As discussed earlier in the same blog, Indians have the lowest per minute tariff compared to many other developing countries @ $.02 per minute! Tradionally Telcos have rushed to get the connectivity figures up and the best way to do it was enticing the consumer to pay less and lesser per minute! Today all carriers have plans which are less than 25 paise per minute. Infact apart from, massification as a startegy which has led to erosion of ARPUs, these discounted rates have also been responsible for reducing the ARPU in the industry. In effect, when every player in the market has been playing on low call rates, the product gets severly commoditized. There is nearly nothingt that differentiates any carrier from the other except for the national footprint (which Airtel/Reliance/TATA held so long). With roll outs of other Telcos such as Vodafone, Aircel, even that differentiation is lost. Add to that the meagre 6MHZ spectrum of usage which translates into call breaks and dissatisfied consumers. There is nothing really that separates the horses and the donkeys and the mules (because none of the Telcos are different anyways.)
This translates into churn rates which depend upon which operator gives the least cost plan. Matter of factly, Virgin Mobile took it to the other extreme, when they started paying consumers 10 paise for every incoming call minute.
A few pointers to get consumer loyalty in place:
1. Experience in international markets prove that bundling a handset (with some subsidies for the handset) increases stickiness.
2. The stickiness increases even more if all the members of a family are given a uniform plan and connection. The handset can be included into the plan.
3. Call drops are a reality of life with consumers in India. Can Telcos for instance provide uninterrupted call service to the top x% of the consumers? The ones who get the top 50% or so of the revenue. If such a service can be branded, and consumers see the benefit, there will be less churn and more stickiness.
4. For the branded uninterrupted call service, the Telco must provide a compensation for every broken call. That way the consumer is assured that the Telco will try and keep the call uninterrupted!
5. High ARPU consumers can be given special services. So far as of now, a high ARPU consumer who probably drives a Honda City would still have to stand in a queue behind 6 people in a Telco Counter to pay his monthly bill. Hardly differentiated!
6. High ARPU consumers can be given loyalty points for usage. Something on the lines of Credit card loyalty points which can be redeemed against purchases. I am privy to corporate spends done by officials on credit cards with highest loyalty bonus pay outs.
7. High ARPU consumers, can be for instance given a new handset every year depending upon their usage. Using the handset as a medium to build loyalty is predatory on the handset but as long as it can build loyalty and stickiness, why not?
8. Get your systems in place. I got an SMS from Airtel some days back. It said that if i SMS Sub 46 to a 5 digit number, i could get a bulk SMS package of 200+ SMSs at Rs.46. It was a win for me. I did SMS sub 46 to the required number and all i got was information about I Phone and its where abouts in the Airtel channel. The computer was not programmed for the bulk SMS thing and it was responding on a 7 month old I Phone availability status. Tch! Tch!
It is said that consumers know what they want and take it! I vary on the point. If consumers were to be let free, the world would have been commoditized. Consumers have to be shown the higher value behing least costs. Not many Telco have tread this path. Its Time they did it or they could end up defending their profitabilities.
Dictator Democracy
14 years ago
