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Addressing Marginal Customers in Mature Mobile Markets

Mobile Network Operators in maturing markets must increasingly address issues of the profitability of the customers they serve. During the growth phase of affluent markets, the primary focus is rightly on acquiring as many customers as possible. When the growth slows, those with the largest numbers have the best chance of winning the subsequent battle for long-term market domination. In Europe today, with penetrations at well over 100%, the next phase of market development is already happening. The winners will be those that have the highest levels of profitability per customer.

• How are MNOs reacting to the new imperatives of the mature, affluent market?
• Has the history of acquisition at almost any price left a legacy of unprofitable customers that cannot be separated out and addressed by the current market leaders?
• What needs to change in the way services are promoted, delivered and priced?

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Table of Contents


1
OVERVIEW
1
2
INTRODUCTION
2
2.1
Background to the Report
2
2.2
Report Content
2
2.2.1
Currency Conversions as at 8 February 2008
3
3
MARGINAL CUSTOMER CHARACTERISTICS
4
3.1
Quantifying the Effect of Marginal Customers
4
3.2
Marginal Customer Scenarios
7
4
IMPACTS OF MEETING MARGINAL DEMAND
8
4.1
Infrastructure Efficiency
8
4.1.1
Network Efficiency
8
4.1.2
Customer Management
10
4.2
Call Termination Revenue
11
4.3
Indirect Value
12
4.3.1
Social Network Benefit
12
4.3.2
Future Value
13
4.4
Regulatory Compliance
14
4.4.1
UK and BT Universal Service Obligation
15
4.4.2
Mobile Social Tariffs in Belgium
15
5
STRATEGIES TO INCREASE PROFITABILITY
16
5.1
Improving Margins
17
5.1.1
Reducing the Cost of Servicing
17
5.1.2
Reducing the Cost of Acquisition
18
5.2
Transforming Services
20
5.2.1
Mobile Banking
20
5.2.2
Sub-branding Strategies
21
5.3
Divest Customers
21
5.3.1
Sprint Account Terminations
22
6
KEY FINDINGS
25
7
RECOMMENDATIONS
27