The business of charging customers for data – and monetising their service usage – can be complex. Digital and communications service providers have profited from customers paying per MB; however, there are two major factors impacting customers’ buying experience and, in turn, sending operators to look for other ways to boost their business.
First is consumers’ demand for specific, third-party content— video, music and apps … and operators shouldn’t think twice about delivering it at anything less than at the highest quality. Secondly, while consumers understand that they use data to access this content via their phones, it’s not always clear how that data is consumed. Does Facebook use more data than WhatsApp? How many songs on Pandora or YouTube videos can be played before the cap gets hit?
Digital and communications service providers can’t succumb to these pressures – their customer retention and acquisition and future revenue growth depends on it. Here are two examples of how operators successfully dealt with such challenges, rolling out flexible packages that leverage OTT content and services and turning mobile data monetisation efforts on their head.
Bundled Content for Grabs
When Vodafone launched 4G services in the UK in August 2013, the operator was 10 months behind rival EE.21 To compensate and demonstrate the power of its network and what 4G services could be used for, Vodafone was one of the first to bundle its voice and data offerings22 with OTT services. The operator gave its new customers free access to Spotify Premium or Sky Sports Mobile TV for six months. Customers’ usage of these services is deducted from their plan’s data allotments.
In February 2014, Vodafone showed the initiative’s effect on data usage.23 The average 4G customer not using Sky or Spotify consumed 2.1 times more data than a similar 3G customer, but with Sky, the consumption was 2.4 times that of a 3G customer with Sky. With Spotify, it increased 2.7 times (below).
Seeing this trend and wanting to use it to its advantage, Vodafone encouraged customers to select more expensive plans to get the premium 4G service, and to up their data consumption once they saw how well equipped the network was for video content and similar services (below).
The operator also steered customers to upgrade their bundles for greater data, voice and text allowances – and to have access to the free OTT service.
Encouraged by the effects on data usage and revenues, Vodafone expanded its OTT portfolio with V and NOW TV24, Sky’s general streaming service, in July and November 2014, respectively.
What’s clear from the Vodafone UK case is the importance of being able to sync up with the right content partners – digital and communications service providers can build on the loyalty to those brands, to expand interest in their own.
Another important element of monetising bundled content offers is having policy and charging flexibility, particularly to adapt to the dynamics of different agreements with different content providers. Integrated analytics will also help digital and communications service providers better predict the most successful offers amongst their customer bases.