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Traditional connectivity services, once the cornerstone of revenue for mobile operators, are facing unprecedented challenges. Intense competition, market saturation, and rapid technological advancements have led to plummeting prices for connectivity bundles.
As a result, relying solely on these services is no longer a sustainable business model. To thrive in this new environment and boost their Average Revenue Per User (ARPU), operators must venture beyond mere connectivity and embrace innovative strategies that cater to the evolving needs of consumers.
Connectivity has become a basic utility akin to electricity or water. Consumers expect reliable service at the lowest possible price, leaving little room for operators to differentiate themselves based on connectivity alone.
In many countries, mobile phone penetration has reached or exceeded 100%, meaning most people already own at least one mobile device. With limited opportunities to attract new customers, operators engage in price wars to retain or capture market share, driving down prices and margins.
Technological disruption further exacerbates this decline. Over-the-top (OTT) services like WhatsApp, WeChat, and Skype have eroded traditional revenue streams by offering free messaging and voice calls over the internet. This shift diminishes the importance of voice and SMS services, which were once significant revenue generators.
Regulatory pressures also play a role; governments aiming to increase digital inclusion often mandate lower prices for connectivity services and caps on roaming revenues, squeezing operators' profit margins even further.
Moreover, today's consumers are tech-savvy and price-conscious, exhibiting little brand loyalty and quickly switching providers for better deals, especially when the perceived value between competitors is minimal.
Given these challenges, the traditional connectivity model is clearly unsustainable. Operators must innovate and diversify to remain competitive and profitable.
In the pursuit of new revenue streams, operators must pay attention to the critical role of customer satisfaction. Delighting customers is essential to reducing unnecessary churn, which can erode profits and negate gains from new services. By focusing on exceptional customer experiences, operators can build lasting relationships that enhance loyalty and encourage customers to explore additional offerings.
Understanding customer expectations is key. Today's consumers seek seamless, personalized, and responsive services that fit into their lifestyles. Operators can meet and exceed these expectations by utilizing customer data to tailor services and recommendations, ensuring new services integrate smoothly with existing ones, and maintaining high levels of service uptime and performance.
Exceptional customer service is a cornerstone of customer delight. Investing in multi-channel support, prioritizing prompt responses, and engaging proactively with customers can significantly enhance satisfaction.
Building trust and transparency is fundamental in retaining customers, especially when offering services that handle sensitive data like financial transactions and health information. Implementing robust cybersecurity measures, being upfront about service terms and fees, and encouraging customer feedback contribute to a trustworthy relationship. Recognizing and rewarding loyal customers through loyalty programs, personalized offers, and community-building initiatives can further reduce churn.
Delighting customers does more than just prevent them from leaving; it encourages them to spend more and explore additional services. Satisfied customers are more likely to adopt premium services or add-ons, become brand advocates, and reduce acquisition costs by staying longer with the operator.
To adapt to this changing landscape, operators should consider expanding their service offerings to include digital lifestyle services, fintech solutions, and Internet of Things (IoT) applications. These areas present significant growth opportunities and can help operators increase ARPU by providing additional value to customers.
Consumers are increasingly integrating digital services into their daily routines. Operators can capitalize on this trend by offering exclusive streaming services for music, movies, and live sports.
By investing in or partnering with content providers, especially those producing local content, operators can differentiate themselves from global streaming platforms and cater to regional preferences. Bundling premium shopping experiences such as Amazon Prime together with exclusive VIP entitlements like airport lounge access can also create exclusive lifestyle brands.
The gaming and e-sports sector is another lucrative avenue with mobile gaming growing enormously. An example here is the amazing growth of the recent Telegram messenger game, Hamster Kombat which within 6 months gained over 300M users. Operators can develop platforms optimized for high-speed networks, host gaming tournaments, and create communities around popular games, driving data usage and fostering customer loyalty.
The demand for online education has surged, especially in the wake of the COVID-19 pandemic. By providing e-learning services, language learning apps, and virtual tutoring, operators can tap into a market that values convenience and accessibility.
Health and wellness applications also present opportunities. With growing awareness of personal health, there is a rising demand for telemedicine, fitness tracking, and mental wellness apps. Operators can offer these services through partnerships with healthcare providers, ensuring data security and reliability.
According to the World Bank, 25% of the global population does not have access to a bank. Mobile operators have the unique advantage of widespread reach and trusted customer relationships, positioning them well to offer financial services. M-Pesa in Africa is a great example of this. By providing secure mobile payment platforms, operators enable users to make purchases, pay bills, and transfer money with ease. This not only adds convenience for customers but also opens new revenue streams through transaction fees.
