Mobile operators: It's time to get personal

perspective Mobile operators are all too familiar with the age-old problems of winning new customers and retaining existing ones, along with increasing average revenue per user (Arpu) and developing new revenue streams.

Current economic conditions mean these issues will only become more acute, as operators look to cut costs and the pressure to grow the business becomes increasingly intense.

A key aspect for operators addressing these challenges is the modern application of customer relationship management (CRM) principles.

Two of the main drivers behind CRM are, of course, to keep customers from going elsewhere and to move them up the value chain. These are both a challenge in the evolving economic climate. In terms of subscribers moving to other operators, ie. churning, the point of upgrade has traditionally represented a natural opportunity to switch between operators but as cash conscious-consumers often hang onto their phones for longer, the upgrade cycle may be extended.

This means that each upgrade matters so much more to an operator--it is more essential than ever to retain or win a customer around the switch than at any other time. If operators lose a subscriber today, they could be gone for two or more years.

Getting subscribers to extend their usage through the adoption of data and content services is equally challenging, particularly if operators don't provide a compelling reason for them to do so.

Bombarding users with an ever wider plethora of generic pricing packages is unlikely to have a significant impact on their behavior. Users already have an expectation of 'all you can eat' pricing, the choices on offer are bewildering. While better pricing may appeal to some, it is not a driver for all. Sub-groups of premium spenders, for instance, are much more interested in the availability and range of value-added services than in cheap minutes, even in a downturn. In any case, pricing is easily replicable by competitors.

Instead, mobile operators need to put increased emphasis on customer loyalty to keep subscribers close and get them to use services more often. This requires the creation of a personal dialogue that demonstrates a genuine understanding of subscriber needs.

Many operators claim, and often believe, that their CRM does just this. While it would be unfair to say that such claims simply don't stand up, research that Freeform Dynamics has carried out with mobile operators on behalf of Business Logic Systems highlights inherent weaknesses in the mobile operators' approach to CRM.

Rather than demonstrating this more personal approach, many operators are entrenched in a generic, blanket approach to CRM.

Part of the reason behind this is that customers' needs have not historically been central to the marketing activities of most mobile providers. The industry has instead been focused on delivering reliable telephony and related services. The idea of 'service centricity', with a focus on the product or offering, is deeply ingrained in this 'utility' culture.

However, with cost effective and reliable voice services increasingly a given, the emphasis has shifted to the richer and much more diverse domain of data services and content.

Mobile operators are now starting to wake up to the fact that their approach is insufficiently personal, and that this more generic approach serves little more than to annoy people--particularly higher Arpu subscribers, who are much more discerning. But, despite the increasing desire to adopt a more customer-centric approach, they are finding themselves constrained on a number of levels.

One major barrier is their internal systems. To reach out to a subscriber in a personal way requires an understanding of what that subscriber is really about. A wealth of information is available to operators that can provide valuable signposting. For instance, who a subscriber calls, when, and how long; or which content they view and which downloads they purchase.

But this information is often spread across a number of discrete systems, and despite investment in expensive CRM systems by many mobile operators, pulling it together requires time and effort and, because of the amount of manual processing required, this can lead to errors. From our research, operators' lack of automation is quite evident.

The problems for operators don't end with systems, however. Internal processes around co-ordination between various groups - marketing, sales, customer services and IT - are often absent or ill-defined, leading to inefficiencies, delays and unnecessary costs and overhead. In part, this is because of the lack of an overarching layer that pulls everything together in a way necessary for effective customer management. This is a real area of weakness in the provider community at the moment.

There are no overnight solutions to these problems but operators must try, particularly in the current economic climate. Operators need to look at short-term fixes, such as modifications to and extensions of IT capability to create a more automated approach to customer relationships.

Similarly, operators need to undertake a specific and thorough review of processes around CRM to find and deal with duplication as well as shortfalls. At a higher level, operators must assess the extent to which they have coherency across service inception, validation from market opportunity perspective, detailed service design, engineering and integration, rollout and delivery, marketing and, ultimately, customer service.

If operators address these issues, not only will they benefit from likely cost savings through improved efficiencies--a positive outcome in any climate--but, more importantly, they will have prepared the foundation for a much more customer-centric approach to CRM.

Josie Sephton is principle analyst at Freeform Dynamics. This article first appeared in ZDNet Asia's sister site, Silicon.com.