Smart pricing strategy for monetizing hypergrowth

By Sanjay Sharma

Growth is good, so hyper growth is better, right?

Well, what seems to be trivial for many industries is not that very simple for mobile operators. A fundamental change in the revenue mix, with voice revenues declining and messaging revenues often tending to zero, means mobile data hypergrowth is key for the Communication Service Providers' (CSPs) future. Unfortunately, monetizing this hypergrowth is a different game and strategies on this game keep many CMOs awake these days.

Why is that? Because smartphones have created an open ecosystem, changing customer expectations, and suddenly ‘value’ and ‘CSP service’ are no longer directly connected. As my fellow blogger Ramesh pointed out, the voice concept was simple; the CSP helped the subscriber to connect with other subscribers — this was the value the customer perceived and paid for. Traditional CSPs transferred the concept to mobile data, providing simple connectivity services (adding data to voice and messaging). Now, the CSP value is providing high quality mobile broadband connections, focusing on ARPU, operational/transactional costs and prices. But is this the right concept, when data amounts are exploding and network upgrades cost the CSP an arm and a leg? Is ensuring network quality and defining bigger and bigger data packages for the same price all it takes to flourish based on data hypergrowth?

Many CMOs spend sleepless nights on this — finding out whether today they deliver on customer expectations (looking at net promoter scores, maybe not…..). Over–the-top players (OTT) and the app providers have succeeded in doing this, successfully capturing significant parts of the industry revenues. “Mobile operators should take a leaf out of OTT service provider’s book for future growth,” says leading technology market intelligence firm ABI Research, and we too agree! CSPs must follow their example, and determine what is the value they actually deliver and how they can get paid for that value. Mobile data is not just mobile data. It is entertainment, finance, education, social life, and gaming. OTTs piggyback mobile networks — true!, but why don’t CSPs piggyback OTTs? Values differ, values are individual and so is there a way to capture this value and what does it take to do that?

We see more and more CSPs creating differentiated products — differentiating in quality, location, usage, payment types, resources utilized, etc.

So far so good — but it is four P's, not one, says the CMO. Successful monetization takes more. What is the right product for which customer? And should we ever find out, how do we get it there at the right time? And, are we asking, and even better, getting the right price for it? Can we grow our wallet share? Successful monetization beyond the traditional bit pipe CSP is a complex game. It takes:

• Efficient operations — keeping things cost efficient, simple, and scalable;
• Differentiated, innovative products — paired with agility to enable the CMO to quickly try an array of new things without ruining margin and revenues;
• Customer focus — understanding, engaging the customer, providing the digital experience they demand and delivering a personal, immediate value.

Only if all three are given, can the CSP really go for smart pricing and capture the value they actually deliver, get paid for it, grow their wallet share and see their mobile data strategy flourish.

The good news for sleepless CMOs is that CSPs are perfectly positioned to do so, having access to both the customers smart device and the network capabilities. The network plus device can deliver an immense amount of information about the customer context, which must be treated with care, respecting individual privacy requirements and carefully balanced to jointly serve and benefit customers and CSPs. Big data analytics help to understand patterns, needs, key factors and opportunities — and aggregating this information makes these available for real time decision making.

A great hybrid position is that which enables smart pricing instead of bit pricing. CSPs can understand, empower, engage, guide customers, motivating them for more valuable service usage and spending. CSPs are able to utilize customer insight to provide personalized, valuable smart offerings at the right time to grow customers and business. CSPs know their products and what more customers could do. Based on this knowledge CSPs can develop customer growth strategies, combining customer context with current behavioral events and triggers that can be used to evolve customers and reconnect ‘value’ and ‘CSP service’.

For CMOs, who are lacking sleep, take note you are in this unique hybrid position. Utilize your network and the intelligence of the smartphones, like all those apps piggybacking your network — after all, you enabled this by providing mobile data. Make sure you have what it takes to provide differentiated products, make sure you truly understand your customers giving them the digital experience they demand — and make sure you have the agility and operational efficiency to move faster than your competitors, move at your customers speed.

Sleepless CMOs — you can do smart pricing, you can monetize data. You can do so much more than just defining bigger and bigger data packages for the same price.

(The author, Sanjay Sharma, is head of sales and marketing for South and West Asia at s Redknee. The views expressed in this article are his personal views and do not reflect the publications’ stand)