The Mobile Business Industry Panel aims to get views from leading figures on key topics. On the panel we have a selection of senior management from operators, distributors and retailers, plus a couple of industry observers and pundits.Each month we invite comment from some of them and we print the best/most interesting of their responses.
What in your view should be the base price for handsets? And can anyone other than Tesco make money on prepay phones retailing at below £40?
Duncan, T-Mobile: Pricing is a delicate balance between identifying the customer that will use the service, offering handsets that meet those needs, and providing value for both the buyer and the business.
Opportunities may exist for companies to make money on prepay devices sub £40, though it becomes a matter of standard business economics, supply and demand, supply being manufacturers offering devices at competitive wholesale rates, and demand to obtain the low wholesale rate, as well as demand for the devices that are generally only voice-centric.
How do you compete with Carphone Warehouse and the networks’ stores? What money-making options are still available for the independent retailer?
Boden, Mailine: Independents have to play to their strengths in order to compete with CW and the networks’ stores. This means providing greater levels of advice and service and by ensuring they are viewed locally as the reliable, authoritative local mobile phone specialist.
Owner managers are better motivated than corporate staff. They can make decisions at ground level and can respond quickly to local market changes and short-term opportunities.
Quality marketing, well trained staff, an attractive store and a focus on value added sales are all within reach of the independent – and they don’t have to do everything themselves. Mainline provides substantial and significant support in each of these areas and the retailers we work with reap the rewards.
B2B sales represent major opportunities for retailers looking to expand their customer base. The high attendances at our regional B2B training seminars show that this market is growing in importance for independents looking to maximise revenues and profits.
What’s the future for ‘converged’ handsets – cellphones which can also function as conventional fixed-line phones? What are the implications for retailers. Will specialised knowledge be required to sell such products?
Duncan, T-Mobile: The future is now as the wireless community is seeing handsets from North America to Europe that offer a variety of technologies that have kicked off the convergence. More importantly, the services offered by mobile operators are allowing more and more customers to simply cut the cord overtime.
The implication for retailers is that they may require some additional knowledge as with any new product offering. That will be dependent on the type of handset and services purchased.
T-Mobile however is working closely with its suppliers to ensure that such new technology is implemented with an “ease of use” approach.
Bud, mBlox: This creates a poignant sense of déjà vu for me, since I was one of the creators of the DECT industry in the early 1990’s. Anyone remember the BT Onephone dual-mode DECT-GSM handset?
The basic problem – then as now – was that the mobile operators could not see why they should subsidise an expensive, technology-packed handset whose sole scope was to bypass their network whenever possible. Now, particularly when the operators have masses of spare voice capacity on their 3G networks, the virtues of converged handsets to the carriers will be especially unclear. And who ever heard of a handset succeeding without operator support?
Customer retention is going to become an even bigger issue for the networks in the coming months. What do you think might be their best options?
Bud, mBlox: Mobile content sales will continuing to rise, despite the huge subscription-services fallout experienced this autumn. They currently account for nearly 5% of ARPU, and could end 2006 at 6-7%. Luckily to achieve this the carriers don’t have to do too much – this growth will come from off-portal services they don’t have to promote, merely enable. In 2006 we could see mobile music, mobile video and MMS services generating relevant incremental revenue – but only if the operators sort out GPRS charging structures that currently kill such services stone dead. It looks as if not all carriers will be able to do so. And if some networks can enable subscribers to reach get rich media services and others can’t, what will that do to the laggards’ customer retention and churn?
Heeran, Valista: With mobile churn rates as high as 33%, fuelled by the emergence of increased competition through new entrants as well as number portability, I feel operators need to make a choice between retaining their valued customers or extracting as much revenue as possible.
Perhaps attempting to do both with customers would seem to run the risk of achieving neither, unless compelling services can be found to drive the extra consumer spend.
At a general level, promoting and providing cheap, attractive mobile data services (including messaging) is vital. As I have said before, mobile data is still too expensive with complicated and unclear charging mechanisms. European operators can take a lead from those in the US which offer significantly better mobile data packages in terms of service and pricing.
At a more personal level, operators need to improve on pro-actively profiling customers with a view to identifying both those that are at risk of leaving in conjunction with those who are worth fighting to retain. A better range of tariff plans (with greater scope for tailoring by the subscriber based on their habits) as well as providing pro-active feedback to subscribers on the best tariff choices for them conveys to the customer a more caring, personal and customer conscious image.
The customer profiles could be used to provide a more personalised handset upgrade policy, for example identifying consumers which do not value or make use of the subsidised handset upgrade, and using part of the cost saving to offer discounts to these subscribers for voice and data services. Locking subscribers into contract periods on the basis of the upgrades simply defers the time when they switch operators and does not necessarily build long term loyalty.
Greater protection is needed by operators to guard against unsolicited charging by 3rd party content and service providers including a greater degree of consumer consent before their charges can be levied. There has been significant damage done to operator brands because of this.
Finally, it’s surprising there are not more family-focused offerings from operators – more advanced incentives including non-corporate group offerings and benefits (for example prepaid top up from a parents post-paid bill etc…) would allow operators to present more incentives for subscribers to remain with them and make it a more difficult decision to churn.
Duncan, T-Mobile: Retention is vital to all networks. At T-Mobile, retention starts when we design propositions and services for our customers. They have built in longevity and we focus on ensuring that our customers are delighted from day one, not just when their contract is up for renewal.
Our strategic focus on building customer advocacy helps us understand where we are good and where we need to improve. Customer advocacy is more than just satisfaction – we want people to enjoy T-Mobile and recommend T-Mobile to their friends and colleagues.
As we move into 2006, T-Mobile will be delivering real innovation and value in the area of retention, and throughout this year our customers will see the tangible steps we are taking to ensure they choose to remain with us and encourage others to join.
If there are any questions you think we should put to the panel just email them to us:
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