Mobile telcos must be 'customer savvy' to reduce churn

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By: Wise Marketer Staff |

Posted on February 16, 2006

As mobile telecoms operators try to increase non-voice revenues and reduce customer churn, they must become more 'customer savvy' and change their approach to market segmentation, according to industry analyst VisionGain.

The company's report, entitled Mobile Segmentation Strategies: Developments and Strategic Options, suggests that an effective segmentation strategy can not only help a mobile telecoms operator attract new subscribers but also boost brand loyalty, reduce churn, and increase data ARPU.

The report says that, in order to stay competitive, operators will need to abandon their existing approaches to market segmentation and be prepared to truly address the needs of multiple groups.

New strategy
For example, this may involve the development of niche products for specific user groups - or any other development that helps a specific provider uniquely match customers' needs. The creation of mobile communities, branding, device and service customisation, relevant content, portal strategies and retail distribution are among the added elements that will need to be in place, the company reports.

According to report author Dr Jean-Pierre Aubertin, "Operators will have to become more savvy in understanding their customers' lifestyles so as to aim their product portfolio at the correct segments, and be prepared to offer greater flexibility in the way that services are packaged. Existing segmentation strategies based on factors such as affinity, behaviour, age, gender and demographics, have met with mixed success."

Tech-savvy market
As Aubertin points out, technology-savvy consumers already know what they want, and what they use. "This presents mobile service providers and terminal vendors with new opportunities to re-think their market segmentation and introduce products and services that meet the needs of their customers."

Operators that develop communities, affinities and segments based around the needs of their target markets are likely to gain a competitive advantage in the market of the future, and will also benefit if they are able to offer mobile content tailored to those consumers' needs. But, Aubertin warns, this will require operators to open their portals: users are already refusing to use portals that charge them fees just to browse.

Handsets too
Handset vendors are also beginning to realise that they can re-vamp their existing phone models by making a few subtle changes. While this has been successful in some instances (for example, Motorola's pink V3 sold 50,000 units per week leading up to Christmas 2005), this is only the first step to more sophisticated methods that vendors can embrace to target specific segments.

Partnership questions
According to VisionGain, one key question that operators face is whether they should create sub-brands to cater to niche segments, or partner with MVNOs instead. And device vendors face a similar choice: should they launch an own-brand model that would appeal to the female market, or launch a sub-brand (such as Nokia's Vertu), or partner with third-party brands (such as Gucci)? The final answer is that it depends on the company, the customer, and the market situation: each approach has its own advantages and disadvantages, which are explained more completely in the report (click here).

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