Research Notes

Mobile broadband providers need to focus on each individual customer and which channel that can most cheaply attract that customer

When working with various types of distribution channels it is important to also work with different types of business models. It is important to understand that different distribution channels have different attitudes towards a broadband product and which business model they would prefer to work with.
By offering various types of business models for different types of distribution channels, one has the possibility of choosing the model that best suits each individual channel. Take for example, Carphone Warehouse – a UK-based mobile telephone dealer. It is obvious that they are more interested in making money on the customer’s ongoing mobile consumption, rather than making money on acquiring a new customer for a mobile operator.
But Carphone Warehouse can allow themselves the luxury of choosing this model because they are a well established company with high earnings, that do not necessarily need to focus as much on the companies cash position as many other mobile dealers. Many mobile dealers are currently under a great deal of financial pressure and if given the choice between earning money on customers’ ongoing consumption or a “finders fee” per customer, many will choose the one time fee, rather than a business model giving them a share of the ongoing revenue generated by the customer.

It is also important that business models that are related to various models/products, are also related to the way that the customer purchases, consumes and pays for that product.
One could imagine that there are products that mobile broadband providers acquire on a revenue sharing basis and it then naturally becomes important that the business model being used when selling the product is related to how the product is being paid for
At the end of the day it is not only an individual provider’s product that is a business case. In reality each individual customer and each segment is a micro-business case, where it is important that there is a balance between what the provider is paying for each individual customer (SAC) and the lifetime revenue (LARPU) that each individual customer generates.
The basis of the business case that is the foundation of a distribution strategy and segmentation model is that each customer – or at least each customer segment – becomes profitable. In a country like Denmark, where the minimum subscription period is only six months for private customers – the demands on creating fast profitability are far greater than in countries like Sweden and Norway where the minimum subscription periods are 24 months and 12 months respectively.
We have thoroughly examined and analysed these – and many other issues – in our new report “Successful Strategies in the Mobile Broadband Market“. The report is therefore an efficient tool for mobile broadband providers in their efforts to create and implement an optimal strategy.

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