Economist: Untangling the social web

Software: From retailing to counterterrorism, the ability to analyse social connections is proving increasingly useful

TELECOMS operators naturally prize mobile-phone subscribers who spend a lot, but some thriftier customers, it turns out, are actually more valuable. Known as "influencers", these subscribers frequently persuade their friends, family and colleagues to follow them when they switch to a rival operator. The trick, then, is to identify such trendsetting subscribers and keep them on board with special discounts and promotions. People at the top of the office or social pecking order often receive quick callbacks, do not worry about calling other people late at night and tend to get more calls at times when social events are most often organised, such as Friday afternoons. Influential customers also reveal their clout by making long calls, while the calls they receive are generally short.

Companies can spot these influencers, and work out all sorts of other things about their customers, by crunching vast quantities of calling data with sophisticated "network analysis" software. Instead of looking at the call records of a single customer at a time, it looks at customers within the context of their social network. The ability to retain customers is particularly important in hyper-competitive markets, such as India. Bharti Airtel, India's biggest mobile operator, which handles over 3 billion calls a day, has greatly reduced customer defections by deploying the software, says Amrita Gangotra, the firm's director for information technology.

The market for such software is booming. By one estimate there are more than 100 programs for network analysis, also known as link analysis or predictive analysis. (See also KDnuggets: Social network analysis, Link analysis and Visualization )

The raw data used may extend far beyond phone records to encompass information available from private and governmental entities, and internet sources such as Facebook. IBM, the supplier of the system used by Bharti Airtel, says its annual sales of such software, now growing at double-digit rates, will exceed $15 billion by 2015. In the past five years IBM has spent more than $11 billion buying makers of network-analysis software. Gartner, a market-research firm, ranks the technology at number two in its list of strategic business operations meriting significant investment this year.

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