Prepaid Mobile 2004: Developing Cost-Effective Campaigns For Implementing Prepaid VAS Sumera Khan...

Prepaid Mobile 2004: Developing Cost-Effective

Campaigns For Implementing Prepaid VAS

Sumera Khan

Manager VAS – Mobilink Pakistan

Pakistan Mobile Communications (Pvt.) Limited 2

Presentation Outline

Developing Cost-Effective Campaigns For Implementing Prepaid VAS

Country Background Mobile industry in Pakistan Mobilink – The Largest Cellular Company in Pakistan Leveraging segmentation Potential of new Value Added Service Mobilink strategies for rolling out VAS Pricing strategy for VAS VAS strategies to control churn Conclusion

Country Background - Pakistan

7th populous nation - 150 million

Urban population – 33%

Current fiscal growth to exceed 5.5%.

Forex Reserves US $ 11.5 Billion

Stock Market Capitalization Crossed US $ 20 Billion

GDP Per Capita projected at $ 600 (officially double)

Pakistan – Economic Outlook

Cost-Effective Campaigns For Implementing Prepaid VAS

Country Background Telecom Industry in Pakistan Mobilink – The Largest Cellular Company in Pakistan Potential of new Value Added Service Leveraging Segmentation Mobilink strategies for Rolling out VAS Pricing strategy for VAS VAS strategies to control churn Conclusion

Population 150 M

Landlines 4.2 M

Cellular Connections 4.7 M

Tele-density Cellular 2.6%

Tele-density Landlines 2.8%

Mobile Operators Operational 4New Licenses 2

Industry growth (CAGR: 1998-2003)

Pakistan’s Telecom Landscape

Cumulative Market Shares as of May 2004

Ufone18%

Paktel6%

Instaphone11%

Mobilink64%

•Total Industry Size: 4.73 Million

Company Subs (Millions)

Mobilink 3.1

Ufone 0.85

Paktel 0.27

Instaphone 0.51

Pakistan’s Telecom Market

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Fixed Line Cellular

Opportunities: Low tele-density Decreasing taxes & call charges Upgraded infrastructure of telecom/internet permeating

semi-urban & rural regions

Threats: WLL for business/private use, proliferation of all public

call offices

Pakistan’s Cellular Industry - continued

Country Background Mobile industry in Pakistan Mobilink – The Largest Cellular Company in Pakistan Leveraging segmentation Potential of new Value Added Service Mobilink strategies for rolling out VAS Pricing strategy for VAS VAS strategies to control churn Conclusion1

Mobilink in Pakistan

Started operations in 1994

Subsidiary of Orascom Telecom

64% of the market share today

Every 50th Pakistani uses a Mobilink Connection

GPRS launch planned in 1month

4 M (projected)

98% Jazz - Prepaid sales

ARPU – Approx 11USD

Objectives:

Enhance ARPU Reduce Churn

Mobilink in Pakistan - continued

Country Background Mobile industry in Pakistan Mobilink – The Largest Cellular Company in Pakistan Leveraging segmentation Potential of new Value Added Service Mobilink strategies for rolling out VAS Pricing strategy for VAS VAS strategies to control churn Conclusion

Prepaid Market Dynamics

Why Market segmentation ?

Segmentation is a process of dividing large, heterogeneous populations into smaller, homogenous groups and creating, based on research, customized and more desirable products, services, and messages

Understand market potential Understand market need Develop the market = Translate need into product

Helps to

Divide

Conquer

Objective:

To determine the relative importance of upfront cost, tariff, VAS and brand name for existing

and potential customers

Research

Potential of new Value Added Service

Prepaid market trend :

Prepaid users spend on average one third less than postpaid users

Average annual prepaid churn rate is much higher than postpaid

Prepaid customer knowledge is mandatory to reduce customer churn

Major Segments

High usage• Business - SMEs• Fun seekers

Teenagers & College Students Medium usage

• Business – Micro• Housewives

Low usage• Blue Collar• Students / Low-budget personal users• Retired people

Jazz Market Segmentation

Segment Description Value

Business

MediumStudents/housewives/retired adults. Mobile helps keep in

touch with community

Credit Challenged

Fun Seekers. Mainly use mobile for socializing & are at leading

edge of life

Self employed individuals who use their mobiles for professional

purposes

Youth High

LowMix of youth & Adults – low

personal usage. Low literacy, Urdu only

Functional

What attributes are important ? Identify untapped markets? External Research Internal

• Usage Records• Customer Service Feedback

Leveraging Segmentation

Country Background Mobile industry in Pakistan Mobilink – The Largest Cellular Company in Pakistan Leveraging segmentation model Potential of new Value Added Service Mobilink strategies for rolling out VAS Pricing strategy for VAS VAS strategies to control churn Conclusion

Breakup of Data revenue – Aug’04

SMS (Person to Person) 82%

PowerTools (Content Based Services) 11%

Premium IVR Services 2%

Subscription Based Services 4.5%

SMS – TV/Radio Services 0.5%

Overall Revenue contribution 9%

Research Findings

Key Buying Factors:• Free or low charged SMS• Affordable Value Added Serviced• Customer Service• Coverage• Reduced connection/Calling charges• Low Denomination Cards• Roaming Facility

Technology Has Had a High Impact on Lifestyles Top of Mind Recall: Mobiles, computers, and

media Technology = Staying in touch Timely Information is a priority for professionals

