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 April 5th, 2011
Stopping Postpaid Bleeding with Contextual Marketing
Growth in the postpaid subscriber segment is slowing precipitously across the industry. Stifel Nicolaus analysts estimate that prepaid subscribers grew by 14.7 percent year-over-year while postpaid subscribers grew by only 2.9 percent year-over-year (Wirelessweek.com 21 May 2010). Considering the significantly higher revenue generated by postpaid customers (vs. prepaid), this is not exactly exciting news. So, is losing postpaid customers an unstoppable trend, or is there a way to alleviate the pain?
| Leave a Comment February 3rd, 2011
Be Smart with Your Prepay Mart
Two important trends in the telecommunications market cannot be overlooked: the penetration of Smartphone and the fact that prepaid customers outnumbered postpaid customers in 2010. True, these two trends seem completely unrelated. Yet, the combination of both trends may have a significant effect on service providers’ revenues and marketing strategy.
According to Gartner research, by end of 2012 over 75% of enterprise mobile users will have a Smartphone, driven by low service costs (Gartner Hype Cycle for Wireless Devices, Software and Services, 2010). Frost and Sullivan, ICT Practice supports this by claiming that Asia Pacific will be driven by price decline and application richness, with Smartphones expected to be mass marketed by 2015 and account for 60% of mobile sub base in Asia Pacific.
Add to this rapid growth the remarkable pace of technology adoption. Today’s coolest device becomes old fashioned in about six months. This makes the whole “exclusive” positioning of Smartphones very short lived. If iPhones and various Smartphone devices used to be perceived as luxurious items, today this socio-economical-mobile-device segmentation seems irrelevant. Welcome to the prepaid world.
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| Leave a Comment December 29th, 2010
Prepaid Loyalty: Fact or Fiction
The prepaid Loyalty Challenge
Prepaid business presents a challenge when discussing the loyalty factor. How do you create and nurture a long-term relationship with a customer when you don’t even have their name or address? Prepaid customers enjoy the simplicity and freedom of no commitments or contracts. Joining a service provider is as simple as buying a SIM card from the local grocery store. In addition, prepaid subscribers in many high growth markets are low-spend customers, which limit the marketing resources service providers are willing to invest in retention. The result: constant prepaid customer churn. Indonesia, for example has one of the highest churn rates at over 10% a month, while the Philippines has almost 5% monthly churn on average. How then are service providers supposed to create and encourage loyalty from a prepaid customer base that is able to churn at will?
| 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 December 8th, 2010
What impact will MVNOs have on developing prepaid markets?
Although MVNOs are perceived as competition, MVNOs actually reduce mobile operators’ operational costs for billing, sales, customer service, and marketing. By providing new applications and tariff plans, MVNOs help mobile operators fight churn and grow ARPU – so that the symbiotic relationship should be perceived as an opportunity rather than a threat. Read more
| Leave a Comment September 27th, 2010
Prepaid Customer: What you do is who you are
Anonymity is probably one of the most frustrating factors for marketers servicing the prepaid market. A Prepaid customer purchases a SIM card in a kiosk, leaving behind no trace of identity – unknowingly preventing any segmentation of core services. You cannot maintain an ongoing relationship with the customer – an essential component for building loyalty and for identifying opportunities to increase share of wallet.
| Leave a Comment September 27th, 2010
Ovum Recognizes Pontis as Leader in Loyalty Solutions Preventing Churn
In a research conducted by Ovum; “Post-recession strategies: loyalty grows in importance”, Pontis is recognized as one of the main solutions enabling service providers to increase loyalty and significantly reduce churn.
According to the report, most services providers initiate loyalty plans through consumer promotions such as free cinema tickets, which can be perceived by customers as meaningless promotions and intrusive. Ovum suggest that instead, operators should provide valuable, targeted and personalized offers , while at the same time giving customers the sense of personal dialogue. In a crowded and mature mobile market, in which loyalty programs are essential, Ovum recommends that operators differentiate themselves with contextual marketing in order to provide the right offer at the right time.
According to Ovum, Pontis addresses these issues and can assist operators to overcome these challenges. The Pontis solution enables operators to design personalized and contextual marketing programs and automatically deliver offers in real time to customers. The Pontis solution helps operators stand out from the competition, while significantly increasing their ARPU.
| Leave a Comment September 5th, 2010
The Pain in Spain: Fake SIM Activation
Spain has one of the largest mobile markets in Europe, with effective competition from four mobile network operators and a growing number of resellers. The economic crisis, combined with new EU regulations and the fierce competition has driven down the cost of mobile calls by 35% since 2005. As if that’s not enough, the Spanish prepaid mobile market has encountered another challenge which seriously affected ARPU. Fake SIM activations, also known as “revolving doors”, have recently hit Spain, significantly impacting operators’ revenue. Some users activate a new card due to the loss of an old SIM, but others take advantage of an attractive acquisition offer (e.g. free airtime, subsidized handset…). In such a case, the old SIM remains dormant and in due time is considered a churned customer.How can operators handle such a phenomenon? How can they identify and differentiate between the different kinds of SIM activations, and more importantly – how can they be prevented? Read more
| Leave a Comment July 20th, 2010
Case Study: Enriching Marketing Campaigns With Context Pays Off for a Tier 1 European Mobile Operator
Gartner has published a case study* in which they document how the use of real-time, contextual information, targeted highly relevant offers to individual customers, have helped a Tier 1 European provider boost their service revenue from prepaid phones, enhance customer loyalty and reduce churn.
The main findings illustrate how the operator has succeeded to follow and better understand the individual needs of their entire customer base and based on this data offered specific targeted prices and products which were highly relevant to individual subscribers. Due to the real-time execution and automatic fulfillment of these offers allowing quick follow-up, and guaranteeing higher response rates, the operator had succeeded to increase overall revenue per subscriber: “offerings that are personalized to the customer segment and presented when the customer is most receptive generate tangible new revenue.”
In this example, the case study highlights how the operator’s “acceptance of promotional offers rose from 2% – 10%.” It further explores how the operator has managed to create an ongoing dialogue with their customers.
Furthermore, the case study recommends that “vendors should target the marketing team, rather than the IT or business intelligence (BI) teams with their products. Highlight that this type of approach allows marketers to radically change the way in which they create and manage promotions”
In addition it is recommended that: “Communications service providers (CSPs) should select a vendor with a proven track record of successful implementations and comprehensive consulting services — they will need to rely on the vendor’s advice to avoid the most common mistakes when creating this new type of campaign”.*
Gartner, Inc.:. Publication ID Number: G00175497
Gartner research is available at www.gartner.com
| 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
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