Mobile network stores produce more profitable customers

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By: Wise Marketer Staff |

Posted on November 30, 2006

A direct correlation has been found between the venue of a mobile handset's purchase and the subscriber's monthly spend on mobile services, according to a study by US-based mobile market research firm M:Metrics.

The firm found that more than half of mobile phone users (56%) who bought their handset from a network operator's retail store are paying more than US$60 per month for mobile services.

By contrast, those who spend less than US$60 per month on mobile services are more likely to have purchased their phones through indirect retailers (such as Wal-Mart, Best Buy, Radio Shack, or Circuit City).

Direct channel approach
According to John Jackson, vice president and senior analyst for M:Metrics, these figures support the network operators' continued investment in the direct channel because of its inherently "higher-touch" environment, compared to the less personal and interactive nature of big box retail environments. As Jackson pointed out, the operator direct channel may be a cost centre but the return on that investment is evident from the company's research.

Retail channel used % respondents
Operator store 56%
Operator web site 16%
Telesales 6%
Other web site 4%
Independent retailer 4%
RadioShack 3%
Wal-Mart 3%
Best Buy 2%
Circuit City 2%
Shopping mall kiosk 2%

Table 1: Retail channels used by those who pay US$60+ per month
Source & Copyright: M:Metrics Inc. 2006

Indirect channel under-performing
The study found that those who spend less on mobile services in a month are less inclined to use mobile content and applications and they tend to purchase low-end phones with minimal data capabilities.

Retail channel used % respondents
Operator store 39%
Wal-Mart 15%
Operator web site 13%
Other retail store 8%
RadioShack 6%
Telesales 6%
Other web site 4%
Best Buy 4%
Independent retailer 2%
Shopping mall kiosk 2%
Circuit City 1%

Table 2: Retail channels used by those who pay < US$60/month
Source & Copyright: M:Metrics Inc. 2006

The indirect channel does not yet perform as well as the direct sales channel in terms of aggregate voice and data ARPU (average revenue per user). However, the study suggested that prepaid and family plans are likely to continue to characterise much of the remaining US market, with indirect and online channels being vital to address the demands of these consumers.

Retail control strategy
"This is part of a larger move of the operators taking greater control of the retail channel with many acquisitions of independent retailers," explained Paul Goode, vice president and senior analyst for M:Metrics in the UK. "Our data supports this strategy, especially with the need for greater consultative and informed selling to drive consumer awareness and usage of mobile data services."

"The operator retail experience provides a vital opportunity for consumer education that hasn't yet been replicated on the internet, or at high-volume kiosks," Jackson warned. "This is a conundrum, as indirect and online channels are key to sustaining subscriber growth. CRM initiatives must extend to these outlets and over the air post-activation. The operators need to offer consumers more than cheap handsets and cheap voice - instead, the reach of customer service has to complement the value of price and convenience."

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