The Prepaid Marketing Battle – Above the Line, Below the Line, or Through the Line?
The news is out. Cost-conscious consumers are shifting towards prepaid (sometimes also called “contract-less”) plans to replace their contract-bound postpaid plans and be able to control spending while cutting costs.
While the prepaid shift is a global trend, it seems particularly strong in the US. Early financial results of US carriers indicate an unprecedented drop in postpaid vs. prepaid numbers. In the fourth quarter of 2009, 65% of the 4.2 million net new U.S. cellphone subscribers were prepaid customers (IDC Technology Research). Couple this trend with the commoditization of smartphones and the question clearly arises – how should US mobile carriers react to these trends and should they re-adjust their marketing strategies to retain the notoriously agnostic prepaid customers?
| Leave a Comment December 29th, 2010
Social Effects on Customer Retention at a Mobile Operator
Researchers recognize the role that social interaction has in the adoption of new products or services: word-of-mouth interactions can lessen the risk and uncertainty associated with new products. But what about quitting behavior? If social connections can induce a person to adopt a product or service, can they also lead a person to abandon a product or service? Until recently, it has been difficult to study this question because of the extensive data needed to do so, but in the past few years, researchers have used telecommunications databases to explore social network behavior. In the current research, Irit Nitzan and Barak Libai of Tel Aviv University use a cellular phone company’s database of more than one million customers to examine the influence that customers who leave the company (defectors) have on their first-degree contacts (direct contacts, or “neighbors”) in their social network.
| Leave a Comment July 20th, 2010
Russia the Freedom of Choice: Multi SIM Ownership Drives Churn and Decreases ARPU
Russia has the largest mobile market in Central and Eastern Europe and is continuously growing. At the end of May 2009 the total number of subscribers reached 194.7 millions, with customers being wooed by three major service providers (MTS, VimpelCom and MegaFon). Competition has further intensified with the growing penetration of multiple SIM ownership. As the majority of handsets are not purchased through the operators but rather from independent stores, Russian mobile operators could not lock handsets to their networks, and consequently customers can benefit from different operators’ SIMs on a daily basis. Read more
| Leave a Comment July 20th, 2010
Segmentation vs. Behavioral Life Cycle Management:Getting the most of Your Marketing Efforts
The saturation levels of mobile markets and the low exit barriers for customers have caused many operators to shift the weight of their marketing efforts from new customer acquisition to customer retention. As part of this trend, operators are investing lots of funds on sophisticated customer segmentation solutions. Yet, are these segmentation efforts really delivering the desired results? Are common proactive marketing practices, based on traditional segmentation succeeding to increase customer loyalty and profitability?
| Leave a Comment June 16th, 2010
Protecting your Prepaid Base in a Competitive Market
Wikipedia defines churn as “a possible indicator of customer dissatisfaction, cheaper and/or better offers from the competition, more successful sales and/or marketing by the competition, or reasons having to do with the customer life cycle.” How can you avoid churn and nurture long-term relationships with your prepaid customer base in a competitive market consisting of customers that have no contractual commitment?
In the context of mobile subscribers, “churn prevention” is almost synonymous to “loyalty” and “retention.” While “loyalty” points to the required activities to keep customer faithful, “retention” makes sure customers do not leave, with superior offers and other customer-centric activities, compared to the alternatives provided by the competition. To ensure these two vital factors are fulfilled and have a real impact on your customer base you must establish real-time contextual marketing and selling capabilities.
| Leave a Comment July 1st, 2009
The race to win the hearts and minds of pre-paid customers
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.
| Leave a Comment September 8th, 2008
Building A Synchronized Set of Prepaid Offers
This is the third and final post in a series of three where we revealed how we went about impacting prepaid behavior in our work with one of the largest prepaid operators in the world.
The following are the main behavior indicators we take into account when building a synchronized set of offers to different segments. To see how we impacted each please see the before and after graphs in How Do We Impact Prepaid Behavior?
> The time period that goes by between top ups – the shorter the period is means the subscriber is more active.
> The time that goes by from reaching a zero balance until the next top up is even more important, because each day that goes by without talking, means the subscriber could be churning. This resonating silence is referred to as a ‘dormant subscriber’.
> The third factor is the date of the last call, or days from the last call. This is extremely important because since there is no contract, there is no proactive activity involved in case the subscriber wants to churn like calling the operator to terminate service. That is the main reason why so many prepaid subscribers become dormant, and why this phenomenon is often referred to as ‘passive churn’.
| Leave a Comment August 11th, 2008
How Do We Impact Prepaid Behavior?
In our first post on impacting prepaid behavior we demonstrated how we increased usage within a “mid–ARPU” prepaid segment, using a multi-stage marketing program. What is the strategic impact we achieved? First let us take a look at the before and after status of each phenomenon and then we will explain how we did it.
As we can see in the below graph showing last call date distribution (Phenomenon 1) a subscriber that didn’t talk for 30 days is considered dormant. As a result of our targeted marketing program we managed to reduce the time frame from the last call made (a shift from the right to the left on the graph), where subscribers actually remained active over time. This is based on a three month period that began in January 2008, and three months later we checked how many were still active. So for example, subscribers from day 30 to day 60 in the graph made their last call in March, and subscribers from 61 to 90 made their last call in February. What we managed to do is bring about a shift where more subscribers remained active over time or to put it another way – kept talking!
| Leave a Comment 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.
| Leave a Comment July 10th, 2007
Prepaid Incentives That Really Work
In a previous post we talked about 
the importance of the prepaid user segment for mobile operators and described some of our field learned tactics on how this segment should be treated. Implemented correctly, the suggested tactics require minimal effort, from an operational perspective, and make the whole process of retaining prepaid customers more efficient and cost effective.
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