What Can Wireless Operators Learn From Politics?

10 Comments

Chetan Sharma is co-author of upcoming “Mobile Advertising” (John Wiley) and “Mobile Broadband” (IEEE Press). He is an adviser to several operators and media brands around the world.

U.S. politics has entered the frenzied season of election primaries, complete with polls, debates, punches, counterpunches, analysis, paralysis, and so on. Each round brings with it an inordinate amount of data over which to pour, and makes number junkies like us draw conclusions that can be applied elsewhere. In fact, there are a number of lessons that wireless service providers — especially operators — can draw from successful political campaigns, specifically around microsegmentation, messaging and engagement.

Microsegmentation: In close contests, the campaigns that best understand the microdemographics almost always have an edge. The time spent building databases and gathering voter profile information that give insights into populace dynamics yields a significant tactical advantage as Election Day nears. The single biggest lesson for operators (and consumer businesses, for that matter) is end-user microsegmentation.

For the better part of the last decade, most operators primarily had two user segments — postpaid and prepaid. As Tomi Ahonen outlined in his book, “3G Marketing,” operators over the last few years have used common segmentation models to guide service offerings and marketing campaigns, such as those based on size (i.e. large corporations, SME, SOHO, residential customers), technology (i.e. 3G, EDGE, WAP, SMS, etc.) and billing. But such methods are woefully inadequate in our subscriber-saturated world, especially as services are increasingly personalized. We need to move from these handful of segments that are comprised of millions of subscribers to hundreds of segments whose number of subscribers range from 100 to 1000, and that help you model the preferences and behavior of the various population segments.

Each subgroup, or segment, has different characteristics — including demographics, lifestyles, work habits, social networks, preferences, product requirements and consumption habits — that could benefit from different product features or marketing approaches. Ultimately, these differences suggest that, rather than putting the soccer moms, Internet marrieds, impressionable elites, aspiring snipers and cricket fanatics in the same bucket, the greatest profitability may be achieved by developing multiple strategies to address the unique characteristics of each individual customer segment. The networked world allows one to focus on narrowly defined targets — often many at the same time. As Ian Ayers says in his book “Super Crunchers,” “Thinking-by-numbers is the new way to be smart.”

Messaging: Each provider has its own mass-market message: flat-out brand awareness ( “Can you hear me now?” – Verizon; “Don’t call it a phone” – Helio), emotional connection via communication (friendship – AIS, Thailand), broadband and network capability (3G – Maxis, Sprint, KDDI), application services (QR Code – NTT DoCoMo), phones (iPhone – AT&T), new plans (lifetime free – Reliance), or competitive advantage (Quad-play – Virgin Media; network coverage and quality – Telstra). As operators roll out new pricing plans or devices or applications, the messages are adapted to these initiatives, but they’re typically not targeted towards any particular segment of the demographics.

The goal is to reach the broadest market possible. However, messaging should go beyond that by adapting to microsegments of the subscriber base. Once segments have been identified and there’s a grasp of potential voters, good campaigns try to figure out how to best communicate their conversion message –- direct mail, phone call, neighbors, or a call from the candidate themselves — whatever will most quickly and effectively close the sale. Similarly, operators would do well to align their product offerings with demographics and adapt their message in a way that will make the biggest impact. Much of i-mode’s success, for example, can be traced to the fact that the service was initially targeted at teenage girls, who helped spread it virally.

Engagement: Once the message has been delivered, good political campaigns engage supporters and voters to stay the distance until the final votes are counted. It is as much about attracting new voters as it is about keeping the current ones happy and engaged. But unlike political contests, in which the loser goes home to fight another day, the fight for subscribers is ongoing.

A friend of mine was a loyal customer of the leading operator for over 10 years. Over time, he noticed a drop in customer service and network quality. When his contract was over, he switched to the competitor. He didn’t hear from his old operator until six months later, at which point the chance of getting him to switch back was literally zero. Operators shouldn’t take customers for granted. Instead of just focusing on acquiring customers or upping the ARPU (average revenue per user), they should focus on LTV (lifetime value) and APPU (average profit per user).

Unlike political campaigns that can’t connect “what voters say” (surveys) to “what voters do” (votes), operators can connect the dots using the tremendous amount of user data already available — and their understanding can be continuously refined with each user interaction.

By aligning the efforts of segmentation, messaging and engagement, marketing efforts will be more focused and yield better results. Once the segmentation and understanding of the user is fine tuned, such gathered knowledge can be applied continuously, enhancing the experience of users by providing recommendations based on what they might be most interested in. These segments can then be studied in conjunction with other strategic models, such as profitability, potential, client credit risk and client vulnerability, and applied to the carrier’s objectives: retaining profitable customers, growing customers with potential, managing and controlling customers with higher credit risk profiles, and optimizing the costs of less profitable customers. Wireless operators can then identify real opportunities in the market where they can make a difference.

Full disclosure: Some of the companies mentioned in this article are clients of the author.

10 Comments

Marie Bjerede

I applaud APPU!

As a member of the micro-segment “soccer mom”, I am patiently awaiting the operator who will target & market to me with the full-on mobile experience in a phone as Chrysler did with the mini-van. As I carpool the kids to dance, karate, and sports in a moving living-room with swivel seats, a table for cards or homework, two TV’s and a separate radio audio-feed for mom (did I mention the luxurious plethora of storage spaces and cup-holders??), I like to noodle on ARPU from a systems engineering perspective.

So, assuming that we are optimizing for profit, let’s consider the simple model of Profit = (ARPU – ACostPU)*Num_Users. We have some variables to play with here:
1) Maximizing the rate of increase of Num_Users. That is getting more people to join and fewer people to leave. A targeted soccer mom phone would sure get my business. And keep it!
2) Increase revenue: Please bundle my (again targeted) applications and services so they work together to give me just the experience I need. I would pay for that!
3) Decrease cost: First make it easy & automated for me to do business with you – that way I won’t have to take up your time unless its absolutely necessary! Second, think about the physical resources I am using every time I make a call: The radios in your base station, the over the air bandwidth, not to mention your T1 backhaul! Those are constrained resources. I’d be happy to have you use those as efficiently as possible by only sending my time-critical data over the air and pushing the rest across other networks when I have access to them. So that’s a cool metric, I think, to maximize: the average value per bit transmitted over the air.

Aman Sehgal

Its true that mobile operators can learn from politics by developing their business models on the strategy followed by a candidate fighting an election on micro segmentation, messaging and engagement but it is not that much easy to implement.
A lot of study and effort has to be put on 1st segmenting the market on the basis of demographics, lifestyle, work…. and then how to implement those changes in the system (Network) as cost of implementing or installing a GSM/GPRS network is very high.
Take an example of a rural area(demographics) where people’s requirement is just to make/receive a phone call and send/receive sms and have very less amount of money to spent; do you really believe that any operator will go and install a network in that area? The profitability of the operator will be very less with the current type of network infrastructure. To cater to the needs of these people someone has to come up with a different approach that has to serve the basic needs of these people and at the same time it has to be profitable for mobile operators. Only then this sort of micro segmentation will be helpful (for rural market).

For urban areas/towns this sort of micro segmentation will definitely be successful as here people have enough money to spend and have different needs that operators can hopefully fulfill and finally can earn profits by targeting their more refined from of customers.

Comments are closed.