Project: Development of a pricing software to optimize customer lifetime value in sectors such as telecoms and banks

The goal of the CLIPPER project is to develop an innovative computer software program in the area of Pricing Optimization with targeted applications in telecoms, banking, insurances and utilities (gas, electricity….)._x000D_In response to economic changes in recent years, the role of Information and Communication Technology (ICT) as an economic engine became very important. ICTs provide key levers for improving the competitiveness of enterprises. An essential aspect is the efficiency of decision making and, in particular, price decision making. By setting the right price for thousands/millions quotes per year, enterprises can typically gain 3 to 7 points in additional margin. Price is indeed the most powerful (and often untapped) profit lever for many enterprises, especially those with a high number of customers in market environments with intensive competition, decreasing prices and increasing costs. _x000D_The project involves Ps of France, Flanders and Wallonia. These regions have traditionally strong capabilities in software development and operations research. However they are loosing ground in the area of package software where the United States and India are taking the lead in terms of marketed products and patents. Pricing Optimization is an emerging market with annual growth rates of 20% according to Gartner Group, a technology research firm. It is significant that among the 11 pricing software companies listed in the Pricing Society’s technology directory, only 2 companies are European (Open Pricer and Stratinis), the other companies being from the US and India. _x000D_Existing pricing software are focused on defining the price of products sold to consumers or businesses during a given transaction and do not cover the need to apply effective and coherent pricing strategies focused on the customer. In fact, until now, there is no pricing software on the market that considers Customer Lifetime Value (LTV) in pricing optimization. LTV is the margin generated by a customer through its entire business relation with the supplier. Its use as a marketing metric tends to place greater emphasis on customer service and long-term customer satisfaction, rather than on maximizing short-term profit generated by a sales transaction._x000D_CLIPPER stands for “Customer Lifetime Price to Profit Effect Rationalization”. This project is motivated by the need to bring pricing decision support to service suppliers having a long-term relationship with their customers who can be persons and households (B2C) or businesses (B2B). In this case the company will aim to maximize LTV and not only the value of a particular transaction with the customer. _x000D_Hence, the CO OBJECTIVE of the project is the design, analysis, development and deployment of an innovative price optimization software aiming to maximize customer LTV on each transaction, focused on telecommunications MNOs (Mobile Network Operators) and Retail Banking sectors with application for B2C and B2B segments. CLIPPER will be the first software in the market that considers LTV in pricing strategies, involving a significant economic impact on the target sectors. The potential market for the solution is evaluated to 86 M€ for the Telecoms and 35 M€ for the banking sector in 2012. _x000D_The product will incorporate the following core technology components: segmentation, market response modeling, order/usage profiling, costing, simulation and optimization. The solution will be the fruit of activities of system detailed specification, data acquisition, data analysis and modeling, software design and development, and validation of prototype. _x000D_The CO advantages of CLIPPER with respect to other pricing systems available in the market, are the following: the evaluation of a “customer response function” for each negotiation event; the building of price micro segments for which the response function is homogeneous across customers; the modeling of customer lifetime value as a function; the simulation of customer revenue and cost, providing pricing recommendations through all the customer “life cycle”._x000D_The consortium is formed by OPEN PRICER, Paris, France (SME, Project Leader), ENQIO, Mechelen, Belgium (SME) and the Université Catholique de Louvain, Center for Operations Research and Econometrics (UCL CORE)_x000D_All the Ps have a proven experience in one or more of the following research areas related to the development of this project: pricing software, business intelligence (data mining, data modelling, data prototyping), operations research, discrete choice modelling, optimization and simulation. _x000D_

Acronym	CLIPPER (Reference Number: 6667)
Duration	01/07/2011 - 30/04/2013
Project Topic	Design, analysis, development and deployment of an innovative price optimization software aiming to maximize customer Lifetime Value each transaction, with primary application on telecom (Mobile Network Operators) and Retail Banking sectors with for B2C and B2B segments
Project Results (after finalisation)	The result of the project research is a new product, CLIPPER. CLIPPER is an innovative price optimization software aiming to maximize customer LTV on each transaction, focusing on retail banking sector as well as on MNOs telecommunications with application for B2C and B2B areas.
Network	Eurostars
Call	Eurostars Cut-Off 6

Project partner

Number	Name	Role	Country
3	ENQIO	Partner	Belgium
3	OPEN PRICER	Coordinator	France
3	UNIVERSITÉ CATHOLIQUE DE LOUVAIN (CORE, Centre for aplications reseach and econometrics)	Partner	Belgium