Thursday, September 3, 2009

Service providers need to focus on the channel

MELBOURNE, AUSTRALIA: Back in the late 90s when the telecoms industry first developed broadband technologies such as DSL, it was the wealth of opportunities that the technology would create that really excited service providers.

Over the past two decades broadband access has provided a good revenue source and has been highly profitable for many, but service providers have never really been able to take full advantage of the other opportunities broadband access provides.

IPTV and VoD have been a success for some, but certainly from a profitability point of view, will not be an option for all. Many of the other opportunities often highlighted, such as online music, gaming, and even technical support and content back up have also been taken up by other players and therefore have become fiercely competitive markets.

Michael Philpott, Practice Leader, says: “One issue that service providers will have to tackle if they are to get back in the game, is a more prominent marketing channel into the consumer home”.

“Often the main points of customer contact for the broadband service provider is when the customer first signs up from the broadband service, and when something goes wrong -– with only the odd e-mail flyer in-between,” says Philpott, based in London.

“Operators can try and do take advantage of these main points of contact, but to be really successful, they need to be looking for innovative and eye-catching ways of opening up more consistent communication channels with their customer base.”

Ovum is pleased to see that such innovation is starting to enter the market. Those few service providers that still have a successful Internet portal, are starting to innovate around that as a way of entertaining, helping, communication with and up-selling services to existing clients.

Others, who do not have a very successful portal, are starting to experiment with free services, to gain the initial traction, and then looking for ways to further up sell services on top of the initial offering.

One such pilot by a tier one player in the US found that such a strategy increased its marketing success rate over traditional methods by 200 percent, as well as gaining:

* A significant increase in VAS awareness –- 615 percent increase in web traffic for the music service.
* An increase in service uptake –- 55 percent increase in new security subscriptions.
* A decrease in service churn –- 20 percent decrease in security service churn.

Such innovation has been a long time in coming, but it is certainly not too late, and operators will need to continue to innovate in both the services and applications they offer, and in how they market and deliver those services, if they are to successfully grow consumer revenues in the long term.

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