Increasing Profitability through Intelligent Interactions:

Innovative Marketing Strategies in the Communications Industry

An Epiphany Business White Paper

Business White Paper

It is a turbulent time for the communications industry, but also a time of great transition. While some companies in the sector are merely struggling to survive, others are rethinking their business strategies and redesigning their marketing practices to build more profitable, enduring relationships with their best customers. The leading edge companies are seeking new ways to set themselves apart from their less-savvy competitors and thrive in the coming years. Successful communications marketers are now moving beyond the traditional practice of outbound marketing and are taking the steps necessary to drive new revenue through crossselling and up-selling. They are also addressing the increasing challenge of customer churn, which represents a major threat to all companies in the industry. These strategic players have stepped off the endless treadmill of customer attrition and acquisition. Rather than devoting all their resources to customer acquisition programs, they are investing in programs that increase the loyalty and profitability of their existing customers. At the same time, they are leveraging their existing call center and webbased infrastructures to manage customerdriven interactions with increasing skill and precision. All of these strategic investments are paying off in both increased profits and customer satisfaction. As the diminishing returns associated with outbound, acquisition-focused marketing initiatives become even more apparent, leading companies are placing much more emphasis on inbound marketing and intelligent customer interactions as the means for building powerful customer relationships that boost profitable growth. COMMUNICATIONS IN TRANSITION Business headlines today tend to emphasize the current troubles faced by communications companies in transition. The challenge for communications firms lies in building the foundation for enduring growth and profitability, while also focusing on the bottom line. With this in mind, many of these companies are increasingly concentrating on the value of individual customers. As marketers in the communications industry are beginning to realize, tools that facilitate effective crossselling, up-selling, and customer retention are essential to meeting this objective.

In North America, diversified operators are now cross-selling and up-selling local service, longdistance, wireless, and data products to their existing customers. Wireless operators are intensely focused on increasing their average revenue per user (ARPU) by up-selling plans that include more minutes, cross-selling wireless data services, and extending existing contracts. And in Europe, operators are focused on serving pre-paid customers more effectively, migrating high-value pre-paid customers to post-paid plans, and finding opportunities to cross-sell new and innovative wireless data services. While concentrating their efforts on boosting existing customer value, many communications companies throughout the world-both wireless and wireline operators-are also focused on reducing customer churn. Annual churn rates in consumer wireline and wireless segments have reached as high as 40% and 50%, respectively, and these high customer churn rates can lead to lost profits, high customer acquisition costs, and lower profit per customer. Based on customer acquisition expenditures alone, replacing lost customers costs the communications industry billions of dollars annually. For wireline operators, competitors are coming from all angles to replace both primary voice and secondary Internet access lines. Cable (MSO) operators are heavily promoting their broadband Internet and voice-over-IP services in an effort to be the consumer's single source for communications and cable television services. That translates into households potentially relinquishing their traditional telephone lines in exchange for high-speed cable access. Moreover, wireless operators are having increasing success as the primary communications provider to youth markets, the engine of growth for any communications business. Today, 5% of US households use a wireless phone exclusively, and that percentage continues to increase, further eroding traditional wireline businesses. Yet, wireless operators themselves face extremely strong competition to retain customers, from within the wireless market itself. Given the relentless change and competition in the marketplace, savvy marketers have recognized that their strategic opportunity lies in creating something that will endure: solid,

Increasing Profitability through Intelligent Interactions: Innovative Marketing Strategies in the Communications Industry

