Monday, April 6, 2009

Every Customer is Sacred

Dave Ginsburg

No… this isn’t another blog about the state of the economy. What it is, though, is a view into two impacts the economy is having on the new generation of smartphone users that were attracted to email and browsing when times were good, what this means to operator revenue, and how to reverse these impacts.

The first is the shift from postpaid to prepaid. Although prepaid is the norm in many developing regions, it is gaining respectability in developed regions as well. In fact, pay-as-you-go may also be common amongst some mobile broadband users. Prepaid has a real impact on subscriber loyalty, in that without a long-term contract, switching is as easy as not paying the next month’s bill. A few months back we thought that mobility was going to be mostly immune from the troubles, but this is no longer the case. What this means is that, when a subscriber does have a problem, the care experience must be without question. If an issue is not resolved the first time, there may be no second time. The subscriber is gone. Over-the-air frontline and automation care can help ensure a positive customer experience. What it also means is that operators, now dealing with lower ARPU prepaid subscribers, can make use of the same over-the-air capabilities to reduce their operational expenses.

The second, related to the first but potentially more disturbing, is a trend amongst some users to back off from smartphones when their contracts expire. Instead of re-uping, some are reverting to simpler featurephones, citing data-plan costs as the culprit. And, once a customer turns their back on the more advanced services and the revenues they generate, it is more difficult to win them back. Operators can do two things here. One is to increase the availability of lower-end data-capable phones, devices that require lower subsidies since they are cheaper to procure from the device manufacturers. They may therefore be offered with lower up-front costs and data-plans. The largest US operators are now beginning to head in this direction. The second is addressing the data-plan tariff itself. Part of the fee is based on the presumed cost of servicing the customer – dealing with support calls. If the operator had systems in place to reduce frontline OPEX, they’d have a better view to their true costs, and could adjust tariffs downward. Yet another reason for over-the-air care.

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