There’s too little innovation on the prepaid market
|– many operators could easily significantly reduce their costs.|
Strand Consult has now been analysing the prepaid mobile traffic market in a number of countries and across multiple continents for several years. The results of our analyses are not particularly positive – we can clearly see that many mobile operators are not making a large enough effort to develop their prepaid mobile markets.
In 2010 we compiled and published the 10 Largest Mobile Business Trends based on our studies of a number of mobile operators prepaid traffic. The data and information we have been analysing clearly shows that the prepaid market has not been moving forward in the past few years. In some cases the market is actually moving in a wrong direction and when that happens, the whole market starts sliding in that country. From a shareholder viewpoint the results of our analyses are naturally very disappointing. You can read more about our “10 Mobile Mega Trends” report here: http://www.strandreports.dk/sw4149.asp
During our business trips around the world in the many different countries and continents we visit every year, we can clearly see that the executives that are responsible for the prepaid mobile area at many mobile operators are simply not very innovative when it comes to business development. Most operators are doggedly continuing to do what they have already done for far too many years; offering customers an increased amount of mobile traffic for an increasingly smaller subscription.
Strand Consult has developed a workshop concept for mobile operators and MVNOs that focuses on this problem. The process starts with a pre-workshop information gathering period, which is followed up by the actual workshop and then finished off with a post-workshop summary. The main purpose of the workshop is to examine together with the operator how to optimise their prepaid mobile market, reduce their costs, and increase their sales and earnings.
In recent years we have held numerous workshops for mobile operators all over the world. We can see that some of these operators have used the information and inspiration from the workshops to develop new and exciting products and concepts and have additionally been able to significantly reduce their costs.
Many of the markets we visit during our travels are noticeably lacking any significant innovation from their local mobile operators. What we are however seeing in many countries are small aggressive MVNOs creating innovative new products within the prepaid area.
All our analyses indicate that most mobile operators can quite easily reduce the size of their prepaid sales and marketing costs and additionally reduce costs on servicing customers for topping-up or recharging their mobile accounts. Just within the topping-up area we believe most operators can reduce their costs by 2 -3 percentage points.
Within the customer care area there are also costs that can be easily reduced. By combining the use of the Internet with the experiences many countries now have where customers are increasingly using online payments for banking and purchasing airline tickets etc., many mobile operators ought to easily be able to reduce their customer care costs by between 5 and 15%.
Furthermore most operators are battling against very high churn figures – a monthly churn of over 3% is quite normal for prepaid customers. There are a number of tools that can help reduce an operator’s monthly churn by between 5 – 10 percentage points – provided that the mobile operator understands how to best utilise their resources.
In practice we believe most mobile operators can improve their prepaid margins by two – three percentage points – an improvement that can directly be measured on their EBITDA.
If you would like to learn more about Strand Consult’s Next Generation Prepaid business concepts please do not hesitate to contact us. We would really like to see mobile operators start giving the small aggressive MVNO’s much more competition on being innovative on the prepaid market. Please use this form to contact us for more information