We feel that enhancing the mobile subscriber experience, all the way from the handset to the Internet is so important, that we wrote a book about it. We are launching this book at Mobile World Congress in a few weeks time, but we wanted to give you a preview to warm up.
Here is chapter 1 introducing you to our passion, what we feel operators can do to work with it and why it is important to do so. Please enjoy! If you want a copy of the real book, register here and step by our booth #5H61 at MWC!
Thomas Vasen Subscriber Experience Evangelist @ Procera Networks
Mobile Subscriber Experience Basics
In This Chapter
▶▶ Understanding why subscriber experience is important
▶▶ Introducing mobile subscriber experience software
▶▶ Understanding commercial challenges that face operators
The mobile market is in a state of massive, ongoing flux. The old ways of doing business no longer work. The best way to gain and retain subscribers now is to track their every move with sophisticated software. That’s where mobile subscriber experience comes in. It can crunch data to give you measurable, competitive advantages in real time by allowing you to know exactly what your subscribers are up to now and what they’re likely to ask for next. Mobile subscriber experience describes a relatively new category of software that has become essential for providers of mobile broadband services.
This chapter discusses how the subscriber experience affects subscriber retention and why that’s important. We also explain some of the basics of what mobile subscriber experience is and what it can do for you.
Mobile subscriber experience software not only gives you an advantage in immediately understanding and managing the present, but also in being able to respond ahead of time to what’s likely to happen next!
It costs roughly seven times less to retain a subscriber than to replace one after he or she has churned. That advantage simply can’t be accrued if the service provider doesn’t completely understand what its subscribers are experiencing.
The Subscriber Experience Battleground
Telco subscribers rely on their fixed and mobile broadband networks more and more. Problems using those networks (for example, in the form of dropped VoIP calls or failure to load a web page) result in dissatisfaction, increased subscriber support time, and, eventually, frustrated subscribers who just give up and move to another operator. This process of subscribers moving to another operator is called churn.
Reducing churn is a major goal in telco, because retaining subscribers means more money in your pocket. (For more on this, see the section “Retaining subscribers is a cash cow.”) But an intelligent network can cater to what subscribers want and dramatically reduce churn.
Loyalty and disruption
When studying the subscriber experience, you want to look at both existing and new subscribers:
✓ Loyalty of existing customers: You can study your existing customers to see what makes them stick with you. By understanding which services they use and value and gaining other insights into subscribers’ behavior, it becomes possible to design and offer increasingly attractive service packages. Plus, service experience can provide the ideas for new business model innovations.
✓ Disruption caused by customer churn: With new subscribers, service experience can allow you to respond almost immediately to their needs in a highly personalized way. It can drive nontraditional but effective new billing models. It can underpin a level of subscriber satisfaction that would be difficult if not impossible to achieve without the insights the knowledge of service experience can provide.
We talk more about how to track subscriber experience using software in the section “Introducing Mobile Subscriber Experience Software.”
Retaining subscribers is a cash cow
It’s a well-known truth in the world of marketing that the health of a subscriber-based business is better reflected by its renewal rates than by its customer acquisition rates. The media industry, too, has known this for a long time. That’s why major magazines and newspapers have long prioritized renewals over any other type of marketing.
Traditionally, mobile service providers have focused mainly on acquiring new subscribers while paying less attention to existing ones. In fact, the mobile market ignored the benefits of retaining existing subscribers for way too long. But these days, customer retention is understood to be important. (For more on the history of service providers, see the sidebar “A brief history of subscriber experience.”)
Keeping existing customers happy is a much more effective means of achieving revenue growth than adding expensive new customers.
It simply costs a lot more to bring in a new customer than it does to retain an existing one. The trouble with acquiring new subscribers is that they come at a price, and often a significant one. You have to advertise, you have to market, you have to establish a brand presence. And generally, you have to “rob Peter to pay Paul” by offering a variety of incentives to lure new subscribers into the fold. In the mobile world, the cost of a free handset is the most obvious example.
As a result, you (the service provider) might be happy to break even on a new subscriber’s initial contract, turning to profit only in future years after the acquisition cost is recouped and the subscriber has moved to the long-term renewal stream. But this profit only comes home to roost when the customer is happy with the service you’ve provided and stays on as a customer instead of ditching you for a different provider.
