Moving Customer: Building Customer Relationships and Generating Demand in the Mobile Data World
Imagine being presented with a Porsche, and climbing inside your sparkling new car to find that it runs on pedal power. There's no point in looking good if you can only run at 5 mph. Or, saving yourself for a rare, vintage bottle of wine. The label looks right, the color is perfect, but in a frenzy of anticipation, you uncork the bottle to find that it tastes foul and is barely good enough to use as vinegar. And along comes WAP, hailed as a revolution in mobile data, bringing the Internet to your mobile phone, and accessed from a shiny, stylish, must-have handset. You buy your phone, dial in, and wait and wait. Over $180 billion has been spent on 3G licenses on the strength of an exciting new generation of mobile data services, which were predicted to attract some 10 million regular users in the UK alone within three years. And yet, after promising so much, mobile data services - Short Messaging Service (SMS), content SMS, WAP, m-commerce, and so on - have so far consistently failed to deliver. Instead, mobile data services, WAP in particular, have become a scapegoat, taking the blame for many of the telecom companies woes: debt, plummeting share prices, and failure to meet average revenue per user (ARPU) forecasts. \
Figure 1 - Wireless data penetration
Too Good to Be True
Mobile phone operators were enticed into spending billions on 3G licenses and WAP service promotions by some optimistic predictions from the investment banks, consultants, and independent research houses. They confidently expected revenues from mobile data - SMS, content SMS, WAP, m-commerce, and so on - to account for anywhere from 26% to 47% of the mobile phone operator's valuation.1
The reality, however, has proved to be very different. Customers may well embrace WAP phones as shiny new gadgets, but it's become evident that they don 't necessarily cross the line to becoming active WAP users. The proportion who do varies considerably from one operator to another. Of the 500,000 Mannesmann D2 subscribers with WAP phones, only 250,000 are active users, while a major Scandinavian operator has fewer than 10,000 registered WAP users, despite selling 75,000 WAP handsets. T-Mobil has done slightly better, but still found that of the 250,000 of its 13 million subscribers who own WAP handsets, only 175,000 actually use the service.
So why have customers remained unconvinced by the value of mobile data? Clearly, a majority of potential users either don't understand the services, or don't feel the need to use them. Those who have taken the leap and experimented with WAP have not had a happy experience. They've been disappointed by everything from the speed of connection to the ease of navigation. In short, they don't feel they are getting value for money.
Figure 2 - European Mobile Operators
What Went Wrong?
Just how did something so promising and so revolutionary manage to go so wrong? The list of reasons grows daily: poorly designed handsets; circuit-switched infrastructure that is ill-suited to packet-switched technology; poor content; and so on. However, there is one major omission from this list: customer focus. Operators have made a critical error by allowing technology to drive product development and marketing while sidestepping customers' concerns. Quite simply, customers remain unimpressed. They have found little use for the sophisticated new phones. What's the point in data services, they ask, if we can't find the right information at the right time, and do so quickly, simply, and with a minimum of fuss?
Operators need to pay urgent attention to the first sign of customer neglect - apathy - or in this case, "WAPathy." Mobile data may well be a technological revolution, but the complete lack of interest out in the marketplace is nothing short of a customer revolution. Operators need to go back to the basics and listen to the four fundamental questions that customers are asking:
o How is mobile data going to benefit me?
o What choices do I have?
o What value-added features are there?
o How can it be tailored to suit my lifestyle?
Hidden within these simple questions are the four ways in which the mobile data customer perceives value:
Relevance
Relevance is at the top of the customers' shopping list as they browse through mobile data services. Any service must prove itself to be relevant to a customer's life. However, many operators have made a fundamental error - they have compared WAP to the Internet. Slogans that tempted users with the prospect of "surfing" WAP sites as easily as if they were on the Web were commonplace. The reality, of course, could hardly have been more different, with poor navigation and long waiting times that proved to be a turn-off for early WAP users.
