Use zero-rating to turn revenue protection into revenue generation
August 29, 2017 - Aleks
It’s been a busy few weeks and months in the operator data scramble for customer attention.
In the UK, we have seen Three announce a deal to zero-rate Netflix for its customers, and EE respond by saying it would no longer count Apple Music streaming as part of its customers’ monthly data allowances.
On the face of it these seem generous offers, but make no mistake, these are strategic and tactical moves designed not only to win new customers but perhaps also to protect data revenues going forward.
European operators want to fight the trend to unlimited data bundles that has re-emerged in the US.
These moves by operators are not so much an acceptance of the trend towards free-for-all data, rather they represent something a little different.
As an example, at its Q1 results meeting, Vodafone’s CEO Vittorio Colao said that zero-rating and bundling content will help operators meet the demand for data without having to “throw-in the towel” and move to unlimited data packages.
What these initiatives show is that the commoditisation of data connectivity in an already competitive landscape is forcing mobile operators to reinvent themselves.
They need to regard themselves not as simply providers of connectivity or internet services, but as entertainment companies providing a service.
If data access itself can no longer be the main attraction, operators need to look at new ways to attract customers and stay relevant - and that is all about the content they can carry and the partnerships they form.
Mobile operators themselves very rarely possess or own the type of over-the-top (OTT) services and content likely to attract customers.
They need to identify and work with partners in TV, music, film, and sports services to put together the right content packages for the audiences they are targeting.
Three UK’s deal with Netflix, EE’s with Apple Music, and Vodafone’s move to offer different “passes” to services are all intended to win new customers and retain existing ones.
But these partnerships are part of a two-way street.
Operators may be determined to seek partners to drive and maintain revenue and stay relevant to their customers and encourage loyalty – but what’s in it for the partners?
Operators need to demonstrate why they are attractive partners for content providers.
Zero-rating services is only the beginning.
Ensuring offers are relevant to each customer is what will boost engagement and increase the operator’s attractiveness as a partner - ultimately leading to improved revenues for both parties.
There are three key areas where the operators can use the customer insight that lives within their BSS systems to show their worth as a partner:
1. Business intelligence. This is the foundation that operators can use to build offers.
What services are attractive to which segment and at what price point – though of course, zero always tends to be a popular price point!
By using closed loop automation operators can constantly analyse the success of an offer and rework it when they identify micro segmentation opportunities.
Operators already collect a lot of this information and by securely opening up their systems, they can offer this intelligence to their content partners as part of the deal.
This information sharing instantly makes the operator a more attractive proposition as a partner.
2. Speed to market. A lot of content, the latest music, cool videos and games, for example, has a limited shelf life.
Having systems in place to quickly develop offers and get them out to market is key to success.
There’s little point pushing the latest app two months after the initial craze.
This is not just about using an offer catalogue to get promotions built and launched quickly - something that legacy BSS can’t really support - it’s about
the ability to quickly refine offers, change the price points and entitlement rules, as well as being able to quickly retire them.
3. Personalisation. BSS systems collect data usage in real–time, giving the operator a lot of information on customers.
If the operator has an offer catalogue to quickly develop new offers, then combining it with the live customer data can enable real-time contextual offers to individual customers.
We’ve already seen real-time offers work very well with customers selling add-ons to existing telco services such as roaming service passes, or data add-ons.
However, the potential for contextual offer management to promote, sell and activate a multitude of services is substantial.
It’s more than streaming TV and music. Contextual offers from partner companies can be tied into what the customer is actually doing – watching sport, streaming music, attending a concert, or watching live TV.
Partners could include betting companies, music providers, ticket agencies, charities, or games companies.
The ability to personalise can make operator offers much more relevant to the customers, and make operators much more attractive to potential partners.
Zero-rating specific services is a good start for operators looking to engender loyalty, reduce churn and protect overall data revenues.
But with better targeting, revenue protection can become revenue generation – and that’s a much better destination.
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