Business White Paper

profitable and loyal customer relationships. But to win in the high-stakes communications game, marketers must do things that set them apart from the competition. INBOUND MARKETING DRIVES INTELLIGENT INTERACTIONS Marketing in the communications sector has traditionally been an outbound effort using direct mail, telemarketing, and e-mail. However, outbound marketing has become an increasingly difficult and expensive endeavor in recent years. Government regulations, consumer backlash, and dwindling response rates have all diminished the role of outbound campaigns within the overall marketing mix. The relative decline in outbound marketing is part of a fundamental marketing transformation that is taking place in the communications industry. This shift represents an ascendance of inbound marketing, which revolves around "inbound" customer touchpoints such as the web and the call center. Considering that communications companies have made tremendous investments in these forms of infrastructure over the years, this shift represents a vast opportunity to leverage and maximize the value of existing assets. Strategic marketers are recognizing that incremental investments in customer interaction capabilities can help them extend the power of their existing i n f ra st r u c t u re s to m a n a g e c u sto m e r s i n powerful and profitable new ways. For consumer-oriented companies, the inbound channel is a golden opportunity to build and capitalize on the customer relationship. Unlike outbound interruptions, inbound interactions represent a time when companies have the customer's time and attention, and are more likely to receive permission to cross-sell a product or deliver a marketing message. The real-time nature of the inbound interaction also creates opportunities. It is a chance to address the customer on a personal basis, presenting relevant messages and offers that reflect the most up-to-date needs, preferences and priorities of that customer. For example, imagine a wireless consumer that has had a significant number of dropped calls during a 24hour period. By leveraging the real-time nature of the interaction, the company can offer this

customer a retention offer to show how much they value the customer, as opposed to an inappropriate up-sell or cross-sell offer. Sophisticated marketers are deploying inbound marketing strategies to generate offers that are based on customer profiles, transaction histories and other forms of real-time information. In the process, they generate the right offer for the right customer at the right time. The relevance of this personalized customer care helps to ensure that these businesses realize optimal results. UNMET POTENTIAL Yet, for all the opportunities to complement outbound marketing and elevate customer value, most inbound marketing solutions today fall far short of their potential. Many communications companies continue to rely on inefficient and ineffective approaches to managing inbound customer interactions. For instance, it is still common to find inbound marketing represented by an "offers of the week" sheeta static list of marketing offers delivered by customer service agents who must rely on training and experience to decide, caller by caller, which offers to make. In addition, automated, rules-based customer interaction systems are delivering disappointing results as well. Rules simply cannot account for the thousands of customer scenarios likely to be encountered, and result in inflexible, time consuming, error prone systems and ineffective marketing programs. Finally, some companies have started using analytics to decide which marketing offer or message to present. However, most analytic solutions rely on off-line batch or periodic data feeds and do not take the real-time or near-term context of the customer interaction into account. Listed below are a few of the limitations of rulesbased and off-line approaches to inbound marketing: Rules are Hard to Get Right. Rules-based systems place the burden on marketers to account for and manage every customer interaction situation that might arise. It is virtually impossible, however, to create and maintain a full set of rules that will take into account every permutation of customer segment, campaign, offer, and interaction scenario. Rules are Difficult to Maintain. Inbound marketing solutions based on a rules-based

Increasing Profitability through Intelligent Interactions: Innovative Marketing Strategies in the Communications Industry

Business White Paper

methodology ultimately require more time and attention to build and maintain. As the number of rules grows, it becomes increasingly important to be able to test in advance the impact of adding new rules. Rules are Hard to Measure. Since rules lack analytics, they provide no insight about the customer behaviors and attributes that drive certain actions, such as why customers react favorably to certain messages more frequently than others. Thus, it is often difficult to know when (or how) the rules should be changed to reflect changing market conditions. Off-Line Prediction is "Too Late". Another non-optimal approach leverages off-line analytics to predict which messages will be best suited for each customer during the next interaction. This batch analysis is less effective than a true real-time approach since it takes place prior to the interaction and cannot take information about the interaction itself into account. In addition, batch systems require manual analysis of results and periodic re-deployment of new models, both of which require more resources and lead to lost opportunities. Off-line Models Require Historical Data. Off-line models usually require extensive historical data before they can be used for predictions, making it difficult to draw conclusions about offer success for a significant period of time. The result is fairly static inbound marketing programs that are unable to quickly adjust to changing market conditions, new offers, or new customers. BEST PRACTICES IN INBOUND MARKETING Successful marketers in the communications industry are focused on building relationships with their best customers. They look for products for their customers as opposed to customers for their products. And they know that it is five to seven times more expensive to acquire a new customer than it is to cultivate an existing one. These marketers have also become increasingly strategic about how they manage inbound, customer-driven interactions. Whereas many companies might treat inbound interactions particularly complaints or threats of service terminationas a nuisance, these marketers see them as a prime opportunity to defend, develop or deepen a relationship.