Simplicity
Next on the customer's list is simplicity. But rather than supplying the simple solutions, basic options, and clear pricing that users demanded, operators responded by piling a muddled mass of services onto a single portal. They not only looked complex - they were complex. Faced with the question "What services should I buy?" or "What options do I have?" the operator's response was: "No idea. Why don't you try them all (and pay for them) and find out which fits?" Customers were expected to go through a similar learning process as when first using the Internet - surfing around to identify their favorite sites and look for what they wanted. Such an approach was simply not acceptable to mobile data customers, who are not only paying considerably higher call charges but also using a less user-friendly interface. Which leads us to the next issue.
Usability
If the customer perseveres, they will then consider usability, in a quest for features they can easily use and customize to their needs. Mobile data services need to be relevant to each customer and therefore easy to adapt to their needs - wherever, whenever, and whatever they are doing. Sadly, the features they encountered were often complex to use or nearly impossible to adapt. Consider again the experience on the Internet. To buy a book on the Internet using a credit card takes around 140 key depressions or clicks; to buy the same book via a WAP phone currently takes over 300 key depressions, with a much less ergonomic keypad. Once again, the outcome could be summed up in one word - disappointment.
Personalization
Those with true stamina may get to the final stage, and seek personalized data services. Perhaps they are after a local restaurant, details of which are in a good food guide they've used many times before. Disappointingly, the service seemed to have absolutely no recollection of this. Operators had ignored the need to learn about customers and to pleasantly surprise them by adapting to their needs. When it came to new application development, customers were low on their list of priorities.
Figure 3 - A survey of customer responses to mobile services
Where Do We Go from Here?
The retail shopper wants to be treated well. They want marketing that talks to them honestly and openly. They want help and advice when they are confused. And they want to know that the product they buy will give them value for money. Why should a mobile data customer be any different?
The old objectives remain the same: to acquire, develop, and retain customers. But none of this will happen without an understanding of what customers want - and what they don't yet realize they want. This "pull" marketing approach may well prove challenging to operators whose feet are still firmly rooted in the "push" approach, i.e., those who develop products and then attempt to force them onto their customers. For operators to effectively change their approach requires application of the following four principles of "pull" marketing:
o Target your customers to build critical mass
o Match products to customers
o Make acquisition a positive experience
o Develop customers - one at a time
We will describe each of these principles in detail, consider the opportunities that they present, and then outline an action plan for implementation.
Figure 4 - Customer awareness of mobile products vs. actual need for those products
Principle #1: Target Your Customers to Build Critical Mass
Some might think that targeting customers is easy. They'll instinctively place them into one of two categories: the high volume business user, or the low volume pre-paid consumer. Unfortunately, reality is rarely quite so simple. Take Mr. Smith, the business commuter, for instance. He uses a WAP phone to check out his "Dungeons and Dragons" gaming chat room, and sets up an online game with his friends that evening. He clearly fits the profile of a business customer, and yet Mr. Smith makes the greatest use of mobile data as a consumer gaming enthusiast. He would have slipped through the net of traditional market segmentation, which can dangerously limit your grasp of mobile data behavior. Because the new technology has created completely new behavior - such as the productive use of dead time - it is essential to understand customers in a new light. There are two ways to achieve this.
Get to know your customers.
A fuller understanding of your customers will influence the way you communicate with them, the timing of communication and what you communicate, i.e., which product offerings. First, you will need to understand the customers' awareness of the products available, and their needs. Do this, and you can divide them into four groups - the product enthusiast, the self-directed, the intention-oriented, and the option seeker - and get a good sense of their buyer values and demand elasticity.
Then you must understand their attributes. Once armed with characteristics such as gender, age, occupation, and income level, you can begin to create a profile and build your understanding of their needs, behavior, and purchasing power.
Build critical mass.
Used correctly, this knowledge can help define the steps toward creating a customer acquisition strategy, and so achieve a critical mass of customers. But first, you need to divide them into two groups: innovators and talkers.
o Innovators will buy a product shortly after launch, and are likely to be either "product enthusiasts" (early adopters) or "self-directed" (early opinion leaders). Both are highly influential, in that they can win over non-users through their "show-and-tell" approach.
o Talkers have wide communication networks and are heavy users of voice and SMS. They have a key ability to educate and win over non-users (both friends, and friends of friends) in an informal setting and to create hype. This has a knock-on effect in generating publicity among the "intention-oriented" and "option seeker" segments - in other words, the laggards.
