Millions of Customers Will Reach Their Data Cap Every Month. Have You Considered Their Customer Experience?

Posted: March 10th, 2014 | Author: Special Contributor | Filed under: Events | Tags: , , | No Comments »

By Fredrik Jungermann, Founder and Managing Director, tefficient

During the last two years, mobile operators in mature markets have been able to shift from monetisation based on the number of minutes and SMSs (where demand at best is stable) to monetisation based solely on the data volume (where demand is growing exponentially).

But this has changed the customer experience. Because of the growth in data usage, more and more customers face the situation in which they run out of data before the end of the month. Some telcos – for example, in the USA, Canada, Australia and Norway – have decided to offer service packages that charge overage fees, so the price of that extra megabyte can suddenly be 100 times higher. This is a problem, because it’s the high value, high usage customers who are penalised most.

In most countries, telcos are blocking access or throttling speed, instead of charging overage fees. Blocking access when a cap is reached is possibly leading to higher upsell probability, but there’s a good chance that this strategy can result in a poor customer experience, too.  To be totally cut off can lead to irritation and a decision to “wait out the month” while relying solely on Wi-Fi. The customer may even want to top up, but is choosing to wait until he/she is in a better location or has access to a PC.

To balance customer experience with upsell probability, throttling represents a more subtle way to indicate that a customer has used up the quota and should consider a top-up or upgrade. But the real differentiator is how an operator notifies customers about their options.

Simplicity Key to Upsell Effectiveness

The way a communications service provider notifies a customer about service packages is integral to his/her experience. Many mobile operators choose to send customers an SMS when the data cap is about to be reached. This SMS should inform the customer what he/she can do to remedy the situation, too. Surprisingly, not all operators have the functionality that allows customers to simply reply to that SMS to top up. Some operators instead instruct the customer to click on a web link or log in via a self-serve tool. If the customer is in transit, this might not be feasible.

A link or next-step includes a number of other hurdles, too. Maybe the customer feels that the screen of the smartphone is too small to display web content. Maybe he or she is wary when it comes to clicking links in general or forgets the necessary log-in credentials. An offer that requires a few more steps guarantees there will be no immediate upsell – and any sales person knows that the propensity to buy declines quickly with time and additional processes.

Very few operators report on their data upsell effectiveness. There’s one exception: Tele2, a Swedish operator, reported that 58 percent of their customers who reached their cap during Q3 bought more data. This is world-class upsell effectiveness. Is it because Tele2 has designed the most beautiful web interface for upgrading and top up? No, it’s because the business created a super-simple customer experience: Reply to the notification SMS with “200” if you want to buy an additional 200 MB of data, with “500” for 500 MB, with “1” for 1 GB and with “3” for 3 GB. In addition, Tele2 supports all other upgrade and upsell channels: web (log-in self-serve but also non-log-in form), app and call-in.

Tele2 has other strengths: The 200 MB top-up increment is much smaller than some competitors, starting at 1 GB. The likelihood of a customer buying 1 GB of data – the average monthly smartphone consumption in Sweden – at the last day of the month is very low; make the increment small, and you overcome this issue.

Another factor behind the figure is that the top-up service package is designed to be lower than the base service packages. High usage customers are thereby incentivised – not penalised. A third factor is that the price per MB falls with the size of the increment. Other operators charge as much per gigabyte regardless of if you buy one or ten.

Tele2 shows that to deliver a great customer experience when it comes to cap notification and data upsell, operators should make it transparent and easy to buy regardless of location, context and wallet. Operators will then maximize the upsell propensity and reap the additional revenue benefits.

Personalised Service, Great Experience

Customer experience is going to become the defining differentiator for operators as services get commoditised and markets get crowded. This all starts with creating special kinds of service offerings for different audiences. Businesses that prove to be agile and responsive to customer needs when a new service package is needed will reap the rewards of enhanced personalisation. While the shift from SMS and voice revenues to data is ending, the shift to how to best price data to meet customer needs is just beginning.

Comptel will host its Focus Group 2014 meeting 25–26 March at the Långvik Congress Wellness Hotel, just outside of Helsinki, Finland. Fredrik will moderate one of the event’s panel discussions, “How to Best Launch – and Profitably Increase Adoption of – 4G LTE and Fiber.”

Want to learn more about telco in 2014? Download our new eBook, “What Telco CMOs and CTOs/CIOs Are Thinking in 2014.”

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