Some of the key strategies and practices that are driving their success include: Driving Intelligent Interactions. Customers today have unique needs, preferences and priorities. Depending on a customer's particular circumstances, they are likely to respond to offers and messages in different ways. Because of this, every customer interaction is an opportunity to strengthen the relationship. Rather than risk losing a customer or an opportunity by presenting impersonal messages and offers, leading companies are focused on personalizing each interaction based on real-time customer information and intelligence. These customer-focused enterprises rely on real-time, self-learning analytics to discover the patterns that would otherwise go unnoticed and then take immediate action based on those insights. World-class analytical tools now enable them to determine which campaigns, offers and messages have the highest statistical chance of success with a particular customer, at the moment of contact. These firms are able to leverage real-time, behavioral and historical information to determine how best to manage each individual customer interaction. Real-time, predictive analytics are the best way to decide the messages that are most appropriate for the customer. These analytics drive personalized recommendations, offers and messages based on predictive models running in the background. They also allow innovative companies to experiment and test new ideas on a subset of their customers, and then rapidly leverage new insights across the rest of their customer base. Accounting for Business Objectives In order for an inbound marketing interaction is to be optimal, it must not only address the particular needs and concerns of the customer but also meet the business goals of the organization. In other words, companies must ensure that they are making offers that are carefully aligned with their immediate and longer-term objectives, whether those objectives revolve around growth, profitability or customer retention. To m e e t t h e s e o b j e c t i ve s , s o p h i st i c a te d marketers are now adopting offer arbitration for inbound interactions. This approach ensures

Increasing Profitability through Intelligent Interactions: Innovative Marketing Strategies in the Communications Industry

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that the optimal message is chosen from an array of possible messages. For instance, a communications company with a high churn rate may decide to prioritize retention offers above all other presentations. Alternatively, within a cross-sell campaign, bundles may be given highest priority, with the individual bundle offers sorted by the expected value of an accepted offer. In almost all situations, different messages with different purposes that target the same people will compete for a critical resource: the customer's attention. When these messages compete, offer arbitration can weigh the value of each offer along with the customer's likelihood of acceptance, ensuring that the final message balances the customer's need for relevant offers with the company's objective to increase profitability. Building Real-Time Customer Profiles Today's successful marketers build their programs around individual customer profiles, focusing their attention on the customers that retain the highest value. This practice is based on the fundamental realization that marketing to the average customer will achieve no more than the average customer's value. Yet, today it is still common in the communications industry to find campaigns based on simplistic, one-size-fits-all approaches. Smart marketers have taken the first step towards improved results by using individual customer data to select appropriate offers. To grow marketing revenues beyond average, best practice companies rely on individual customer profile data and analytics to improve performance and drive true customer intelligence. Marketers have achieved significant gains using customer profile data such as tenure, product usage, ARPU, billing data, credit status, contextual data and demographic data. The more sophisticated this customer intelligence-and the more actively it is leveraged-the more effectively companies can manage and strengthen relationships. In fact, marketers that convert to real-time, individual customer profiles often experience double-digit gains in offer acceptances, as compared to untargeted, average customer approaches. However, for customer profiles to be effective, it is critical that the profiles be up-to-date and accessible in real time. It is estimated that this

real-time context can provided 40-50% of the predictive power of analytic models. Through a sub-second assessment of the context of the current customer interaction (e.g., service request, billing question, complaint, service termination, etc.), and other very recent interactions (e.g., transactions, calls, website visits, etc.), these systems can generate relevant, personalized recommendations with much higher precision than non-real-time systems. Enabling and Encouraging Collaboration Today's leading communications companies are strengthening the connections between marketing and customer interaction channels, as well as between departments and divisions. While in the past many marketing departments and customer service organizations have worked in isolation, today's consumer oriented companies are finding that success lies in ensuring crossorganization alignment of all marketing and service objectives, actions and processes. To maximize the value of customer relationships, it is critical that communications companies speak with a single voice to their customers and have access to all previous interactions. For example, the wireless product group should have access to and leverage information about customers using high-speed data services. By collaborating across business units and departments, communications companies are able to share information more effectively and ensure customers are managed in a consistent fashion. Collaboration also avoids depleting customer attention by coordinating and proactively limiting the number of customer contacts made. Successful companies have now bridged the gap between marketing and customer care, so that the organization that designs campaigns wo r k s c l o s e l y w i t h t h e o rg a n i z a t i o n t h a t manages customer interactions. By closing this gap, companies ensure greater success in marketing campaigns, more accurate measurement of campaign results, and more rapid adaptation to changes in the marketplace. In addition, close collaboration between these groups ensures higher customer satisfaction. Measuring and Refining for Results It is vital to measure and refine one's marketing campaigns to match market trends and to improve business performance. Only in this way