The next priority is to target customers in the correct order: innovators first, then the talkers, and finally the rest (including non-users). There is no more powerful way to spread the word about mobile data than by showing it in use - especially in the hands of informal opinion leaders. Their example will guarantee that mass awareness is built up, and with credibility. Once the innovators influence the talkers, the talkers will do what they do best, and the word will spread rapidly. However, the relationship with innovators and talkers needs to be carefully managed. So far, customer acquisition efforts have been targeted at direct customers or, in this case, innovators; talkers have been largely ignored.
If you are to reach a critical mass of customers, and do so quickly, you should target innovators while simultaneously seeking out the talkers who can get the mobile data message to areas which formal marketing channels don't or can't reach.
Principle #2: Match Products to Customers
If you don't have useful and relevant products, your customers will leave. And that's the greatest challenge facing mobile data operators. Indeed, everyone is in the race to find the so-called killer application. One day it's email. The next, it's unified messaging - or a host of other applications, each created in the hope that it will change attitudes towards mobile data overnight. In these early stages of mobile data, however, the killer application will almost certainly elude most providers. In fact, it might not exist at all. But while there may be no such thing as a killer application, there is definitely a killer process. So what exactly is it? How can it help with customer acquisition? And is a killer application needed to set this killer process in motion?
Figure 5 - Targeted customer segments and expected results.
(see larger picture)
The killer process.
The need to think "killer process" rather than "killer application" is crucial for survival. By placing your bets according to a "small stake, multiple play principle, rather than "large stake, single play," you will survive the early, unpredictable days of the mobile data market. The operator's ultimate goal should not be to find the right product. There is no such thing. Instead, operators should seek the right product for the right customer. This will be their true role in the future and enable them to avoid commoditization of their services. So what is the killer process and what steps can be taken to implement it?
o Step 1 - Seed the market with basic products. With the customer in mind it's time to identify a few basic products to be introduced into the market. The key is to target your marketing and communication of a basic application that meets a specific contextual need - such as synchronizing your address book, managing your time, making good use of dead time, community building, and so on. This will test whether consumers are ready to use mobile access to deal with many of their data-driven activities.
o Step 2 - Create a platform to let others plug in new products. In seeking to capture and keep new technology customers, operators need to standardize both the technology platform and the rules they apply to commercial relationships with their go-to-market partners, content providers, etc. NTT DoCoMo and Telenor Mobil, for instance, have allowed partners to plug applications onto their platform in order to increase speed to market. Taking a "non-exclusivity" approach to partnerships has meant that many applications have found a home on the operator platform and crept into the world of the mobile data consumer by the back door. It's a win-win situation: increased visibility for the partner, rapid development of a more compelling offer for the operator, and a better choice for the customer.
o Step 3 - Channel products to customers using modal segmentation. Segmentation by Modes of Behavior is key - especially for mobile data customers. "Modes" are defined by time, place, and the customer's intention, and distinguish customers by their state of mind and behavioral preference. Take the example of Mr. Smith. He has four modes of behavior, based on where, when, and what he intends to do:
Transport mode: Mr. Smith is stuck in the train during the morning rush hour. He relieves his boredom through gaming, using his mobile phone.
Work mode: Mr. Smith is running late for a meeting, but can't afford to interrupt his client by calling his secretary. He sends her a text message to postpone the meeting.
Social mode: After work, Mr. Smith would like to meet friends in a local pub. He sends a text message and directs them to a map WAPsite to show them where to go.
Home mode: Mr. Smith is free to indulge in his gaming hobby. He logs onto the gaming website (integrated with his WAPsite chat room) and downloads tips onto his personal desktop file.
By adopting the three steps described above, it is possible to transform your understanding of your customer. Mr. Smith is no longer a simple 9-to-5 business customer. He is now a 30-year-old, single, high-income business professional who is also a high user "product enthusiast" during off-peak hours. Your marketing team can now design tariffs and product packages for Mr. Smith and others like him. Remember that relevance, simplicity, context, and personalization are what matter most to customers. Technology enables; it shouldn't 't dictate.