Operators can also offer microloans and credit facilities by leveraging alternative credit scoring methods based on user data, such as payment history and usage patterns, helping individuals who lack traditional credit histories access financial services.
Simplifying the process of purchasing insurance or investing in financial products via mobile apps can attract customers interested in managing their finances conveniently. Partnering with financial institutions ensures compliance with regulations and leverages financial expertise, while robust security measures protect user data and build trust.
The Internet of Things represents a significant growth area. Operators can offer smart home solutions that include security systems, energy management, and home automation devices. These services enhance customer engagement by integrating into daily life and increasing reliance on the operator's ecosystem. Collaborations with automotive manufacturers can lead to in-car connectivity services, providing drivers with infotainment options, navigation assistance, and vehicle diagnostics.
For enterprise customers, operators can provide IoT connectivity and data management solutions that improve operational efficiency in sectors like manufacturing, agriculture, logistics, and healthcare. Offering connected wearable devices for health and fitness tracking encourages customers to subscribe to data plans that support continuous connectivity.
Developing scalable IoT platforms that support a wide range of devices and applications, ensuring interoperability, and offering customer support services are essential for success in this domain.
The era of relying solely on connectivity for revenue is drawing to a close. Mobile operators around the world face the stark reality of declining prices and shrinking margins in traditional services. To remain competitive and profitable, they must look beyond connectivity and embrace a diversified portfolio of services that align with modern consumer demands.
Operators can significantly enhance their value proposition by offering comprehensive digital lifestyle services, venturing into fintech solutions, providing IoT applications, and, critically, delighting customers at every touchpoint.
These strategies not only have the potential to significantly increase ARPU but also position operators as indispensable partners in the digital lives of their customers. The future belongs to those who adapt and innovate. Mobile operators that recognize this shift and act decisively—while keeping customer satisfaction at the forefront—will not only survive the challenges ahead but will thrive in the new digital economy.
If you are interested in learning more about our transformation approach and how we focus on business outcomes then click the button below!
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One of the most immediate and impactful uses of AI is in personalization. Telcos have long recognized that customer experience is more than just a differentiator—it’s central to loyalty and long-term success. AI enables telcos to create customer journeys that are tailored based on actual behavior and preferences.
Insights
7 Oct 2024
Insights
7 Oct 2024
Traditional connectivity services, once the cornerstone of revenue for mobile operators, are facing unprecedented challenges. Intense competition, market saturation, and rapid technological advancements have led to plummeting prices for connectivity bundles.
As a result, relying solely on these services is no longer a sustainable business model. To thrive in this new environment and boost their Average Revenue Per User (ARPU), operators must venture beyond mere connectivity and embrace innovative strategies that cater to the evolving needs of consumers.
Connectivity has become a basic utility akin to electricity or water. Consumers expect reliable service at the lowest possible price, leaving little room for operators to differentiate themselves based on connectivity alone.
In many countries, mobile phone penetration has reached or exceeded 100%, meaning most people already own at least one mobile device. With limited opportunities to attract new customers, operators engage in price wars to retain or capture market share, driving down prices and margins.
Technological disruption further exacerbates this decline. Over-the-top (OTT) services like WhatsApp, WeChat, and Skype have eroded traditional revenue streams by offering free messaging and voice calls over the internet. This shift diminishes the importance of voice and SMS services, which were once significant revenue generators.
Regulatory pressures also play a role; governments aiming to increase digital inclusion often mandate lower prices for connectivity services and caps on roaming revenues, squeezing operators' profit margins even further.
Moreover, today's consumers are tech-savvy and price-conscious, exhibiting little brand loyalty and quickly switching providers for better deals, especially when the perceived value between competitors is minimal.
Given these challenges, the traditional connectivity model is clearly unsustainable. Operators must innovate and diversify to remain competitive and profitable.
In the pursuit of new revenue streams, operators must pay attention to the critical role of customer satisfaction. Delighting customers is essential to reducing unnecessary churn, which can erode profits and negate gains from new services. By focusing on exceptional customer experiences, operators can build lasting relationships that enhance loyalty and encourage customers to explore additional offerings.
Understanding customer expectations is key. Today's consumers seek seamless, personalized, and responsive services that fit into their lifestyles. Operators can meet and exceed these expectations by utilizing customer data to tailor services and recommendations, ensuring new services integrate smoothly with existing ones, and maintaining high levels of service uptime and performance.