Increasing Profitability through Intelligent Interactions: Innovative Marketing Strategies in the Communications Industry

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can companies set and meet marketing objectives of the highest order. The ability to learn continually from the market and then act on the intelligence that has been gathered is a hallmark of a dynamic, agile, modern enterprise. Equally important, these highly measurable approaches have made it possible for front-line marketers to demonstrate improved results to management and thereby secure ongoing support for their programs. Compared to the old "spray and pray" approach, today's closed-loop systems leverage analysis of observed customer data generated through actual campaigns to determine the most effective tactic for achieving the desired result. Campaigns can be designed, tested against control groups, and then rolled out more broadly. In this way, campaigns start small, and then are promoted to the broader customer base once refined and proven effective. With this feedback loop in place, campaigns become better targeted, more frequently updated and ultimately more effective. Closed loop approaches typically spark a move towards more flexible and focused marketing. For example, a diversified operator may want to crosssell the same DSL Internet package using multiple messages, each targeted at a particular customer segment (e.g., SOHO businesses, high-income households, etc). Alternatively, a wireless operator might decide to promote each of its various wireless data applications (e.g., SMS, news, sports, weather, ring tones, e-mail, games) using messages specific to the customer segments it is trying to reach. By measuring and tracking the results of these personalized approaches, companies are able to continuously sharpen their segmentation and message targeting. BOTTOM-LINE BENEFITS As leading consumer-oriented companies in the communications sector have learned and demonstrated, strategic approaches to inbound marketing and customer interaction management can significantly boost individual customer value, revenues and profitability. Drawing on the real-world experiences of several top communications companies, it is clear these firms have generated substantial ROI from both retention and cross-sell programs. Listed here are just a few of those real-world scenarios:

Retention ROI Scenario Customer retention has become a high priority in the communications industry in recent years. As markets have matured, churn has become more pervasive, and customer growth has slowed. Because of these forces, significant benefits are being generated by focusing on retaining existing customers. Projecting the hard dollar savings yielded by a best practice retention program requires specific information. Here are a few simple assumptions: Number of customers. Assume this operator has a total of 3 million subscribers. Expected decrease in churn as a result of implementing a successful program. Even incremental improvements in churn can have dramatic economic impacts. Conservatively assume a 0.1% reduction in churn rates. Cost to acquire a new customer. A general rule of thumb is $250-$300 for the communications industry. Cost to retain an existing customer. A general rule of thumb is that it costs 5 times as much to acquire a new customer than to keep an existing customer. Assume $50 to retain an existing customer. Using a conservative 0.1% reduction in churn, a successful program would yield $600,000 in saved customer acquisition costs. Note that this calculation includes only the cost of acquiring a new customer, and does not include the fact that loyal customers have significantly higher revenue and profitability than new customers.

SAMPLE CALCULATION Total Customers % Incremental Churn Reduction Retained Customers Incremental Cost Savings Per Customer (Acquisition cost $250 less cost of retention $50) Saved Acquisition Costs

3M 0.1% 3,000 $200 $600,000

Cross-Sell / Up-Sell Benefit Scenario Still another powerful aspect of an inbound marketing program is the capacity to generate increased revenue and profit through crossselling or up-selling efforts to an existing customer base. Beyond simply addressing a service issue or a customer request, inbound marketing capabilities enable a company to

Increasing Profitability through Intelligent Interactions: Innovative Marketing Strategies in the Communications Industry