Principle #3: Make Acquisition a Positive Experience
In recent years, the customer experience for the mobile phone buyer wasn't much to speak of, with most offerings marketed on a "take it or leave it" basis. Today, the picture has changed dramatically: the customer demands a positive experience when selecting mobile data products and services. This is tested at three stages: awareness, relevance, and purchase.
Figure 8 - Benefits of various types of customers
Stage One: Awareness
There are two key considerations surrounding customer awareness: trust in a brand name that customers associate with mobile data and targeting relevant messages at specific segments. Initially, the puzzle for operators is whether to use their own name, or an independent brand created for the mobile data offering. Broadly speaking, the use of the operator brand name is an effective way to build on existing trust and awareness among consumers.
OrangeWorld, for instance, is clearly linked with its parent company in the eyes of customers, and this approach has also paid off. Its strong early adopter customer base trusts their network to continue its tradition of customer focus and innovation in its new mobile data offerings. Vodafone's Vizzavi portal, on the other hand, has benefited from direct campaigns to the company's existing customers, telling them that their operator - the mobile market leader in the UK - has launched yet another offering to stay ahead in the market.
The second consideration for operators is to create awareness-raising messages that are specific to each segment. As early adopters, the "Product Enthusiast" and the "Self-Directed" (see Principle #1) watch closely, learn quickly, and can't wait to try what they see. They will, however, be quickly put off by what they perceive as a substandard product. In response, you must manage their expectations carefully and take a step-by-step, interactive approach that guarantees a successful first-time mobile data experience - whether they are in the shop, using the Web, or on their own.
By contrast, the "Intention Oriented" and "Option Seekers" are likely to mull over your messages, consider the practical implications, and watch others lead the use of mobile data. This means that you'll need to make the benefits twice as clear, and show them how others are already enjoying the fruits of mobile data. These segments are more likely to be won over by current and easily identifiable icons - like operator brands, portal brands, or application-specific benefits (e.g., the convenience of using MapQuest on a mobile). They are not yet ready for mobile Internet services as a concept and talking about mobile data in its purest form risks going straight over their heads.
Stage Two: Relevance
Customers need to be persuaded that a mobile data product is relevant to their lifestyle, and not just some new and expensive fad. It's time for the operator to create relevance by using innovative channels to deliver tailored messages. How you establish relevance is just as important as what is relevant. Traditional media may be a proven way to establish awareness, but how effectively can they create relevance?
Creating relevance is all about meeting individual desires. Fleeting TV images, jingles, or slogans just don't go far enough, and fail to create genuine emotional impact. A trusted circle of informants, or "informal opinion leaders," on the other hand, will get the job done on your behalf - especially between the "Self-Directed" and "Option Seeker" segments. The power of viral communication cannot be overemphasized, and you only have to look at the success of peer-to-peer application sites like ICQ.com to see evidence for this.
Stage Three: Purchase
New technology customers are much more critical of what they perceive to be substandard products. Fail to convince them that they are making a wise move, and you will compromise the association between your brand and the technology it stands for. At this critical stage, the key objective is to ensure customer expectations are met through a smooth interaction, to seal the purchase. Never spring any surprises on customers before they hand over the cash. Always meet the customer's expectations on:
o The performance they can expect (e.g., speed of connection, menu of services, compatibility with other devices they use)
o Where they can get the product/service (e.g., through dealer shops or self-service WAP and Internet channels)
o How much they have to pay (e.g., "best deal" introductory offer, pricing schemes)
o What support they can expect (e.g., hot-line during trial period, help line)
o The process (e.g., simple registration, minimum account activation time)
Principle #4: Develop Customers - One at a Time
Having acquired your customers, you need to develop them. Most operators, however, are far too shortsighted and presume their job is done once a customer is through the door. This is a big mistake. Customer acquisition is not an end, but merely a means to develop a long-term, trust-based relationship, through continuous contact with the customers, and a readiness to learn lessons, respond, and adapt. The process of development must be managed, as customers are new to mobile data and its potential. They may not yet know what they want, so you have a golden opportunity to show them the possibilities.
Figure 9 - The effect of customer offerings on the development of trust
Customer development can be broken down into five steps:
Step 1 - Understand the customer.