Exceptional customer service is a cornerstone of customer delight. Investing in multi-channel support, prioritizing prompt responses, and engaging proactively with customers can significantly enhance satisfaction.
Building trust and transparency is fundamental in retaining customers, especially when offering services that handle sensitive data like financial transactions and health information. Implementing robust cybersecurity measures, being upfront about service terms and fees, and encouraging customer feedback contribute to a trustworthy relationship. Recognizing and rewarding loyal customers through loyalty programs, personalized offers, and community-building initiatives can further reduce churn.
Delighting customers does more than just prevent them from leaving; it encourages them to spend more and explore additional services. Satisfied customers are more likely to adopt premium services or add-ons, become brand advocates, and reduce acquisition costs by staying longer with the operator.
To adapt to this changing landscape, operators should consider expanding their service offerings to include digital lifestyle services, fintech solutions, and Internet of Things (IoT) applications. These areas present significant growth opportunities and can help operators increase ARPU by providing additional value to customers.
Consumers are increasingly integrating digital services into their daily routines. Operators can capitalize on this trend by offering exclusive streaming services for music, movies, and live sports.
By investing in or partnering with content providers, especially those producing local content, operators can differentiate themselves from global streaming platforms and cater to regional preferences. Bundling premium shopping experiences such as Amazon Prime together with exclusive VIP entitlements like airport lounge access can also create exclusive lifestyle brands.
The gaming and e-sports sector is another lucrative avenue with mobile gaming growing enormously. An example here is the amazing growth of the recent Telegram messenger game, Hamster Kombat which within 6 months gained over 300M users. Operators can develop platforms optimized for high-speed networks, host gaming tournaments, and create communities around popular games, driving data usage and fostering customer loyalty.
The demand for online education has surged, especially in the wake of the COVID-19 pandemic. By providing e-learning services, language learning apps, and virtual tutoring, operators can tap into a market that values convenience and accessibility.
Health and wellness applications also present opportunities. With growing awareness of personal health, there is a rising demand for telemedicine, fitness tracking, and mental wellness apps. Operators can offer these services through partnerships with healthcare providers, ensuring data security and reliability.
According to the World Bank, 25% of the global population does not have access to a bank. Mobile operators have the unique advantage of widespread reach and trusted customer relationships, positioning them well to offer financial services. M-Pesa in Africa is a great example of this. By providing secure mobile payment platforms, operators enable users to make purchases, pay bills, and transfer money with ease. This not only adds convenience for customers but also opens new revenue streams through transaction fees.
Operators can also offer microloans and credit facilities by leveraging alternative credit scoring methods based on user data, such as payment history and usage patterns, helping individuals who lack traditional credit histories access financial services.
Simplifying the process of purchasing insurance or investing in financial products via mobile apps can attract customers interested in managing their finances conveniently. Partnering with financial institutions ensures compliance with regulations and leverages financial expertise, while robust security measures protect user data and build trust.
The Internet of Things represents a significant growth area. Operators can offer smart home solutions that include security systems, energy management, and home automation devices. These services enhance customer engagement by integrating into daily life and increasing reliance on the operator's ecosystem. Collaborations with automotive manufacturers can lead to in-car connectivity services, providing drivers with infotainment options, navigation assistance, and vehicle diagnostics.
For enterprise customers, operators can provide IoT connectivity and data management solutions that improve operational efficiency in sectors like manufacturing, agriculture, logistics, and healthcare. Offering connected wearable devices for health and fitness tracking encourages customers to subscribe to data plans that support continuous connectivity.
Developing scalable IoT platforms that support a wide range of devices and applications, ensuring interoperability, and offering customer support services are essential for success in this domain.
The era of relying solely on connectivity for revenue is drawing to a close. Mobile operators around the world face the stark reality of declining prices and shrinking margins in traditional services. To remain competitive and profitable, they must look beyond connectivity and embrace a diversified portfolio of services that align with modern consumer demands.
Operators can significantly enhance their value proposition by offering comprehensive digital lifestyle services, venturing into fintech solutions, providing IoT applications, and, critically, delighting customers at every touchpoint.
These strategies not only have the potential to significantly increase ARPU but also position operators as indispensable partners in the digital lives of their customers. The future belongs to those who adapt and innovate. Mobile operators that recognize this shift and act decisively—while keeping customer satisfaction at the forefront—will not only survive the challenges ahead but will thrive in the new digital economy.
If you are interested in learning more about our transformation approach and how we focus on business outcomes then click the button below!