Profiting from Mobile Services

Many Content Service Providers (CSPs) are struggling to turn their mobile services into a profitable business. The poor Quality of Experience (QoE) lowers adoption rates, decreases revenues, and increases churn, resulting in poor return on investment (ROI) for mobile content service providers. Furthermore, large content providers, brand owners, and service providers spend increasing amounts on marketing their services and the investment is partially lost when the services do not meet with the expectations of the users.

The profit drivers for CSPs

Based on our long experience and customer interviews the most important profit drivers in mobile services can be summarized as follows:

• Cost efficient mobile advertising models
• Number of active users
• Number of successful billable transactions
• Cost of content & delivery
• Repurchase Intentions
• Loyalty
• Churn

On top of overall subscriber satisfaction, improving the quality of customer experience impacts directly all profit drivers and increases Average Return Per User (ARPU). ARPU is an indicator used by service providers to measure the potential revenue that they can obtain from their subscribers and is calculated by dividing the revenue by the number of subscribers that provide the revenue.

How to improve ARPU from mobile services

Typically 85 – 95 % of the visitors are lost right away or very soon after the marketing campaign. The rest convert to “customers” but not all come profitable. The customers can be classified into New, Returned, Active, Loyal, Dormant and Churned users. ARPU differs greatly depending the behaviour, the length and the depth of the visits. Dormant customers will turn inevitably into Churned if nothing is done to prevent that.

The main cost of a transaction comes mainly from marketing, content and billing costs. It is business critical to follow-up customer behaviour and behaviour patterns for turning as many customers from satisfied to loyal and then from loyal to advocate. The profit is made from Active, Loyal customers. Typically mobile content services boost wide market foot-print and extensive number of transactions. Customers fall into dormant state very easily and loyalty is considered generally low in the industry.

A successful mobile service needs to generate value to the customers and this can be achieved only by understanding the customer base, offering rich fine-tuned and relevant content. For being successful CSPs need to understand their users and offer services that are satisfying, desirable and engaging.

The key factor in addressing these key points is an effective Customer Experience Management strategy that ensures competitive service quality and end-user satisfaction in the increasingly competitive marketplace. Customer experience is the only major differentiator in the commoditised market where products, prices, customer segments and services are so similar and competitive.