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present a relevant offer that matches an individual customer's needs and interests. Through this process, customer interactions become increasingly valuable and important opportunities that can contribute mightily to customer loyalty, profitability, and overall growth. Projecting the incremental gross profit yielded by an inbound cross-sell / up-sell program requires specific information. Here are a few assumptions: Annual inbound customer interactions. In the communications industry, the vast majority of inbound contacts occur in the call center. For this scenario, assume there are 9 million inbound call center interactions per year. Percentage of interactions eligible for crosssell. Not all inbound interactions will be eligible for a marketing offer because customers should not be cross-sold during certain situations (e.g., dispute resolution, cancellation). Assume that 25% of interactions are eligible for cross-selling or up-selling. Expected offer acceptance rates. Offer acceptance rates can vary widely and rely heavily on the marketer's ability to create compelling campaigns and offers. Assume an extremely conservative 1% higher offer acceptance rate (this can be the improvement over and above an existing cross-sell program or the rate of brand new cross-sell program). Expected incremental value generated from a cross-sell offer. Assume that, when accepted, the cross-sell offer being promoted generates $50 in immediate incremental revenue and has a 60% gross profit margin. Below is a sample calculation showing the first year ROI impacts of cross-selling in the call center. Each 1% increase in offer acceptance rates yields $675,000 of annual incremental gross profit.

Bundling Penetration Benefit Successful cross-selling of bundles can provide even greater lift to customer value-by simultaneously reducing churn, generating new revenue, and increasing loyalty. Customers who purchase bundles spend between 7 percent and 15 percent more than other customers. This benefit is additive to the initial gain from crossselling a bundled offer. A successful marketing program in the communications industry would likely select the best bundled offers and prioritize them over other offers, driving bundling strategies to the front of inbound marketing efforts. As a result, this program could increase bundling penetration and improve individual customer spend. Projecting the incremental gross profit yielded by a bundling program requires specific information. Here are a few assumptions: Number of customers. Assume this operator has a total of 3 million subscribers. % incremental increase in bundle penetration. Assume a 0.5% increase in bundle penetration. Expected incremental value generated from a bundle offer. Assume that bundles drive $50 of annual incremental revenue and have a 60% gross profit margin.

SAMPLE CALCULATION Customers % Incremental Increase in Bundle Penetration Incremental Bundle Penetration Annual Incremental Revenue Per Customer Owning a Bundle Annual Incremental Revenue Gross Profit Margin Incremental Gross Profit

3M 0.5% 15,000 $50 $750,000 60% $450,000

SAMPLE CALCULATION Annual Inbound Interactions % Interactions Eligible for Cross-Sell # Interactions Eligible for Cross-Sell Increase in Offer Acceptance Rate Incremental Offers Accepted Expected Revenue Per Offer Incremental Revenue Gross Profit Margin Incremental Gross Profit

Contact Center 9M 25% 2.25M 1% 22,500 $50 $1,125,000 60% $675,000

As the above scenarios suggest, the payoffs a ss o c i a te d w i t h e m b ra c i n g a d y n a m i c , intelligent approach to inbound marketing are demonstrably real. Through customer retention, cross-selling and bundling programs, inbound marketing provides an opportunity to maximize the value of each customer relationship while leveraging existing investments in call center and web infrastructure.

Increasing Profitability through Intelligent Interactions: Innovative Marketing Strategies in the Communications Industry

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EPIPHANY'S INTERACTION ADVISOR FOR TELECOMMUNICATIONS Recognizing the challenges and opportunities that companies in the communications industry now face, Epiphany has developed a powerful inbound marketing solution for today's leading enterprises. Epiphany Interaction Advisor for Communications is a multi-channel inbound marketing application built specifically for the communications industry. It utilizes customer data from across the entire enterprise to deliver intelligent interactions to all touchpoints in real time. As part of the Epiphany Advisor family of solutions, Interaction Advisor can be easily integrated with existing applications to drive immediate revenue out of each customer interaction. Controlled by a marketing professional through an intuitive Web-based interface, the application provides a framework for creating, executing, modifying, and monitoring inbound marketing campaigns. The communications solution includes a number of industry best practices, including data models, business processes, and marketing templates. Wi t h to p c u sto m e r s g l o b a l l y, E p i p h a ny Interaction Advisor for Communications is an established leader and delivers proven business results. Our customers include: 2 of 4 Largest Regional Bell Operating Companies (RBOCs) in North America 2 of Top 3 European Telecom Companies 3 of the Top 7 Wireless providers worldwide INTERACTION ADVISOR DELIVERS KEY BUSINESS BENEFITS FOR COMMUNICATIONS COMPANIES. Retain Your Most Valuable Customers Epiphany Interaction Advisor recommends the optimal retention offer for each customer, matching the value of the offer to the value the customer brings to the enterprise. Because it works in real time, the solution can be used as part of an ongoing loyalty campaign or to recommend an immediate action to retain a customer who demonstrates an intention to defect. As a result, companies that use Epiphany Interaction Advisor are improving their customer retention by 50 percent or more.