& businessmen

Country Background Mobile industry in Pakistan Mobilink – The Largest Cellular Company in Pakistan Leveraging segmentation model Potential of new Value Added Service Mobilink strategies for rolling out VAS Pricing strategy for VAS VAS strategies to control churn Conclusion

VAS Strategy

Retain & Grow customer base

Maximize penetration by income level Retain customers through bundling and further segmentation Discover the high value Prepaid customers Anticipate & minimize churn from high-value, high risk

customers Target with specific offerings

Stimulate usage & ARPU:

Offer multiple recharge methods to drive usage Traffic bundling and flat rates, increasing weight of fixed

charges Introduce new VAS

Segment - Product Line Enhancement

Educate – Communication Strategy

Stimulate – Entice trial & Usage

KIS – “Keep it simple !”

Strategy to rollout Prepaid VAS

Segment Strategy

Business

Products that promote community interaction, friendship & fun

Credit Challenged

Rollout innovative services that are focused on entertainment and customization

Retention of customers through adding value to their business

Promote frequent usage by facilitating friends & family communication. Proactively educate on

use & benefits of SMS & IVR based servicesFunctional

Increasing ARPU – The Next Step

High VAS revenue generating segment : Business and Fun Seekers.

General PersonalizedContent/Service Content/Service

Financial News Stock AlertsSMS Chat Community Chat/MSN Dictionary M-BankingRing tones Funky Dial Tones

Service Target Group How?

Community Portal Funseekers & Business Increases SMS interaction between closed groups

Fax Mail Business / Professionals Subscription based service for SOHO

Missed Call Alert Business & Professionals Subscription based & increases voice/SMS usage

Increasing ARPU – How?

Service Target Group How?

M-Banking (info)

Business Customized Alert Service. Bank pays for MT SMS, User pays MO.

G-Mail Business Will soon be converted to subscription-based, Email-SMS

Cricket Alerts All Segments Subscription based, taps the local passion for cricket.

Funky Dial Tones

All Segments Subscription based

Key Components of VAS Strategy

Attractive Pricing

Attractive business models

Distribution

Marketing CRM

Mobile Terminal

Network

Mobile support service

Compelling content

Satisfied customer

Country Background Mobile industry in Pakistan Mobilink – The Largest Cellular Company in Pakistan Potential of new Value Added Service Leveraging segmentation model to maximize VAS

penetration Mobilink strategies for rolling out VAS Pricing strategy for VAS VAS strategies to control churn Conclusion

VAS Pricing Strategy Begins and ends with

customer in mind

Focus on simplicity and transparency

Evolution from standard to premium priced content

Pricing will continue to be used as a promotional tool

Pricing will compliment our core VAS strategy – increase penetration

Pricing Proposals and Deals – continued

Present : Simple

• Event based : All services marketed by Mobilink were ‘standard’ priced

• Subscription based: relatively new strategy for services where the number of MTs were largely unknown

Reference point = customer’s perception of value

Future : Price based on :

• Type of content (commodity vs differentiated/high value)• More attractive for high usage / valuable customers• MT based

Case Study 1: Missed Calls Alerts

Service / Objective Customer receives an SMS of calls missed when out of

coverage/switched off. Initially launched for Postpaid subscriber only.

Methodology Branded as MCA, for corporate customers Activation by sending an SMS to a LA Offered FOC for 2 months trial to all postpaid customers

Results More than 10k active postpaid subscribers after trial

period ended MOU increased for subscribers

Learning

Free trial period proved to be successful Simple activation process made it easier for the

customer to opt in / out Several features of the application stimulated users to

try it Cultural inhibition of ‘interacting’ with a

machine/computer (IVR) made voice mail a highly segmented service

Launch through ATL was greatly supported by the Free Trial Period

Increased ARPU through subscription & stimulated voice/SMS usage

Utility of the service is high 11

Churn management

Understanding of present market needs and dislikes

Quality not Quantity

Image improvement – branding and positioning

Product prioritization, sticky services!

Investment in loyalty programs

Turning the anonymous to known and loyal

Churn management

Customer knowledge management to support churn management

Key customer data• Marketing data• Customer care data• Billing data• Polls, focus groups• Informal customer feedback• Data on competition• Social-demographic data• etc

Churn management

Segmentation & Identification of existingCustomer profile

Identify customers with high churn risk

Maximize customers satisfaction

Identify potential VAS targets

Lower the churn rate Maximize customer value

Propensity to churn

Value Score

Increase customer’s lifetime value

Churn Management

Loyalty Programs – • Free trials & incentives to

encourage customer to try new services & simultaneously increase satisfaction

• deals Multiple recharge solutions Segmented pricing Innovative services & Sticky

Services - Introduce P2P services & Personalized Content that keep customers from changing carriers

Conclusion

Focus on Youth Provide leading business services through additional channels

to increase data revenues on the back of sms success Offer innovative VAS that leverage new handsets’ rich feature There is money to be made through new customer segments &

leveraging existing customers with new services Personalized content increases customer satisfaction, creates

stickiness, & increases ARPU The most lucrative segment of our prepaid market wishes to

keep it simple, remember this when developing content Don’t leave money on the table!!

Thank youThank You

Prepaid Mobile 2004: Developing Cost-Effective Campaigns For Implementing Prepaid VAS Sumera Khan...

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