Getting more from prepaid mobile services

As the industry matures, mobile operators won’t be able to count on a flood of new customers to fuel growth, so they must create more value from those they already have — including prepaid ones.Half of the world’s people now have mobile phones: nearly 3.3 billion users in all. One major contributor to this phenomenal market penetration has been the rapid growth of prepaid mobile services — customers pay up front — which have enabled a huge swath of low-income consumers to make calls at prices they can afford. As the industry matures, it must find new ways to sustain revenue growth. Encouraging longer, more profitable relationships through customer life-cycle management is a significant opportunity.This approach, which is hardly new, typically involves segmenting customers by their probable long-term value and constructing distinct marketing approaches for each segment. But prepaid mobile operators hoping to use customer life-cycle management face a vexing challenge: how do you manage a relationship with customers you barely know? People buy prepaid SIM (subscriber identity module) phone cards,3 generally from third-party vendors, as easily as they buy cans of soda. Since no information is exchanged, mobile operators don’t have basic consumer data about their prepaid customers, such as age, gender, and address. Other service industries have a wealth of customer information, gleaned mostly from application forms, that helps them plan strategies to extract more revenue and reduce churn. Without such basic information, most operators abandon any hope of managing their prepaid customers effectively, instead resorting to blanket promotions that risk destroying value by needlessly cutting prices or offering free services.To read more of this article from the McKinsey Quarterly, free registration is required. See www.mckinseyquarterly.com/Telecommunications/Getting_more_from_prepaid_mobile_services_2108.

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