The Top Ten Marketing Mistakes made by today’s Operators

Guy Talmi, Senior Marketing Director at Pontis says the notoriously competitive and rapidly evolving market for telecommunications consumers is bringing marketers within this sector new and ever escalating challenges, but also tremendous opportunities for increased revenue and more cost-effective Marketing campaigns.

Managing an ever growing digital product and service portfolio, that often spans thousands of items, combined with the current shift towards delivering converged offerings of broadband, mobile and entertainment services, now means that mobile, cable, VoIP and IPTV operators are facing a very complex environment. Operators are fighting ever harder to drive new revenues from existing customers with the ever present need to find cost-effective ways to reach and convert new customers to their service offering.

In the saturated mobile space, operators struggle with high customer churn and continuous price erosion as new low-rate operators and MVNO’s enter the market. Customer acquisition costs are high and retention is a top priority in a market characterised by low levels of product differentiation where customers will simply shop around for the best deal.

Combine this competitive landscape with the added complexity of the products on offer – more products are being introduced to market at an ever increasing rate through a variety of different channels to users with varying subscription types and devices – and the scale of the challenge for marketers within this sector is evident.

“One-size-fits-all” Marketing

However, the traditional mass-marketing “one-size-fits-all” approach is no longer tenable in this environment. Services and bundles of products are offered with limited flexibility in terms of customisation or personalisation and, as such, many of the marketing messages delivered to consumers are both badly timed and far from relevant. They therefore fail to persuade the user to adopt a new service or purchase a new content item. This fact was graphically born out by a recent survey commissioned by Pontis with GfK NOP amongst 752 mobile phone users which revealed that 70% of mobile phone users considered the marketing offers they receive from operators to be irrelevant and 64% were downright irritated by them.

So where are the operators going wrong?

In my view the top ten mistakes that are commonly made by the operators are as follows:

1. Who is the product designed for?

Product offerings from operators are too generic and often driven by emerging technology, rather than being designed to address the actual needs and expectations of real customers. Operators typically create a large portfolio of products but then fail to build an effective mechanism (conceptual and actual) to get them to the right customers at the right time.

2. The unfortunate failure of free trial offers

Product Launch campaigns offering free usage to all customers do attract lots of interest. However, operators often fail to follow up with customers that respond, in a timely fashion. Failing to secure ongoing usage with these respondents is a real missed revenue opportunity.

3. Introductory offers “only for new customers”

Mass media marketing, offering truly attractive packages or free items to attract new subscribers, does alienate the existing customers. Stating that current users are ineligible for the offer in the small print does not solve this problem!

4. Missing the target

Operators often send marketing offers to customers in a non targeted way that is therefore, irrelevant to the user. At worst these campaigns can even be perceived by users as spam. Not a term you want to be associated with your brand!

5. Too little, too late to turn the churn

Operators are not reacting in time to retain the relationship with about-to-churn customers. Typically communication only starts at a late stage when the customers actually say that they are leaving. At this stage, customer retention can be very costly.

6. Failure to test campaigns

Operators often launch mass promotions and campaigns without actually testing the creative approach, perceived value and response levels, thus frequently fail to meet the desired KPIs. Testing on a sample group and fine tuning the offer based on the results – can dramatically improve campaign results.

7. Shotgun or sniper?

Operators are still not using the right media to communicate and promote their services to customers. They are often using expensive mass media such as TV ads where direct communications (SMS, portal banner etc.) would be much more effective with a lot less cost.

8. Value the customer

Operators still seem to think that “one offer fits all” and are simply not using effective value-based segmentation when planning and launching campaigns. As a result, response rates and customer take-up is very low.

9. Jumping on the latest bandwagon

Operators are not planning for, or in some cases even reacting to, high profile external events – concerts, shows, sports, etc. There are numerous marketing activities and new service offerings that could be successfully delivered around these opportunities.

10. Success breeds success – if you can recognise it

Operators fail to analyse past campaigns and offers to fully understand the customer responses and the actual revenue results produced. By analysing the real ROI of campaign types and the effectiveness of tools and techniques used, better results can be achieved in the future. Too often the campaign analysis stops at a response rate and cost per response, rather than understanding real revenue versus cost.

Too many, the list of mistakes above will seem as basic as a class in ‘marketing 101’ and they would be correct. However, the fact is that operators have been so long entrenched in a traditional consumer mass-marketing model that is no longer relevant to their customers and is both costly and ineffective. However, industry habits are often very hard to break, which, when coupled with network limitations and lack of flexibility, puts forward thinking marketers in a challenging position when trying to convince their senior management team that investment in change is essential to both campaign and business success.

The key challenge for all marketers in this sector if they are to survive and thrive in this environment is to leverage their strengths and to target the right customer at the right time with exactly the right proposition.

The personal approach

In this sense, the industry needs to follow the example set by on-line service providers who have long maximised the potential of the ‘personal approach’ with interactive suggestions linked exactly to the users’ preferences and real time behaviour (e.g. browsing or purchasing). “Amazon-like” recommendations based on buying patterns can be used by operators to promote a “cross sell” of related content items, or to use “up sell” techniques in order to encourage customers to purchase additional content, such as music bundles, all based on the lifestyle characteristics of a carefully segmented group of customers.

Operators now need to adopt these more sophisticated techniques through the use of marketing delivery platforms to address specific, well defined customer segments with relevant offers. The arrival of new solutions specifically designed for marketers within this sector, is now providing the capability for them to do this, by monitoring usage of services or products in real-time to enable behavioural-based targeting; an approach that, until now, has simply not been possible.

A marketing delivery platform provides marketers within operators with an end-to-end design-execute-measure environment to deliver real time targeted and personalised marketing offers. This ties marketing design, on-line sales, dynamic communications and product offer processes, effectively automating the marketing IT. Such systems allow products to be configured dynamically (including special terms) and to be communicated in real time to customers, based on their preferences, history and current usage.

This may seem logical, however, in reality; it marks a significant step forward in an industry hampered by silo-based thinking, lack of flexibility across the different operator’s departments, and a non-systematic, non-automated approach to targeting customers. For some of the emerging competitors to traditional operators this approach is a more natural one to take. This provides a real competitive edge for the new entrants and a substantial risk to the operators business moving forward. It may seem a bold statement, but unless traditional operators move quickly to change their marketing approach the end result will be customer and revenue loss on an immense scale.

Improving ARPU in the real world

This personalised approach to communicating with the customer has been proven to deliver compelling results. Recently, a cable operator recognised that its key competitive advantage was the delivery of video on demand (VoD), yet many subscribers were failing to purchase this premium content. Through targeted promotions to different consumer categories the operator was able to convert users that had never bought content in the past, and by analysing relationships between content categories was able to design cross-sell offers that leveraged purchases from one category to promote purchases in another relevant category. This not only drove VOD subscribers to pay for premium movies but also introduced customers to new categories; increasing overall sales in the promoted categories by 42% over a nine month period.

Achieving these results means that operators must fine tune their processes and adopt a more targeted approach by aggressively marketing highly tailored offerings. This is the strategy that operators will need to embrace if they are to out-perform the competition and improve levels of customer retention and profitability.”

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