Understanding the customer is the overriding priority. In fact, it is the only way to find the right products for the right customers. To achieve a true understanding, you need to know their usage patterns, needs, and preferences. Segmenting customers according to levels of awareness, attributes, and modes of behavior will produce much of the information you need. And by creating a behavioral profile, the value of a loyal customer will soon become clear.
Step 2 - Obtain permission.
You can't get any further without the customer's permission. Personalization is a unique proposition offered by mobile data, but in order to be relevant to the customer, you need to establish a connection with their own private world. And you'll only achieve this if they let you. It's not as hard as it sounds. Understanding a customers 'modal behavior means you can choose what to say to them and when to say it. And you can dispense with the lengthy emails, monthly newsletters, and cold calling so often resorted to by a busy world suffering from information overload. Instead, consider making frequent contact - no more than 30 seconds at a time - when customers least expect to hear from you (e.g., during commuting dead time) or when they silently seek help (e.g., triggered by a call to a directory service).
Step 3 - Educate the customer.
Be ready to educate customers. And again, you can use your grasp of modal behavior to gather clues on when and what they would most appreciate help with. The evolution of mobile data usage makes it clear that customers should first be introduced to simple applications, before progressing to interactive real-time applications. This may well lead to a whole range of services being used regularly (increased scope of usage) or perhaps greater use of one specific service (increased depth of usage). Your goal should be to open up new worlds for your customer. And it is essential for the customer to know that you will be moving into this uncharted territory together. It 's the same rule of give and take that you'd apply to any friendship.
Step 4 - Maintain and reinforce permission.
You can't take it for granted that the customer will stay with you at every stage of the journey, so you'll need to continually maintain and reinforce permission if you are to develop the customer further still. Keep an eye on customer satisfaction levels and look out for areas where you can expand customer permission. Stay one step ahead of their complaints: if a customer has been inactive for more than two weeks, it's worth finding out whether he's found a new provider, and if so, match their terms. If check payments have been late three times in a row, you might ask if they'd like to settle their bills by direct debit - which could be a weight off the mind for someone with a heavy workload. Why bother? Because mobile data is capable of delivering personalized benefits, as never before - anywhere, anytime, and in any way the customer wants them. The image of the customer has evolved into something far beyond a mere transaction, and with this deeper understanding, you can lay the foundation for a well-managed relationship, where the customer is champion.
Step 5 - Direct the customer.
The final stage focuses on expanding the scope of usage; in other words, encouraging customers to try - and enjoy - services that they had never considered before, and increase the number and variety of services they use. To do this successfully, you must first understand their current levels of awareness (for both products and self-needs) and their existing modes of behavior. Creating one-on-one channels that carry personalized messages are a vital part of this process. Get this right, and the customer will become an "ambassador" for your services and you will enjoy a lifelong relationship built on trust and understanding. In other words, a win-win relationship.
Ease Your Growing Pains
Now it's time for action. Working closely with ever-demanding customers will inevitably lead to "growing pains," but these can be eased by systematically applying customer relationship initiatives to address issues as they occur. If you do this, while staying faithful to the four principles of "pull" marketing, you can enhance the customers' trust in your brand, your offering and your insight into their needs.
Figure 10 - Time and its influence on the customer
As you seek to implement these principles, keep an eye on the following key success factors:
o Coordination. The goal of all your organizational activities should be the acquisition, development, and retention of mobile data customers. This might require a significant organizational realignment.
o Speedy implementation. This business model requires many alliances and partnerships to achieve both speed to market and the variety of products and services that customers demand. Telecom operators traditionally handle business processes in-house, so additional resources might be required.
o Quick learning from the market. Create the processes that will enable you to gather feedback from the market continuously and use this information to drive strategy and business development.
o Adopt Dynamic Strategy Development. Be ready to change and develop your strategy and execute changes rapidly as you learn from the market.
The mobile data customer awaits you. By placing that customer at the center of everything you do, and by taking timely and systematic action, you can confidently begin your journey into the personal mobile world, with the customer riding alongside you.
Reference
1 Goldman Sachs Wireless Data: Issues and Outlook, Winter 2000.
