Telecoms operators face fierce competition in 2020.
Smartphones are everywhere, data is cheap, and consumers go where they find the best deal. Of course there are all kinds of ways to attract and keep new subscribers, like unlimited data plans, tiered pricing, and clever VAS (who doesn’t love free* Netflix?) -- but at the end of the day margins are tight, and that’s not changing any time soon.
We’re here to talk about two groups of users that present an opportunity for telcos to increase ARPU, promote customer loyalty, and create new revenue streams.
Over at Brigr we have worked with telcos globally for 15+ years, and the data shows that telcos worldwide are facing a few specific, high-level challenges to growth going into the new decade:
- The market for data is hyper-competitive
- Unique subscriber growth has slowed as the market saturates
- Customer expectations of services and solutions are rising
So what do these users look like?
There are two key types of underconnected users we have uncovered:
Zero-balance users are subscribers that are signed up for a prepaid or postpaid contract with a telco, but have run out of data -- either because they’ve burned through their monthly allotment, or because they purchase data in small bundles as and when they need it. They may be low-income in a developed area and on a tight budget, or they might live in underdeveloped regions where prepaid is the most common and affordable way to access data.
Silent roamers are users who probably have a postpaid contract with a telco in their home country, but switch off their data when traveling abroad -- this can be to avoid overage charges, astronomical roaming fees, or high-priced international add-ons to their existing plan. They’re savvy consumers who know how quickly data usage adds up, and are wary of racking up huge charges during an international trip. If you’ve ever opened Google Maps on your phone while abroad to check how to get to that cafe your friend says serves “the best croissant she’s ever had,” you’ll know you could be in for a massive shock on your next phone bill!
These users are currently underserved, or “underconnected.” They find themselves needing data, but lacking immediate access to it. The term is a parallel to the word “underbanked” in the financial world, which describes consumers who don’t have access to a full range of banking services. These underconnected users are tough to reach with traditional advertising or cleverly priced data plans. There are alternative ways the telecom industry can meet their needs, but that’s a story for another post! Before we get to the “how,” it’s important to understand the “why.”
Consumers increasingly prefer telcos that provide simple, digital, and mobile solutions to meet their needs in real time.
Changing consumer behavior helps explain how underconnected users think. According to a report published by Bain last year, telecom customers are increasingly demanding “a digital-first experience that allows them to navigate seamlessly between online and offline channels, as well as personalized service that is suited to their specific needs.” They’re looking for a telecom provider that meets their needs as they happen, in a wide variety of situations, with flexible options that are affordable and easy to access.
Telcos that go “simple and digital,” as Bain terms this trend, have margins that are more than 10% higher than those who don’t. These are also the players who will be able to most easily meet the needs of underconnected users.
How are underconnected users different from the average telco customer?
They buy and use data differently
Underconnected users exemplify the real-time, digitized, personalized consumer needs we’re seeing in the global market. Because of their non-traditional circumstances (by “traditional” we mean a contracted user who regularly pays a fixed amount for sufficient data for the period), they exhibit a few key behaviors:
- They pay only for what they need
- They tend to avoid longer-term commitments, and
- They are less impressed by “fringe” benefits or traditional package deals
Instead of purchasing all the data needed for a month in advance and keeping usage within those limits, someone at risk of running a zero balance transacts in smaller quantities and often on-the-go, topping up when the need arises. They’re only willing to pay for what they immediately need, and tend to avoid longer-term commitments since these require a larger investment up front.
They also prioritize convenience over luxury. Far from splashing out on a data contract that comes with free Netflix or Facebook use, they reject “fringe” benefits in preference of a solution that will meet their day-to-day needs, even if they run out of data unexpectedly while out running an errand, or taking the kids to school. This makes them harder to predict and advertise to, since traditional package deals and fancy VAS don’t serve them well.
These users have traditional data packages at home, but have a gap in connectivity while they’re abroad.
Silent roamers look a little different from zero-balance users on the surface, but the bottom line is they are unwilling to pay for the same data access they have at home while abroad. They might wait until they find free wifi to connect to Netflix or their favorite gaming app, or pay for a local SIM card with small batches of data that will cover the basics while sightseeing, or in between business meetings.
They also prioritize convenience over luxury during their travels, and the irregular nature of these trips makes them difficult to predict or market to. These users have already rejected the international roaming options their “home” telco offered, so once they leave the country they are functionally out of reach. For more numbers, check out this infographic from Syniverse:
These users’ needs are specific, urgent, and difficult to predict, but there are a few key use cases that arise commonly:
Banking, Transport, and Gaming
These needs are particularly urgent (and addressable!) in these three cases because they are often time-sensitive and can impact other important areas of the user’s life. We’ll dive into this much more in another post, but for now here are a few examples:
- Banking: A silent roamer or zero-balance user gets a notification of fraud on their bank account but doesn’t have data to sign into the app and resolve the issue
- Transportation: A zero-balance user misses their bus on the way to work and needs to call an Uber so they won’t be late, but doesn’t have any data
- Gaming: A silent roamer is stuck on a train while on vacation and has opened a game as a distraction, but since they have no data, none of the ads are populating and the game’s features don’t work properly
These may seem like fringe cases, but the number of users we’re talking about is significant. Mobile provider WorldSIM Infinity estimates that 70% of travelers turn their data off while abroad, and the GSMA has estimated that up to 1 billion users lack access to data every day.
Serving these groups better creates new revenue streams for telcos
Understanding the needs of these two groups opens the door for new ways to serve them that are simple, digital, and deliver the data they need in real time. When done right, telcos stand to sell much more data to under-connected users, resulting in benefits like:
- Increased ARPU
- A share of $90bn in unlocked revenue from silent roamers
- More satisfied, loyal customers
Check out the rest of our blog for how to capitalize on these users, what drives customer loyalty to telcos, and more. We’re also building a tool you can use to calculate your own revenue opportunity from successfully tapping under-connected user groups, stay tuned for updates!
Brigr is an enterprise data and loyalty tool that enables telecommunications companies to sell data to consumers when they otherwise would not have been able to reach them. To learn more, email firstname.lastname@example.org to chat with our team or book a demo.