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

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.”

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Conversation on CIQ4T with Heavy Reading, Part 1

At Comptel, making data beautiful means transforming the voluminous amounts of information that service providers have on hand into contextual – and digestible – insight. This entails moving beyond the simple collection of data and discovering the true applications of the information.

Heavy Reading analysts Ari Banerjee and Sarah Wallace recently discussed this very topic, exploring how contextual intelligence for telecoms (CIQ4T) can elevate the customer experience through many dimensions. In this conversation, they consider how, in order to fully maximise business opportunities, communications service providers require a holistic understanding of an individual subscriber’s usage patterns, behaviours and circumstances – and the benefits this provides. You can listen to the full podcast of the conversation here or read the highlights, from part one of our two-part series, below.

Ari Banerjee: Sarah, how do you define CIQ4T especially when it comes to dealing with the communications industry and telcos?

Sarah Wallace: CIQ4T is defined as being able to understand the uniqueness of a person, circumstance or object and converting that understanding into an opportunity. That translates very well into telecoms because providers are really trying to get a better understanding of their subscribers and then translate this into an opportunity to retain customers and further monetise their opportunities with them.

Ari Banerjee: Obviously advanced analytics plays a major catalyst role here. In our opinion, advanced analytics is a key enabler for CIQ4T. It helps to navigate through the huge amounts of data that operators gather to get a more in-depth profile of the subscriber and understand factors, like their preferences and usage patterns. Then, service providers can use that data with advanced algorithms to predict future behavior patterns.

Advanced analytics implementation typically involves the creation of architecture that enables the collection, storage and integration of data sets from a variety of systems. Then, applying correlation and analytic techniques to identify patterns of significance across these data sets. Obviously, this helps to provide a root-cause analysis and to become more predictive.  On top of that, all of these different processes or ways of handling Big Data help to facilitate the delivery of actionable intelligence and provide context-specific insight for end-users.

So Sarah, now that you’ve defined CIQ4T, can you talk about its key characteristics that you see in your research with service providers today?

Sarah Wallace: Sure. So in telecoms, one key aspect is the real-time capability – or being able to take all the data, process it and turn that into analysis to make offerings in real-time. And then you have the characteristic of prediction – or being able to predict subscriber behavior and allowing for optimal decision-making, when it comes to planning and designing for future offers. There’s also connecting with the customer at all touch points and having a contextual or deeper, granular understanding of those touch points to determine which action should take place next.

Of course, there’s also the ability to handle large volumes of data – for instance, combining the data from the network with other sources, such as CRM and OSS and other network elements. Then, being able to apply that data for real-time decision-making. There’s also the operational aspect of advanced analytics and CIQ4T, which based on the analytics, determines the need for action toward the customer, network and the feedback loop for machine learning.

Ari Banerjee: So what you’re talking about is being able to navigate through Big Data to provide a more predictive pattern of how someone, a network, or the subscriber will behave in the future and to understand the different parameters that make up a subscriber profile. This includes things, like his location, his action patters, and business life, how he’s using services during office hours, non-peak hours, family time – and how to basically provide more offers that are very focused on his day-to-day needs. This is a shift away from mass-market approach of campaign management to more of a focused, one-to-one approach.

Stay tuned for part two, in which Ari Banerjee and Sarah Wallace put analytics into action and discuss compelling CIQ4T use-cases that illustrate just how effective the approach can be.