Telecom
Today
With 900 million subscribers
and 13 mobile operators, India is the one of the largest and the most
competitive telecom markets in the world. India is also a fast growing market
with more than 10 million subscribers being added on a monthly basis. But the market presents challenges to
operators – ARPU as low as $2 for recent additions, monthly churn rates over 5%
and increasing multi sim usage. The tariff wars have reduced voice to a mere
commodity. So the time has come for operators to look beyond Voice and into new,
differentiated and more profitable revenue streams – Value Added Services (VAS)
is a key potential growth area for operators.
Telecom
Tomorrow
Traditionally VAS has been
associated with text based services – Peer-peer SMS, SMS based VAS like music,
news etc… But there are new developments in the market such as the launch of 3G
and the increasing penetration of smart phones which will facilitate the
adoption of new generation VAS services like Mobile Internet, Mobile commerce, Mobile
education and Mobile Applications. This will give operators an opportunity to
enhance ARPU and increase customer stickiness. At present, in India
contribution of VAS to overall revenue is 10% compared to the figures of about 30%
in developed markets. So there is
immense opportunity for growth in VAS adoption and revenues.
But are the Indian operators ready to make use of this
opportunity?
VAS
Scenario in Indian market
A report from Deloitte on MVAS, estimates the size of the Indian VAS market at INR 158
billion and predicts it to grow to INR
671 billion by 2015. In addition to this, contribution from VAS to overall
revenue is estimated to grow from the existing 10% to more than 30% in 2015.
VAS ARPU is also expected to grow by 48% in the next 5 years. Give Reference
The key to unlock the potential opportunities presented
by VAS lies in harnessing the power of subscriber data. This applies equally to
both VAS providers and the operators.
Today VAS Providers and
telecom operators use basic systems to analyze VAS subscriber behavior. The
emphasis of analysis is on overall behavior. Such the scope of such systems is
limited to ad hoc reports & analysis. Another characteristic of the
operator approach today is the use of elementary profiling and untargeted
campaigns to push VAS usage.
To unleash the full
potential of VAS, operators and VAS Providers need to walk the extra mile –
adopting analytics and employing unconventional data sources to study
subscriber behavior. It is necessary
that VAS and mobile operators have a well defined analytics roadmap to exploit
its benefits.
Analytics can help VAS providers
and operators in improving the acquisition, enhancing the usage and improving
the retention of VAS subscribers. By using segmentation and profiling, the VAS
behavior of subscribers can be understood better. Accordingly, focused
campaigns to up sell/ cross sell services would be possible. Currently,
operators are exploring the use of micro-segmentation to profile the
subscribers at very small group sizes to be able to map the subscriber groups
better. This along with focused campaigns would achieve the below outcomes
·
* Increase in VAS adoption
·
* Improved profitability of VAS services
·
* Better returns on VAS focused marketing
campaigns
Apart from the conventional usage of analytics
mentioned, there are other areas where it can be used innovatively to enhance
VAS penetration and profitability.
New
VAS analytics frameworks
VAS Value Matrix
The
VAS Value Matrix which helps to study the subscriber movement across VAS
categories. Based on IAMAI’s report on MVAS, we propose this analytical
framework which helps to capture shift of values (perceived & practical) in
urban and rural consumers for various VAS services. As depicted, VAS categories
are measured based on their practical value – real value to subscribers and
perceived value – value customers perceive of the category.
Also
social media apps, mobile internet had less practical value and perceived
value. But today, social media apps and mobile internet have high perceived
value and practical value. This might be due to the launch of 3G, penetration
of Smartphones and the explosion of apps.
Rural
scenario presents different picture, earlier mobile internet and social media
which were considered to be low in practical value have shifted to high
perceived value now. These shifts indicate the change in subscriber behavior
and preference using which VAS service providers can come out with more
relevant offerings.
Category Management
Market
basket analysis is a concept in retail, where every customers purchase is categorized
into groups like grocery, healthcare, cosmetics etc. Similarly, a telecom operator/ VAS service
provider can group services subscribed by a customer into groups like
education, music, news, sports etc. Marketers can study the performance of each
category and try to study the relation between categories and come out with
offers.
VAS Usage Profile – Scatter Graph
Another
important framework being proposed here is the VAS profile matrix. VAS profile
matrix is the perceptual mapping of subscribers and subscriber groups across
popular VAS categories. This matrix helps operators to identify different
customer segments and also measure the potential of each segment.
VAS
profile matrix helps marketers to identify niches and opportunities that were
not tapped and introduce new offerings. Also it can help in making strategic
decisions with respect to portfolio alignment and revision. It helps marketers
answers the following questions
*
What are the biggest and the smallest
segments?
* Do I have services/ products addressing the
big clusters?
*
Which is the fastest growing segment?
*
Is there any new segment and do I have
offerings? Is it worth coming out with one?
Future
for VAS analytics
Traditionally,
the focus of analytics has been to use the CDR data to analyse subscriber
behavior. We are seeing an explosion in new data sources which are more
unstructured. To achieve the objectives of VAS profitability, operators should
explore using these data sources. These need a new generation of analytics
solutions along with a change in the approach to analytics.
Some
of the emerging areas are highlighted below –
* Social
Network Analysis – Marketers can study the relationship
between subscribers and their close network. We can study the influence of a
subscriber’s VAS adoption and behavior in his/ her network based on the leaders,
influencers and followers. Each subscriber is treated differently based on his/
her profile in the network. It is also
possible to study the VAS usage patterns, interests and psychographics in a
particular group and come out with targeted VAS offerings.
*
Text
Analytics – Explosion of social media and other data sources has
forced organizations to look for unconventional data sources like social media
sites, forums, customer contact centers etc. Customers today are vocal about
their experience with a brand or service on forums such as this. This extends
to their experience with new-age VAS services such as data heavy movies, games
and other applications. Marketers should explore using this data to gather intelligence
about customer behavior and to capture customer’s sentiments.
*
Mobile
App Analytics – Mobile Applications usage and downloads is
on the rise because of the increasing smart phone and 3G penetration. There are
millions of applications across platforms like App store, Android, Blackberry,
Samsung etc. There are apps across categories ranging from education, health,
business etc. Analytics – esp. handset
or device driven analytics can help us throw more light on the subscriber
behavior metrics such as – time spent, shelf life, features used etc. These
will help app developers to improve the content and offering and the operators
to increase the adoption of these applications.
Analytics – Moment of Truth (ROI)
It is necessary for any
mobile or VAS operator to have well defined business objectives to ensure the
success of analytics deployment. As a part of this, there it is critical that
organizations have a roadmap for analytics and its deliverables over a period
of time. Organizations with high
analytics maturity have defined frameworks to address some important business
areas that are of strategic importance.
To conclude, VAS is the next
big opportunity for developing telecoms. To exploit this opportunity it is
essential for VAS and mobile operators to adopt analytics. To ensure the
successful deployment of Analytics as a strategic and tactical tool, a well
defined analytics road map with top management support is pivotal. Analytics in turn can help operators to
·
* Enhance VAS penetration
·
* Enhance Customer Loyalty
· *
Optimize Cross Sell / Up Sell campaigns
·
* Revenue Uplift
·
* Increase Marketing ROI
BY Sathya Karthik, CEO, ABIBA Systems
