The telecom and wireless industry finds itself in a uniquely challenging position with the smartphone market penetration at an all-time high. As shown by the Pew Research, 85% of Americans now own a smartphone. On one hand, the proportion of first-time smartphone buyers is decreasing and on the other hand, retaining and up-selling existing customers is becoming tougher.
Though experts estimate an increase in new device purchases with 5G technology on the horizon, the imminent upgrade to 5G plans will be a costly affair for wireless retailers. The IHS Markit Report shows that 5G phones will almost certainly be more expensive to produce than 4G phones by 20 to 30 percent. This additional cost will further eat into the already dwindling profit margins of telecom operators.
Telecom companies need to find new ways to increase their net profit without losing sight of consumer affordability. Diversifying into under-explored areas of smartphone management, deploying innovative technologies, and implementing analytical marketing tactics to cross-sell products are all of paramount importance in this fast plateauing market.
In this article we cover:
- Why telecom operators need to focus on ancillary revenue
- What are the opportunities to increase profitability
- How telcos can use a 3-step personalization process to up-sell and cross-sell
Why telcos need to focus on new revenue streams
Higher price tags, improved device performance, and broken upgrade cycles have resulted in customers using their smartphones longer than ever before. Here are some statistics that shed more light on the current state of the smartphone market:
- Global smartphone sales have plateaued at around 1.4 billion new units per year due to multiple factors - McKinsey
- The average upgrade cycle of a smartphone in the U.S. is 32 Months - NPD Connected Intelligence
- The average replacement cycle length of smartphones in the U.S consumer segment is estimated to go up to 3.77 years by 2024 - Statista Report
According to the data from market research firm Kantar Worldpanel, the reason for longer upgrade cycles can vary from technological advancements to pricing of phones. Dominic Sunnebo, global director for Kantar, was quoted by CNBC saying, “The age of poor smartphones is over. Most consumers rate their smartphones very highly, so there is less push to change.”
This brings into focus the importance of adopting an end-to-end lifecycle management approach and exploring newer streams of ancillary revenue to secure higher profits.
What are the opportunities to increase profitability
According to Deloitte’s 2021 telecommunications industry outlook report, building an intelligent retail experience that enables powerful use cases such as smart shelves, cashierless shopping, digital signage, dynamic pricing, and contactless purchases is a key growth opportunity for the wireless retail industry. Highlighted in the same report are the 4 areas telecom companies need to pay attention to for the remainder of 2021:
- Reassessing the way customers transact with retailers
- Strengthening online interfaces to improve customer experience and satisfaction
- Exploring new business models and technologies that foster a deeper understanding of consumer behaviour
- Focussing on the channel mix and offering a broad variety of communication options
As device sales reach a stagnancy, companies turn their attention to driving ancillary revenue through accessories, smartphone insurance plans, and connected devices. Smartphone insurance plans, in particular, become a supportive purchase to the changing consumer behaviour of trying to increase the life of devices. The Strategy Analytics, Smartphone Insurance Trends shows that smartphone insurance, in particular, is a fast-growing market estimated at $10 billion to $15 billion and is climbing rapidly at over 10 percent a year.
How telcos can use a 3-step personalization process to up-sell and cross-sell
To create new revenue streams, companies have to work on marketing and customer outreach strategies that go beyond traditional mass promotions. To drive additional purchases which are not conventionally perceived as essential in the smartphone market, tailoring the marketing message based on usage patterns of the customer and recommending relevant offers is key. Statflo recommends the following 3-step process to personalize customer outreach in telecom and wireless retail:
Leverage hyper-personalization to tailor customer engagement campaigns
To address customers’ changing expectations and needs, telcos have to take an all-inclusive approach to marketing that goes beyond just selling. When marketing campaigns take into account user habits and expectations, they are well-received by customers and play a pivotal role in establishing trust. The first step in the process of developing reliance and relevance is that of creating a stellar brand experience for each customer. The cornerstone of great customer experience is engaging customers with suitable content and pertinent interactions, making it easier to cross-sell and up-sell products. Also, to ensure that the process of customer engagement doesn’t turn into a time consuming one, companies should deploy customizable campaigns to personalize outreach at scale.
Often, companies are sold on the benefits of personalization but don’t know where to begin. Running promotions and campaigns without interpreting the customer mindset correctly isn’t an effective way to try and sell more accessories and add-on plans. The strategy should start with customer data. An in-depth understanding of the customer’s purchase patterns and problems has to come before any offer is designed and implemented.
Deploy analytics to add context to customer conversations
Data silos are the biggest roadblock to efficient analytical marketing. Companies collect customer information but fail to consolidate it. As a result, this valuable data, that has the ability to inform marketing decisions, is scattered over different teams of the organization, and never makes it to the customer-facing staff. It’s necessary to break these data silos, consolidate customer data, regularly scrub it, and organize it in a way that’s easy for everyone to interpret. That’s half the battle won when it comes to deploying analytics.
Once telecom companies have a concise representation of the customers’ history with the company, their marketing teams can get a better sense of the customers’ usage patterns. This will help the sales reps understand the individual’s needs and pain points and add context to customer conversations. Additionally, sales leaders can also use the data to identify patterns in user behaviour and apply the patterns to create prompts that trigger specific product offers.
According to this report by Strategy&, Turkcell, an Istanbul-based cell phone provider started reviewing customer data in realtime to get a better sense of how customers were interacting with their products. As a result, they were able to shorten the sales cycles from several months to few weeks and saw an increase in revenue by $15 million. And Turkcell did this a decade ago, when data mining softwares and CRMs were not as advanced as they are now. That’s the power of data-based personalization.
Create rich content experiences to elevate customer experience
The last piece of the telecom marketing puzzle depends on technology and innovation. Complex products and unsatisfactory explanations are the key issues affecting customer satisfaction in the telco space. Thinking out of the box and experimenting with various content formats during product promotion and onboarding will move the needle for telecom companies looking to differentiate themselves from competitors. Sending helpful resources and distributing content over channels such as text messaging will make information more accessible as well as shareable.
Visual content helps customers understand the product better and creates a seamless experience. One-pagers and infographics can be used to simplify complex product packages and provide full transparency around offers and fees. Australian company Telstra leveraged one-pagers that described in a clear, simple language the product packages the customer purchased and saw an increase in their customer satisfaction score by 17 percent.
With an increasing number of customers considering smartphones and wireless devices an essential commodity, telecom companies need to up their marketing game to upsell their offerings. Those who don’t embrace technology and leverage personalization to tailor marketing campaigns will fail to drive ancillary revenue.
For more information on how Statflo helps telecom providers engage, retain, and grow their customer base, check our texting for telecom page.