Does one size fit all?

Today's customers expect services to be tailored to their individual needs and preferences and personalised based on their previous experiences

Driven by an upsurge in smart phone usage, growing mobile broadband penetration and continued growth in video consumption, global mobile data traffic has been tripling for the past three-four years. According to IDC, the number of smartphones shipped in India has grown by over 200% in the last one year.

The latest Mobility Report from Ericsson cites that smartphones accounted for around 55 per cent of all mobile phones sold globally in Q3 2013. India saw the second highest number of new mobile subscriptions in Q3 2013, following China. There was a net addition of 10 million mobile subscriptions in India, taking the total number of Indian mobile subscriptions to 742 million.

This massive growth in data traffic certainly means more revenue for mobile operators. The mobile broadband world is changing the paradigm of data business for the service providers. Unlike a traditional PC or a laptop based internet access model, the smartphone data uptake is predominantly driven by various apps installed on the phone rather than plain internet browsing on the mobile browsers.   

Today’s customers are becoming more sophisticated and demanding than ever before. They expect services to be tailored to their individual needs and preferences and personalised based on their previous experiences. Customers are more device-centric and seek out the latest and greatest tablets and phones. They want instant gratification in the form of downloaded apps and immediate self-care possibilities. They want to buy services that suit their lifestyle, choose a convenient payment method and receive an individual customer-care experience. Interestingly, they are also willing to pay a premium for the same. Videos from YouTube, messages from WhatsApp, music from Hungama or pictures from Facebook are demanding operators to forever keep growing their “bit pipe” putting an unending strain on network and financial resources.

Operators are therefore beginning to encounter a new set of challenges including exploration of new data monetisation models and the need for personalised consumer experience. However, the monetisation opportunity is shifting from operator to content providers as data consumption (driven by apps) gets more personalised and content oriented. 

Fighting commoditisation and ensuring sustainable data profitability will depend on the ability of an operator to use this personalised content to enhance its own value proposition to the end-consumer and increase its brand value.
So how can operators make the best out of the growing data traffic?

One way operators can explore monetisation is by evolving the “smart pipe” concept. This would mean instead of just acting like a “dumb pipe” which is used by the customer on one end and apps on the other and offering same quality of service or same experience to all types of users, giving people exactly what they need at that very instance and are willing to pay for.

 
Operators can offer differentiation on:

• Subscriber behavior eg the kind of apps he/she uses the most, usage pattern based on need, time of the day, location, history etc.
• Requirements of specific application type: high bandwidth and reliability requirement for streaming video compared to offline movie download at night

Operators are gradually beginning to recognise the additional profits available from a good understanding of the different priorities and expectations among their increasingly sophisticated customer base.

Customer segment based pricing for data traffic will lead to enhanced user experience and position operator as innovative and customer centric brand. This will reduce churn and also help acquire new customers. Add-on packages can be provided where there is need for faster data access for a particular content type (eg streaming video) or at specific time of day or location such as at an airport

Service usage differentiation is achieved by real time modification of quality of service parameters on the network. It can address one of the operator’s biggest challenges - increasing revenue from customers who are willing to pay premium for better service quality on high bandwidth application such as watching TV on mobile, booster package during Indian Premier League etc.

Personalised services collectively empower an operator’s marketing department with the creative freedom to build market strategy by developing attractive, differentiated offerings that optimise use of network resources.
What are the benefits?

• Enhanced usage from existing customers and attract new segments based on customer differentiation strategy: Personalisation of individual offers based on the operator’s knowledge of the customer’s interests, location or point-in time usage needs
• Increase revenue and loyalty by providing cross-service product bundling
• Giving the customer the control to adjust his own offer to buy additional speed, volume or services is not only appreciated by the customer but also helps to maximise their willingness to pay for the products and services that resonate with them individually
• Monetise advertisement and contextual content opportunities by building customer profiles comprising of their demographics, their usage patterns and their real time context   

 

Conclusion
Operators have traditionally been playing the role of a “pipe” that allows data traffic pass between end user and content providers. The focus needs to shift on enhancing user experience and creating segment based offerings. Increasing operator profitability requires a combination of delivering positive customer experience and value differentiation. Operators need to move away from “One size fits all” type of packaging approach to enabling personalised offerings, meeting the demands and willingness to pay for different segments and creating up-sell/cross-sell opportunities based on usage patterns.

The author is Practice Head – OSS-BSS, Ericsson India