the server, the SGSE can support up to 10 million subscribers and 100 million
connections.

Sonamine Graph Analysis Engine (SGAS) is a SNA software that works on distributed servers. The SGAS
can handle unlimited amounts of data. One customer of Sonamine is using SGAS to analyze 150M
subscribers with 15 billion relevant connections.

Sonamine provides outsourced network analysis services. In cases where the customer does not want
to install the software, data can be safely transferred to Sonamine. The results of the analysis are sent
back to the customer.

Data security and privacy

Sonamine provides software that is installed and operated by business intelligence and data mining
departments. There is no requirement to transfer sensitive subscriber information outside of your
environment, thus minimizing the risks of any security breach and stolen data.

Streamlined integration with existing systems

The analysis results from Sonamine SNA can be used themselves or integrated into existing systems.
The diagram below shows how this integration would take place. From the left, it shows that Sonamine
software will generate SNA analysis. The SNA analysis results are then imported into existing data
warehouse and predictive analytics systems. With this process, the Sonamine analysis will be sent to
any reporting, segmentation, CRM or business intelligence systems that use the data warehouse.

Data mining Segmentation

predictive CRM
Sonamine analytics
Sonamine results
software
BI, Reporting,
Data
Query
warehouse

The final SNA analysis can be stored within the data warehouse in a simple table. Consolidating the
results makes it available for other uses within the company such as fraud detection and customer
service.

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Applying Sonamine SNA to Telco Marketing

Agility in responding to market conditions

By integrating Sonamine SNA into existing systems, marketers can respond to changing market
conditions rapidly. For example, when a competitor introduces a new tariff targeted to night-time
night
calls, you may want to respond by offering a retention incentive to your subscribers most likely to take
churn. You can immediately use Sonamine to create and analyze a “night
“night-time”
time” social network,
followed byy predictive analysis and proactive campaign execution. This rapid response is one benefit of
using Sonamine software that is installed in your business intelligence department.

Minimum training and support costs

Given the busy schedules that marketers hav
have,
e, learning a brand new tool and user interface presents
significant adoption hurdles. Training sessions and the required help desk increase the cost of support.
Sonamine SNA tools avoid this problem by integrating directly with the existing campaign management,
man
reporting and CRM systems. A marketing professional who wants to know the average community size
of the prepaid segment will use the existing reporting system to obtain this information.

Total cost of ownership

Sonamine utilizes its own data storage
orage and analysis technology. As such there are no new databases to
manage or additional database license and hardware costs. The streamlined integration results in
lower training, maintenance and support costs. Consequently, the overall cost of ownership
owners is lower
and the return on investment is much higher than comparable products.

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Applying Sonamine SNA to Telco Marketing

Proof of concept and evaluation

Sonamine offers the SGSE for free 30 day evaluation at http://www.sonamine.com

For larger subscriber populations, Sonamine offers a proof-of-concept (POC) package that includes data
transfer, analysis and results discussion. These POCs can be completed within 6 weeks. Please contact
us at info@sonamine.com

Supported hardware configuration

Sonamine software runs on the following systems.

• Windows XP, Windows Vista and Windows 7, both 32- and 64-bit versions.
• Fedora, CentOS, Redhat Enterprise Linux.
• Amazon EC2 cloud supported including Double Extra Large Instance, Quadruple Extra Large
Instance.

Minimum 2GB of RAM and 50GB of disk space is recommended.

i
The role of (personal) network effects and switching costs in determining mobile users’ choice. Juan
Pablo Maicas, Yolanda Polo, Francisco Javier Sese. Journal of Information Technology (2009) 24, 160–
171.
ii
Classification in Networked Data: A Toolkit and a Univariate Case Study. Sofus A. Macskassy, Foster
Provost. Journal of Machine Learning Research 8 (2007) 935-983.

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