For Loop, it pays to retain than acquire

The Mumbai-only operator is focusing away from tactical promotions for pre-paid customers for greater retention

Mumbai is one of the busiest markets for the telecom industry. It has a mobile penetration of 200 per cent, that is, going by the number of SIM cards, every consumer in the circle would have two SIM cards. The embattled industry is seeing a growth of just 0.5 per cent in subscribers but gross industry revenue has grown by 5.2 per cent and gross average revenue per user (ARPU) by 5 per cent in April-June, 2013, according to Telecom Regulatory Authority of India (TRAI), indicating a shift towards profitable growth.

Of this, the Mumbai circle accounts for around 33.6 million subscribers, which is roughly 4 per cent of the all-India market. Loop Mobile, Mumbai's oldest operator, is the third-largest player in the circle. It is a brand which does not play outside of Mumbai when there is a hankering for seamless national roaming and big-bang national campaigns.

Yet, in a media-aware metro like Mumbai, Loop has maintained its position and has been able to garner a clientele comprising high-value customers. As against Bharti Airtel's decidedly high national ARPU of Rs 209, Vodafone's Rs 197.8, Idea's Rs 171.9 and Reliance's Rs 84, in the last quarter of 2012-13, Loop recorded an ARPU of Rs 175.4, albeit from the Mumbai circle alone. Loop's above-average (over the national average of Rs 149.6) ARPU and its consumer base make it a prime acquisition target.

Loop has differed from most telecom operators in its steadfast focus on its existing customers, rather than unbridled customer acquisition that other players are only now moderating. One of its mainstays has been associations with classy shows and festivals such as select plays around the city, inviting its high networth customers to attend. Now, it is focusing on a wider base of its customers through its latest campaign.

"Earlier, telecom communication was slanting towards customer acquisition. Now, we are focusing as much on existing customers as we realised that it is cheaper than acquiring new customers. New customer acquisition has become costly due to change in regulation," says Surya Mahadevan, chief operating officer of Loop Mobile.

Loop is projecting itself as the gateway to India. Even though it is not present in any other part of the country, it is offering its subscribers the choice to pick an operator as they roam nationally. Of course, non-subscribers also get to know more of the brand through such campaigns. Despite the over-penetration, churn plays a sobering factor for Mumbai's operators. If earlier it was tariff wars, now with fewer players in a circle, consumers are moving in search of better networks and value-additions.

New customer acquisition, then, cannot be ignored. Branding in this scenario becomes crucial for the single-circle operator which depends primarily on city-specific media such as hoardings, print, radio spots and cultural outings.

Mahadevan feels that customers are making brand choices, based on offerings and service. "The entire pre-paid business has become a lot more serious. From here, serious product offerings will come in," Mahadevan says, and the current campaign is a case in point.

Loop's competitors such as Bharti Airtel, Vodafone India and Idea Cellular advertise aggressively on mass media like television nationally and are active in Mumbai. Loop, on the other hand, uses localised media such as billboards and cinema slides. It also advertises on buses, cabs and trains in the city and suburbs. The digital gets tapped through social media and relevant sites such as travel portals for its latest roaming campaign.

Loop has come up with a retailer outreach programme as well. "We are trying to bring in new elements as they ask us, 'What new are you bringing to me'?" says Mahadevan. The operator has come up with a co-promotion offer.

Around 70-80 per cent of telecom sales come from non-telecom outlets (SIM activations and recharges). Loop wants to convert them to multi-brand outlets. "For example, we have a spectacle shop as a retailer. We create leaflets with co-promotional offers. It would have Loop offers on one side, and that of the spectacle shop on the other," says Mahadevan.

Loop plans to involve 600 retailers in the city. "Once they see that we are taking an extra effort for their promotion as well, it would be an incentive to showcase our product," says Mahadevan.

Retailers would also prefer to promote operators that are prompt with their activation. A new connection from Loop can be activated within 12 hours of purchase. "We also make it a point to pay commissions on time which is very important," says Mahadevan. Loop has also started recognising retail outlets that return high sales.

With inputs from Sayantani Kar