Retaining customers is an issue for carriers in all markets – unless loyalty is incentivised, they will switch between operators without a second thought. However, with customer bases that can be as much as 80-90% prepaid, mobile carriers in emerging markets can have a particularly hard time getting to know their customers.
It’s no surprise therefore that innovative ways of ensuring customer loyalty are breaking new ground in emerging markets. The challenges of gathering customer information in these environments may be steep, but they provide great benefits to both the operator and the consumer.
There is a definite benefit, argues Yann Chevalier of Intersec (right), in obtaining as much information on a customer’s habits as possible – the number of calls made, the types of VAS used, etc. – and maintaining an index on this behaviour. From this, an individual profile for each subscriber can be created and kept up-to-date, allowing for marketing that can target a specific audience.
With a comprehensive profile, it is possible to segment the customer base into very specific subsets based on different criteria, such as whether they make calls abroad, or have a data-enabled handset. This has a number of benefits to a carrier in terms of marketing, as by pushing more appropriate services they can increase ARPU and fight against churn.
In emerging markets, subscribers are essentially anonymous; in many markets, the sole criterion for segmentation of the customer base is whether they are prepaid or postpaid. Up until now marketing teams have typically had very little access to location information, and any requests for information would typically be handled via an IT team which could take anywhere from three weeks to three months. With a monthly churn rate of around 15% in many developing markets, such outdated information cannot be relied upon for customer retention strategies.
Currently, the most advanced value propositions are based on very broad criteria – youth, business, international etc. Thus far, operators have not been able to collect enough information for efficient and relevant campaigns, which leads to customers being unaware of offers that they could benefit from.
Subscribers stand to benefit significantly from better targeted marketing – with particular perks and incentives tailored to their needs, they can receive more airtime or services for the same budget. “Customers are happier when they feel that there is a benefit to their operator knowing them – it’s clearly advantageous for an operator to adapt a value proposition to the customer’s needs”, says Chevalier.
However, gathering the information can prove even more difficult than it is in developed markets, where marketing teams typically know their customers solely from their invoice – meaning that information about their behaviour and consumption is hard to come by. Establishing what a customer can afford to pay is just as important as finding out about their needs and interests when it comes to tailoring a tariff.
Many customers in emerging markets don’t even have ID cards and there are frequently no address records, meaning that operators don’t know their names and addresses. Therefore, operators lack even basic information on their customers, so they begin by gleaning as much information as they can from the network – their rough location, who they’re calling, how often their phone is switched on, etc.
“Once a usage profile has been drawn up, it’s a question of being able to provide the right services and offers in terms of pricing and bundling”, says Arnauld Blondet of Orange Middle East (right). “Segmentation is key – the more you can segment your customers by usage and income, the more specifically you can target them. Around three years ago we had just one pricing offer available. That’s grown to around ten today, and within the next year it will reach fifty or so.”
Increasingly, services such as mobile money are the driving factor behind attracting customers, and according to Chevalier this trend is likely to continue. “It’s perhaps too early to tell, but services such as social networking, mail to SMS, and location-based services will likely become a differentiating factor for operators”, he notes.
Mobile money in particular is becoming very popular – while it takes a while to become established, it has seen tremendous success in certain markets. The services liberate money, enabling the liquidity of money that banking infrastructure in the developed world provides. It becomes easy to transfer and send, and therefore has greater value both for the country’s economy and the customer.
By fulfilling this key need which is not widely met, mobile money services allow operators to differentiate themselves from their competition. This in turn creates loyalty among existing customers. “If you put money inside your SIM card, then at the end of the day you don’t want to lose that SIM card”, observes Blondet.
Creating demand for these services involves making sure that they are widely available, and do not discriminate against customers with older handsets. The technology gap presents a further opportunity for operators to differentiate themselves via the ‘democratisation’ of services that are typically limited to smartphones – the reserve of the rich elite in many emerging markets.
Blondet cites the example of Facebook – Orange has launched a fully-featured version of the social networking site which works over USSD, a technology similar to SMS. It is very low-cost and will work on any device, meaning that the service is literally available to all customers.
The democratisation of such services is for many users the first step towards using their devices for more than just the basics. The affordability of the services allows them to spread, creating interest from more users – Blondet highlights that the communitarian nature of social networking sites is crucial as it allows customers to access information from people they know, both at home and in other parts of the world, essentially in real-time.
There is a market for low-cost smartphones, says Blondet, but no matter which devices become available the key issue is the availability of apps and content geared towards a local market. Indeed, while there are users of high-end phones in many emerging markets, they are not using the devices to their fullest potential. It therefore becomes important for services to demonstrate to customers that phones can have a functionality outside of making calls and sending text messages.