Increase Revenue per Customer through Cross-Sell Epiphany Interaction Advisor increases crosssell revenue from each customer by looking across all possible offers and selecting the one that will drive the highest expected value for that individual. It uses a combination of historical, personal, and contextual data to create a real-time customer profile, and then applies a unique blend of real-time analytics and business rules to deliver the highest-impact offers at the moment of interaction. Using this solution, Epiphany customers are doubling and tripling their offer acceptance rates and their cross-sell revenue. Increase Penetration of Product and Service Bundles Interaction Advisor increases carrier revenue by allowing operators to use offer arbitration to prioritize bundled offers over other programs, and to drive bundles to the forefront of the inbound marketing strategy. This ultimately results in both increased revenue and enhanced customer loyalty. Ensure Consistent Multi-Channel Customer Interactions Epiphany Interaction Advisor was specifically designed to ensure intelligent interactions across any number of marketing channels. Using out-of-the-box interfaces, companies can easily plug Interaction Advisor into their call center, web site, point of sale, or any other inbound channel. The Real-Time Decisioning Service seamlessly manages messages across all these channels using its unique combination of dynamic business rules and real-time, selflearning analytics. Coordinating with outbound campaigns created in Epiphany Marketing is both easy and intuitive through a web-based user interface. Contact preferences can also be created and enforced across all channels to ensure the consistent treatment of customers. Quickly Respond to Changing Market Conditions Epiphany Interaction Advisor's easy to use webbased interface allows you to create and deploy changes in days, not months. Real-time reporting provides an immediate view into the success of campaigns and offers as they are rolled out, which allows immediate adjustments to be made whenever necessary. The real-time self-learning analytics begin getting smarter immediately about which customers respond to which offers

Increasing Profitability through Intelligent Interactions: Innovative Marketing Strategies in the Communications Industry

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SUCCESS STORY: BELL CANADA AND BELL MOBILITY

Bell Canada is Canada's leading communications company, providing service to residential and business customers through wired and wireless voice and data communications, high speed and wireless Internet access, direct-to-home satellite, IPbroadband services, e-business solutions, and local and long distance phone services. Bell Mobility, a division of Bell Canada, is the country's largest wireless service provider. The Interaction Advisor project introduced at Bell Mobility was initiated in an effort to transform its inbound call center into a revenue-generating and customer-centric operation. In late 2000, Bell Mobility's marketing and customer service departments came together in an effort to change the contact centers from a traditional cost-center service organization into a more modern, revenue-generating sales and service organization. Bell Mobility sought a seasoned CRM leader that would become a longterm business partner, not simply a vendor. The company required a highly targeted real-time marketing solution that could: Increase employee effectiveness Raise customer satisfaction and loyalty Decrease customer churn Generate revenue through cross-sell and up-sell Integrate easily with existing systems Learn automatically in real time Deploy quickly and easily

In June 2001, Bell Mobility implemented Interaction Advisor in its home-grown contact center application for 550 agents. Campaigns were categorized between pre-paid and post-paid wireless customers and included churn, cross-sell/up-sell and revenue stimulation campaigns. Interaction Advisor now arbitrates between 70 different offers for each eligible customer interaction. The project has been a smashing success. After implementing Interaction Advisor, Bell Mobility has been able to: Increase campaign velocity by 75% Boost agent sales per hour by up to 18% Increase sales revenues from the inbound channel by 16% Immediately adjust efforts through real-time campaign monitoring Improve agent performance through real-time agent monitoring

With the success of Interaction Advisor at Bell Mobility, Bell Canada recently elected to expand its use of the product to an additional 2,300 Bell Canada contact center agents. Bell Canada agents deliver offers across wireless, long distance, local service, Internet and satellite TV. Interaction Advisor arbitrates between 80 different offers for each eligible customer interaction.

