August 3rd, 2008
Impacting Prepaid Behavior To Increase Revenues
The big race to retain customers and maintain their level of usage has proven to be extremely challenging in the prepaid sector. Generic characteristics of this service, lack of users’ data and minimal differentiation bring marketing challenges to new heights.
This post is about the best way to overcome these obstacles and go about impacting subscriber behavior in one of the most lucrative revenue sectors for mobile operators - the prepaid sector that is comprised of over 1 bln subscribers worldwide. The following insight is based on our activity with one of the largest prepaid operators in the world.
Our first challenge with this operator was to increase usage within a “mid–ARPU” prepaid segment. Experience has taught us that the best way to impact behavior in this segment is to integrate real time and immediate response tactics into all marketing activities. Here is a real life sample of how we went about increasing top up recharges and voice usage for subscribers with an average top up amount of lower than €10.
The goal was to develop a multi-stage marketing plan for changing the targeted subscriber’s recharge pattern and as a result stimulate usage and increase ARPU. The marketing plan included a set of offers across the subscriber’s “life cycle”, starting with an initial top up incentive offer and continuing with different follow up offers for those who “responded” and different follow-up offers for those who didn’t respond to the initial offer. Positive responders, who recharged their account, were driven to boost their usage, while those who didn’t respond were communicated with a more attractive offer.
Here is the breakdown of the multi-stage marketing plan:
Offer #1: Top Up €15 and get 15% bonus (1 week offer)
The 15% who responded received Offer #2:
Get 10 minutes of credit for every 20 minutes you talk (2 week offer) – the response rate was 80%!
The 85% who didn’t respond to the first offer received Offer #3:
Top Up €10 and get a 10% bonus (1 week offer)
The 46% who responded received Offer #4:
Top Up €10 and get a 50% discount on “on-net” calls until the end of the week (1 week offer).
The response rate to the last offer was a whopping 55% (!)
But the really interesting part is the overall result witnessed a net ARPU increase of 40% during the month of the campaign and a 10% residual increase during the couple of weeks following the campaign.
Now don’t forget that we are talking about a segment with extreme price sensitivity with many youngsters using these no-obligation services, where the ability to influence both the top-up amount and frequency is quite an achievement.
So considering all of the above these results are phenomenal and prove that using a scientific methodology to target different segments with a multi stage personalized plan that takes their response - or lack of response - into account, produces significant revenue-impacting results.
In our next post we will review three main shifts we managed to create in the prepaid segment: reducing dormant periods, reducing average time between top ups, and reducing the average time from zero balance to recharge.
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4 Responses to “Impacting Prepaid Behavior To Increase Revenues”
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Hi Nir.
Glad to see you here
Happy to see you here too
Hi Nir,
It’s a fantastic artical i am working as U & R prepaid manager in bharti and i have also implemented the same promo to my sub base before launching promo i am not sure of the responce but after reading your artical i am so comfordable lauching it.
Thanks,
Rajat Mahajan.
Thank you Rajat,
I believe that adopting such marketing paradigms can achieve a dramatic impact on customer’s behavior.
In this case, the main causes to the high response were:
1.of course, offers’ attractiveness
2. Timing of communication - Top up incentives were offered once the subscriber has been left with low balance amount.
3. Using a series of offers, that took the customer through a multi-stage “journey”, make sure no customer has left without an offer fits to his needs.
Your are most welcome to read more about other trends and phenomena which help to reducing churn and keeping Prepaid customers active and loyal, in my latest article -
“HOW DO WE IMPACT PREPAID BEHAVIOR ?”
Nir Hakarmeli