July 1st, 2009

The race to win the hearts and minds of pre-paid customers

By Alon Werber - VP Marketing & Business Development

In these cash conscious times, with the race between mobile operators to retain customers and drive-up levels of usage, mobile operators need to focus their efforts on more effectively marketing to, and impacting the behaviour of, their pre-paid customers.

With around 1 billion prepaid subscribers worldwide, impacting this group of subscribers’ top-up frequency and amounts, as well as their consumption habits, represents a hugely lucrative, yet under-utilised opportunity to drive ARPU and reduce churn. If carried out in a targeted and timely manner, addressing pre paid customers has proven to increase overall revenues, (versus control group) by as much as 6-8%. Operators should therefore focus on enticing customers to top-up when their balance is low and reviving ‘silent’ customers with contextual offers.

The challenge to retain customers this year will be particularly demanding in the prepaid sector; it is a notoriously price sensitive sector with little brand loyalty. Operators should entice customers, such as high-churn risk subscribers and high value subscribers, to top-up and talk more through relevant incentives- closely tied to customer’s behavior and preferences. Incentives can include rebates, discounts, and free minutes but also benefits in other services such as SMS and VAS services. The silent period is an important trigger for action as it not only represents missed revenue but the strongest churn indication.

Know your audience – “What you do is who you are!”

In the past, lack of data on users and operators’ inability to quickly and automatically act upon pertinent data has presented marketers with a challenge in trying to segment and deliver offers which meet user’s needs in a timely manner. However, the technology is now available to enable operators to target subscribers with personalised offers, in real time in order to entice them to talk more to preferred destinations, top up more frequently and minimise silent periods. Instead of predicting what users want, operators need to adopt a system which acknowledges a subscribers’ activity, or lack of, immediately and keeps the dialogue open, whilst executing real-time offers. It’s an essential part of the Customer Relationship Management mix and helps deliver optimum results.

This can be shown when we undertook our own analysis of subscriber’s behaviour with a European Tier 1 operator, which revealed that over 80% of subscribers that didn’t talk for 14 days became dormant, that is they became ‘inactive’, users. The same operator was able to reduce the average time between recharges by 30% and even more important – to reduce average time elapsed from reaching zero-balance until next recharge by 50%, through ongoing interaction aimed at changing recharge patterns and stimulating usage. The key is identifying high-churn risk subscribers and encouraging them to recharge more frequently through the right retention offer, for example: if the average recharge amount is between £10-15, operators should provide offers such as “if you recharge more than £20 get 10% immediate bonus and 20% discount on calls to a relevant destination.” Benefits might also relate to other lines of business, e.g. top-up £10 and get two ringtones for free, for customers who have expressed interest in similar services in the past. Operators should also look at subscribers who haven’t responded to previous incentives, and automatically move them up the value path and target them with a more enticing offer, for example: “recharge more than £20 and get 10% bonus on all recharges during the next month.” These activities encourage subscribers to frequently recharge, whilst promoting other services; giving subscribers an incentive to remain active.

Right here, right now

Operators need to work at ensuring that they target the subscriber with relevant offers at the right time. It is essential to ensure subscribers don’t reach zero balance, as the time between reaching a zero balance until the next top-up is even more important, because each day that passes means the subscriber could be churning. Operators should look to implement a proactive approach using event/trigger based activities through a series of special marketing offers to prevent subscribers from reaching a zero balance. So the moment a subscriber – which is part of a high risk segment - reaches a low balance of £3 for example, they receive an SMS: “recharge now and get an immediate bonus”. This is also accompanied by reminders, where if they don’t recharge they receive the offer again after three days.

The second factor operators should look at is the date of the last call. This is extremely important because as there is no contract, there is no proactive activity involved, and subscribers don’t need to notify the operator if they churn. That is the main reason why so many prepaid subscribers become dormant. The right offer can make the difference between retaining a customer or failing to act and losing to one of your competitors.

So the bottom line is that it is essential that operators focus their attention on their prepaid customers and encourage subscribers to increase their average top-up amount and frequency. The means are now available for operators to harness data on their subscribers’ behaviour and implement marketing offers in real time based on their preferences, ensuring customer satisfaction and minimising the risk of churn.