How mobile telcos could be missing valuable insights

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By: Wise Marketer Staff |

Posted on December 22, 2005

How mobile telcos could be missing valuable insights

Mobile telephone service providers are in danger of missing vital consumer insights that could be gained from the vast data they already have at their disposal, according to UK-based consumer behaviour analyst 5one Ltd.

Lindsay Cowan, client development director for 5one Ltd, has noted that when company executives refer to customer insight they usually do so in the context of direct marketing and customer communication. But this, Cowan warns, is not the full extent of the use of customer insight. In particular, mobile telcos are at risk from this as they try to make sense of the wealth of rich customer behavioural data available from SMS messaging and the increase in mobile phone usage over recent years.

In Britain alone more than 60 million SMS messages are sent every day, and 75% of consumers own at least one mobile telephone. Given the huge attractiveness of this intimate and immediate form of marketing, and the lure of response rates of between 5% and 20%, mobile operators are easily tempted to use this medium solely a as promotional tool, often offering other companies the chance to reach their customers through the mobile network.

Trying and testing For example, Smirnoff is currently sponsoring a text introduction service between club-goers at specific venues in London; consumers simply send a message to Smirnoff to make a connection and introduction on the spot.

But this form of marketing is still in its infancy, mainly focusing on information gathering for companies and information provision for customers. McDonalds also used SMS to raise awareness of the Monsters Inc. film, and as a means of creating a McDonald's txtclub. The AA (the UK's Automobile Association) is using text alerts to enhance its AA Roadside Assistance service by letting members know when they can expect a patrol vehicle to arrive at the scene of a breakdown. Even television - a powerful medium in its own right - is using the mobile/SMS channel to subscribe prospective dieters who receive SMS diet incentives on their mobile telephone handset.

Tread with care According to Cowan, "The possibilities offered by this medium means that companies truly do have the ability to reach their customers any time, any place, any where. This is exactly why mobile phone operators - and the companies they are allowing to market to their customers - need to tread with extreme care."

Indeed, to simply use it as a tactical promotional medium runs the risk of bombarding customers with inappropriate, ill-timed, and even badly targeted promotions, risking the loss of more customers than could be gained, not to mention damage to the brand.

Better segmentation "It has never been more important to accurately segment your customers by not only their value, but their motivations, needs, attitudes and lifestyles," explained Cowan. "The mobile phone operator has a wealth of information to call upon to create clearly identifiable, measurable and actionable segments, from SMS messaging behaviour (time, frequency, volume, location), demographics, call usage and value, roaming usage and so on. But even then, the use of insight should not be limited to deploying this only in terms of communication activity. This is still the tip of the iceberg."

Conclusions 5one's experience shows that the real power of the data that mobile telcos have at hand lies in creating fully formed customer strategies at a segmented level, considering all aspects of the customer proposition (i.e. pricing, product development, service, and delivery). Only by understanding what must be achieved at a customer segment level, and what the customers within these segments want in return, can it be understood how and where to deploy the most appropriate use of targeted communications, including the right tone, message, offer, and timing.

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