And what’s the point of winning expensive new subscribers only to lose them as soon as their initial contract runs out? Even if your acquisition marketing is successful in terms of pure numbers, it will do little more than mask long-term financial loss.
Introducing Mobile Subscriber Experience Software
Monitoring the subscriber experience isn’t new in itself, but today’s mobile subscriber experience software is considerably more evolved and more effective than anything that has preceded it. So although the term isn’t new, the functionality that it now encompasses is.
Truly understanding your subscribers
The capability to clearly understand exactly what the subscriber has experienced and therefore to personalize an appropriate response is a key deliverable of the software.
Mobile subscriber experience can help service providers get their priorities right. Its most obvious and immediate impact is in making existing customers happy. When your customers are happy, your renewal rates increase and bottom-line revenues shoot up. You can also offer tailored services to subscribers based on their behavioral history. Upselling existing customers in this way is a huge moneymaker.
Understanding your subscribers is the key to every aspect of success; it fuels upselling, cross-selling, increasing satisfaction, and developing a proactive, need-based relationship.
With an improved knowledge of the subscriber experience, the service provider can plan both network and service evolution based on real data about subscribers. By looking outward rather than inward, providers reduce the chance of unwise investments, while increasing the chance of generating a favorable customer response by creating subscriber-driven innovations.
What mobile subscriber experience software can do
Any mobile subscriber experience software should be adept at handling intelligent charging, congestion management, network quality assurance, and location awareness. Those topics are covered in much more detail in Chapters 3, 4, 5, and 6.
Mobile subscriber experience software allows you to proactively manage your network by studying and reacting to actual data instead of hunches. It also allows you to make changes in real time instead of months after the fact.
Here’s a brief introduction to some of the most important things you can expect from such software:
✓ Fair use: Ensuring that a few subscribers on an access link can’t degrade the experience for all users.
✓ Analytics and forecasting: Forecasting when and why links will need to be upgraded or additional link splits will be needed to maintain acceptable quality levels.
✓ Usage management: Managing the amount and volume of bandwidth that individual subscribers, applications, and content can consume at one time.
✓ Selective optimization: Operators need to be able to trigger advanced traffic steering when congestion is due to a specific application or content type.
✓ CAPEX management: Upgrade links only when QoE can’t be maintained using congestion management techniques to reduce operational costs.
Meeting Subscriber Needs without Breaking the Bank
But the big problem with trying to anticipate subscriber needs and meet them even before they arise is the problem every business faces every day: the bottom line. Providers must balance the need for pleasing subscribers with the fact that they don’t have a bottomless well of cash and in fact, need to make money.
Service providers today face three overriding commercial challenges:
✓ Capital expense (CAPEX) reduction: One way for any business to improve its bottom line is to make more money. Another is to spend less. Most important of all is to spend more wisely. This is particularly true in the mobile industry — in which the globally recognized accountancy firm PWC estimates that around 20 percent of CAPEX investments are misallocated. This is mainly because investments are consistently technology-driven, rather than business-driven. Investments in technology can sometimes resemble guesswork. With knowledge of subscriber experience, you can base your company’s investments on hard commercial results and market demands, rather than internal politics.
✓ Increased service agility: As the battle to win and retain customers intensifies due to both competition and innovation throughout the industry, the capability to quickly identify and then launch and deliver attractive new service offerings is key to success.
✓ Operations expense optimization: Without knowledge of the subscriber experience, making operational decisions can be likened to driving to an unfamiliar destination without the aid of a road map. With that knowledge (of subscriber habits and preferences), the mobile service provider can manage expenditure to achieve maximum bang for his buck. Operations may be expensive, but that expense need not be wasteful or misplaced.
Mobile subscriber experience software provides insights that can impact all three of these areas by providing knowledge that enables the service provider to quickly identify the correct responses to subscriber needs.
Speed is a key facet of effective mobile subscriber experience. It not only improves the operator’s ability to do what the customer wants. It enables operators to “do it now!”
We hope you enjoyed that. If you want a free copy of the real book, register here and step by our booth #5H61 at MWC!
Topics: Expert Insights