Next up on the continuing more granular look from the series of reports associated with the recently published Nokia 2016 Acquisition and Retention Study is the report, Value-added, bundled services and connected devices. It is now available for download following our previous look at the criteria customers are using to choose a mobile operator.
I hasten to add that of all the reports in the series that have been reviewed thus far, from a personal perspective, this one is the one I have spent the most time digesting since it looks at what can entice customers to purchase premium services going forward. After all, in a world where ARPU is declining and customer churn is a fact of life that is increasingly stubborn thanks to both traditional and OTT competition, that old term “stickiness” is coming back in fashion. In other words, bundling is important.
Before diving deep, the context for the opportunity is worth a review. What Nokia (News - Alert) found is that globally only 27 percent of consumers currently receive some form of value-added service. And, making this even more interesting is that the research also uncovered that customers are agreeable to such bundled services, including with devices, and are willing to pay for them based on who they are structured. In addition, and somewhat surprising, is that value-added services are more attractive in Transition Markets than in Mature Markets.
An additional piece of context is that, in terms of what value-added services are attractive, #1 is free or discounted messaging apps like WhatsApp, followed by discounted movie tickets and cloud storage.
As has been customary in these reviews of the reports, and obviously as inducement to download them, selected charts tell some fascinating tales. One that caught my attention is the one below on the positive effects of value-added services. The chart shows the increase in the likelihood of customers to stay with their service provider based on the perception of network quality and data usage when value-added services are offered to consumers.
That is quite the WOW factor when you think about it, especially given the current state of industry competition and churn. Plus consumer interest in receiving such services is high:
- Transition Markets—51 percent do not receive such services but are interested, 24 percent already receive, and only 25 percent do not receive and would not be interested.
- Mature Markets—57 percent do not receive such services but are interested, 10 percent already receive, and 33 percent do not receive and would not be interested.
When you throw in consumer desires to have a connected device control capability provided by their mobile operator, and a connected device as part of a bundle, there is ample reason to understand why bundles of value-added services plus devices is increasingly becoming the way in which mobile operators are going to market.
Here is one last tickler for reading this report. It is self-explanatory.
As Nokia says: “Value-added services, connected devices and bundled services prove to be strategic levers with which operators can increase consumer satisfaction, develop new revenue streams and build points of differentiation in an industry threatened by commoditization.” However, when digging deeper into the numbers, as with most things, it is about the execution. These are not checklist items. How things are bundled, packaged and priced is both art and increasingly science. In a rapidly changing world, having the tools, insights and ability to be responsive with a broad set of options, and the ability to scale massively in order to fast in the market, all are part of the success equation. The good news from the report is that opportunity abounds.
Edited by Alicia Young