Faced with a dramatic and continuous double-digit decline in the ‘average revenue per user’ (ARPU) mobile operators have to learn how to sell more services to more customers better. But don’t think that broadcasting offers to an even broader subscriber base will do the trick. Alex Vratskides argues that operators will have to embrace other mobile marketing approaches to make a convincing (and personalized) pitch.
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A recent report from Wireless Intelligence reveals that ARPU across the 27 European Union countries has dropped by a staggering 20 percent over the last three years — and the decline continues. While prices for voice calls continue to fall, consumer demand for data usage—most notably video—is on the rise. But it’s hardly a reason for mobile operators to break out the champagne, since delivering data and video requires them to make significant investments in their network capabilities.
The bottom line: If you’re a mobile operator, you need to grow your revenues. You have two options: attract more customers from rival operators, or wring more value from your existing customers.
Campaigning to acquire new customers involves taking significant risks, and it doesn’t always deliver results. It is a costly business, requiring operators to spend on advertising and media campaigns in press, online and TV outlets in a bid to target potential customers, and offer new tariffs and prices to those customers to sweeten the deal.
Moreover, ad campaigns and hard-sales pitches can backfire, particularly if the consumers feel they are being inundated with blanket advertising they find neither relevant, nor interesting.
But it doesn’t have to be this way. The mobile operator already owns an alternative – the mobile channel. Now they just have to learn to use it.
The mobile channel has two advantages:
It’s cost-effective. Operators have to pay to deliver their marketing message to consumers via TV, radio, Internet, and outdoor. But they can deliver their mobile subscribers ads (via text messaging) free of charge.
It’s personal. Reams of reports and surveys show consumers trust mobile communications from their operators. It’s a close relationship the mobile operator owns and can deepen through targeted text advertising.
Many mobile operators are turning to mobile marketing to connect with their existing consumers, with the aim of cross-selling or up-selling users additional telecom services such as data and video. But, in a space notorious for customer churn, the question remains: How can mobile operators market their services most effectively to their customers – without alienating them?
What the people want (and how)
The good news is that the recent Upstream Mobile Marketing Consumer Attitudes Report confirms the close (and in many ways untapped) relationship mobile operators have with their users.
Based on a survey of 2,198 U.K. adults the report revealed that over half (59 percent) of consumers are happy to be contacted by their operator with relevant offers (not generic advertising). Notably, 15 percent of respondents said they would welcome personalized suggestions for plan upgrades, and 13 percent would like to receive advertising about discounts aligned with their actual usage and requirements.
But these findings should not be read by mobile operators as a green light to deliver their users a deluge of marketing messages. The report found that the majority (38 percent) of customers will not tolerate more than one promotional message from their operator per month. An almost equal number (31 percent) said they would accept even less. Interestingly, these findings are further supported by Upstream’s own campaign experience with mobile operators in more than 40 countries.
How do consumers want to be contacted by mobile operators?
The most popular format was text message (61 percent), and 51 percent said that they would like to be informed about new offers and services within the normal flow of SMS messages that they already receive from their mobile operators. Specifically, respondents would welcome mobile marketing messages as part of top-up confirmations (9 percent), missed call and voicemail alerts (8 percent), balance updates (7 percent) and roaming notifications (7 percent).
The right stuff
But combine these regular communications with a deep understanding of the customer (which mobile operators have), and operators can provide their users an offer they literally can’t resist.
Imagine the power and effectiveness of a personalized (targeted) marketing message that pairs an account balance notification with an offer based on the user’s own unique usage and requirements. For example, a special offer targeted to a frequent traveler, might suggest the customer change to a contract offering a portion of free international minutes. Alternatively, an offer attached to a balance alert sent out to a prolific user of text messages might promote a text message ‘bolt-on’ (a cut price monthly message allocation).
And don’t think making a match is hard for mobile operators. They have the trust of their users and, more importantly, a de facto opted-in audience for their marketing messages. Put another way, these marketing messages, which arrive as part of the regular communication flow, are relevant from the get-go because they are aligned with data the mobile operator already owns. This includes the customer profile and personal preferences (information mobile operators glean from data such as mobile usage, billing records and browsing behavior, for example).
Thus, mobile operators have the edge over third-parties. They cover all the bases to deliver highly targeted advertising to the right (and opted-in)demographic.
Opportunity knocks
At Upstream, we estimate that a mobile operator has an average of five interactions per month with their customer base, delivering text messages that feature information such as top-up or balance notifications.
With five billion mobile phone subscribers globally that is equal to a whopping 25 billion (!) opportunities for mobile operators to connect with their users, communications that could be harnessed to deliver targeted and personalized offers consumers are sure to appreciate (because they are aligned with their profiles and preferences in the first place).
Do the math, and that’s an untapped opportunity to deliver relevant advertising that dwarfs even Google. Google typically delivers click-through rates of 0.1 percent. Mobile operators up-selling and cross-selling their own products through the delivery of highly personalized messages report double-digit response rates of up to 20 percent.
But the real secret to achieving high response rates is not the deal; it’s the context in which it is delivered.
Put another way, while good deals and great offers can result in increased response rates and consumer participation, these marketing messages are most effective when they are delivered in context and at the right frequency. Consumers trust their operator, and that gives operators a huge advantage over the competition. But, if operators squander that trust through over-promoting services and spamming their customers, then they will quickly see that trust and revenue eroded. Context is king.
About Alex
Αlex Vratskides is the co-founder and Chief Executive Officer of Upstream. As CEO, Alex is responsible for all global operations, including sales and marketing, product development and spearheading Upstream’s international expansion by building relationships with blue-chip mobile operators in Europe and the Americas. Alex began his career designing algorithms and systems for traffic forecasting and route optimization for United Airlines. He went on to join OC&C/McKenna (Boston, MA) becoming a management consultant in the areas of marketing strategy for software and telecommunications companies, before founding Upstream in 2000. Alex has overseen Upstream’s growth from its first client, Capital FM, to the relocation of the head office to London from Athens.