Increasing Profitability through Intelligent Interactions: Innovative Marketing Strategies in the Communications Industry

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no historical data is required. This allows you to respond to changing market conditions faster than ever before, decreasing marketing cycle times, and becoming significantly more proactive in your marketing approach. Augment Existing Systems to Deliver Rapid Time to Value Interaction Advisor plugs into existing IT environments through a library of standardsbased interfaces. It leverages investments in data warehouses and databases for customer profile information and integrates easily to front-end systems that expose inbound marketing offers. Rather than ripping out and replacing existing systems, Interaction Advisor extracts and extends their value. Because it is fully compatible with other systems, Epiphany Interaction Advisor can be implemented in as little as six weeks. As a result, businesses can get up and running quickly, leading to payback on investment in six months or less. SEPARATING THE BEST FROM THE REST The communications industry is now in the midst of a painful consolidation, which results in a confusing, fragmented and frustrating experience for most customers. In order to succeed in this environment, companies must effectively compete for customer attention and retention through quality service and intelligent customer interactions. Leading consumer-oriented communications companiesthe ones that will survive and thrive in the years to comerecognize that they must strategically invest in deep, enduring and profitable customer relationships. To accomplish this, these companies are constantly refining their customer strategies and customer-facing business processes. They seek to leverage

inbound channels to sell more services to their existing customers as opposed to constantly chasing new ones. However, what these companies also realize is that they must leverage their existing infrastructures more effectively if they are to meet these objectives. Successful companies are embracing technology that enables them to manage customers on a more powerful and personal level, but that does not require them to rip out and replace their existing systems. This ultimately increases ROI for all customer-related investments, even legacy operational systems that have to date delivered disappointing returns. What is becoming increasingly clear is that these leading companies are only widening the gap between themselves and their less-savvy competition. They are exploring new ways to refine their marketing approaches, work collaboratively with all of their enterprise-wide departments and enhance the richness of each and every customer interaction. They are already pushing their inbound initiatives to new lengths in an attempt to uncover the next best practices that will provide competitive differentiation. At some point, the distance between the best and the rest will become impossible to recover. Forward-thinking companies in the communications industry have come to realize that the time to invest in winning strategies-and best practices-is now. The opportunity is clear and it is being seized by an emerging set of market leaders. The telecom industry may be in transition, but the best are merely treating this as an opportunity to redefine their relationships with their customers and drive increased customer loyalty, profit and enduring growth to the front lines of their businesses.

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Increasing Profitability through Intelligent Interactions: Innovative Marketing Strategies in the Communications Industry

Contact 475 Concar Drive San Mateo, CA 94402 USA p 650.578.7200 f 650.356.3810 epiphany.com

About Epiphany Epiphany (NASDAQ: EPNY) provides CRM software solutions that increase profitability at the largest consumer-oriented companies by making every customer interaction intelligent. With over 475 customers in financial services, insurance, retail, communications, and travel & leisureincluding nearly 35 percent of the Fortune 100Epiphany powers deep customer insights and optimizes each relationship from both a revenue generation and customer retention viewpoint. With a suite of blended marketing, sales and service solutions, Epiphany enables global organizations to align touchpoints, processes and technologies around the most valuable enterprise assetthe customer. Built on the industry's most advanced, service-oriented architecture, Epiphany solutions address problems that span business silos, departmental functions and geographic locations, and result in rapid, measurable ROI. With worldwide headquarters in San Mateo, CA, Epiphany serves customers in more than 40 countries worldwide.

Global Offices Americas: +1.877.764.4163 Asia/Pac: +61.2.9492.1200 Europe: +44.118.929.7700 Japan: Epiphany Solutions, Ltd. +81.3.5733.1720

2003-04 Epiphany, Inc. All rights reserved. EPIPHANY, the Epiphany logo, and E.6 are trademark of Epiphany, Inc., registered in the United States and other jurisdictions. All other company names, product names, and trademarks are the property of their respective owners. 03-09-004 Rev1