Making Marketing Sense From Convergence (con'd)

For service providers, the theory of service bundling appears deceptively easy. For bundling success, service providers simply up-sell new services to their existing customer base, thus increasing customer ARPU and contract longevity. However, in practice, this approach is failing to achieve the desired results. Because the individual elements of the bundle all tend to be simple, flat-rate services, the ‘up-sell’ implies a pretty major end user decision, and probably a contract annulment with the existing provider.

Because of the design of standard communications contracts – fixed, Internet and mobile – most consumers are tied to their existing provider for a number of months, anything up to 24 months depending on the provider and market. Because the single-disciple service provider (such as a mobile operator) can have no visibility into the maturity of the user’s DSL or fixed-line contract, the appropriateness of the up-sell promotion’s timing up-sell can be nothing short of hit-or-miss. This cumbersome choreography makes it all but impossible for a consumer to respond to an up-sell promotion with immediacy. Furthermore, by the time the contract window with the existing provider is starting to close, the user has probably forgotten all about the up-sell promotion, and is more likely to respond to a better timed alternative. But even if the consumer was in the market to switch providers for a bundled service opportunity, the lack of customer segmentation and promotion targeting makes such broad propositions inadvertently unattractive. The lack of back-office system and customer integration platform integration in the past means that even integrated service providers find it difficult to leverage valuable information on an individual user to drive a more sophisticated up-sell campaign. Up-selling consumers to new services is not quite as easy as it first appears, and, perhaps worse, the ‘one-size-fits-all’ approach may be doing more harm than good. 

Tragically, service providers are, theoretically, able to create promotions along lines as distinct and sophisticated as time-based or behavior-based activity. Theoretically, a mobile operator can indeed identify the moment an end-user starts to demonstrate interest in mobile music by monitoring mobile portal links in the mobile music area, and encourage that new interest with a relevant promotion. Most service providers indeed collect, and store, such information somewhere in the dusty corners of their back office systems, but have not, until now, attempted to leverage it for promotional activity in any meaningful sense. That’s because most service providers today segment their customer base down generic age or gender lines, with no more thought to individual preferences or lifecycle activity than that. Promotional activity, it seems, needs to become more sophisticated at predicting customer needs at the appropriate moment, in order to position promotions of real value, based on individual end-user preferences and real-time behavior.  

But the real difficulty in multi-service campaigning and bundling promotions is managing visibility into end-user behavior across the various service platforms. In an ideal world, service providers would be able to cut and deliver a contextual and highly- personalized promotion campaign aimed at a multiple sub-sections of an aggregated customer base of fixed, mobile and Internet users, according to a best-fit scenario of respective preferences and customer activity history. But that ideal is looking woefully remote in today’s multi-service marketing practice, as marketing executives struggle with the basics of managing multiple customer sets across different legacy environments, let alone tailoring a cross-platform campaign.

As outlined above, the first instinct for the ‘total communications service provider’ is to simplify on a basic ‘one-size-fits-all’ bundled proposition, but the real art in next-generation marketing is going to be a whole lot more sophisticated than that. To this end, a new breed of solutions providers are innovating on a toolbox of marketing delivery platforms to automate many of the marketing prerogatives that appear so impossible to execute on today in a multi-service context. Marketing delivery platforms essentially attempt to take the ideal of the long-tail theory to its marketing conclusion, allowing service providers to stage guerilla warfare on micro-segments of its user bases, with highly-personalized offers which yield a far higher response rate and customer satisfaction than blanket, one-size-fits-all promotions can excite. In a fully-automated world, a marketing campaign managed by a marketing delivery platform can execute on distinct provider objectives and goals, targeting the very sub-sector of the customer base most likely to respond, based on time-specific, end-user behavior patterns. Service providers deploying marketing delivery platforms will also become better equipped at building up a portrait of a customer’s history, which takes into account the minutae of user behavioral changes, from usage fluctuations to promotional response.  

But the deployment of a marketing delivery platform also allows a service provider to play more surreptitiously in the market as promotion activity is channeled more directly and effectively to the end-user. Better use of messaging and online channels for new promotional communication will make that promotional activity more direct, and less visible to the competition – and that will make the service provider less easily addressable in a competitive context. As marketing delivery platforms start accessing cross-platform messaging techniques to reach out to diverse service customer groups, the marketing dialogue between service provider and end user will be taken out of the public domain altogether. This will, furthermore, detract from the importance of a service’s headline pricing proposition. Collective groups of end-users serviced by a marketing delivery platform will learn to get used to their provider’s ability to correctly anticipating their next purchasing desires with contextual and highly-personal promotions, and this will make them less likely to churn to the next low-cost offer.

Taking some of the pricing heat out of the consumer services market is a major consideration for all players today. The long-tail-of-the-dog theory of market segmentation has now taken a firm hold within the communications market, with new ‘low-cost’ labels emerging in all areas of the business, from cable to pay TV, broadband and mobile. Fighting the low-cost providers on their own-terms is a dispiriting exercise – as any mobile operator in a strong MVNO market can testify. Price wars merely serve to lower the value of the market for all participants, yet, up until now, most incumbents have been left with few alternative methods to offset a low-cost competitive challenge. Automating much of the headache of cross-platform campaign creation will serve to make customers more loyal, and less responsive to lower-cost challenges in the market. At the end of the day, great service may well turn out to be the best competitive response to pricing aggression. But consumers have seen very little of this of late.  

In the ‘old world view’, good service was defined by the length of time an end-user would wait on hold to speak with a tele-support agent. The next-generation definition of good service, however, will be judged in terms of the quality of the dialogue between the service provider and the end-user, and that dialogue will encompass so much more than a support call.  

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