Enhanced messaging services are a way of tapping into the revenue potential at the same time as gradually encouraging a cultural shift towards making more use of our mobile phones.
Tom Veldman thinks there are real opportunities here …
LogicaCMG is also beginning to see a renewed dependence on established earners such as SMS, where the infrastructure is already in place and traffic has exceeded all expectation.
However, mobile operators can only sit back and reap the rewards for so long. Although traffic is increasing, revenues are unlikely to reflect this as competition drives down the price per message. SMS is very likely to remain the most popular messaging stream for at least the next two years so operators need to work out how to keep the service while increasing the revenues.
There are several ways for operators to boost revenues. One is to introduce different SMS pricing structures and offering varying levels of service agreements.
For example, consumers who are sensitive to price, and less to quality of service, can be retained on cheap price plans, while additional revenues are available from more discerning customers.
If operators do this right, this can significantly contribute to brand loyalty and reduce churn.
There are also a host of SMS-based applications which should be exploited to encourage people to use their phones more. Email-style business functionality, for example out of office responses, can be easily adapted to existing technology. Similarly, interactive applications, combining SMS and television and built around shows such as ‘X Factor’ can create significant revenues.
This enables organic growth of SMS and provides a bridge to next-generation platforms.
There is great potential in these new services. But to achieve maximum benefit, operators need to ensure that they are not charging ahead and forgetting to take the customer with them. Operators needs to have a greater level of understanding of their customers’ needs and behaviour patterns, and then personalising the messaging services to make such service relevant and compelling to the customers’ individual preferences.
The telecommunications industry needs to consider a fresh approach because it is not just in the business of selling technology – it needs to be enabling cultural change. Apart from being a cash cow for the industry, SMS brought about something of a revolution in terms of the way people communicate with one another.
Operators need to make careful use of messaging for marketing to grab this opportunity. Few operators are using customer data to make sense user activities. The data is there – with tremendous possibilities to be used in campaigns – but in many cases it has never been integrated or analysed.
This data is going to be the first step towards encouraging more innovative usage of messaging. It will enable more precise targeting and more effective campaigns. Operators will be able to introduce higher levels of control so that mobile marketing feels like direct marketing and less like spam. Mobile operators will also become a valued partner to marketers of a range of brands.
SMS has a few unplayed cards in its hand and enhanced messaging services are a way of tapping into the revenue potential at the same time as gradually encouraging a cultural shift towards making more use of our mobile phones. You would be hard placed these days to find a businessperson who doesn’t have a mobile phone. Even when they are in a meeting and unable to pick up voicemail or dial up to get the latest emails, most people are able and willing to check SMS messages.
The introduction of enhanced messaging services could be spread out with little risk. Done well, this will lead to a well-timed rollout of next generation SMS services that will offer greater differentiation, helping reduce churn while at the same time offering additional revenue. IMS and mobile TV are certainly important for reducing operational costs and increasing revenues through new services.
But why just wait for the future when you can also act now? Building upon the existing SMS infrastructure will support bridging of the current and forecasted revenue gap. n
(*) Research conducted by LogicaCMG at Global Messaging 2006, London, May 2006.
at LogicaCMG Telecoms
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