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Targeting prepaid customers on smartphones

April 8, 2011

Michal Samuels is marketing manager of Pontis

By Mihal Samuels

Last year brought two interesting trends in the telecommunications market which cannot be overlooked. 

First, the increasing penetration of smartphones, coupled with the fact that prepaid customers actually outnumbered post-paid customers in 2010. 

According to market researcher IDC, prepaid services revenue concluded 2009 with $15.6billion, while post-paid services revenue reached $134 billion. The analyst firm predicts that although both segments will continue to develop, by 2014 prepaid will get to $19.9 billion, or 11.3 percent of the overall market revenue.

Although these two trends seem completely unrelated, the combination of both trends may have a significant effect on service providers’ revenues and marketing strategies.

Prepared for prepaid
According to market researcher Gartner, by the end of 2012, more than 75 percent of enterprise mobile users will have a smartphone, driven by low service costs offered by the wireless carriers. 

Frost & Sullivan’s own ICT Practice team supports this statement and further claims that Asia-Pacific will be driven by price decline and application richness, with smartphones expected to be mass-marketed by 2015 and account for at least 60 percent of the mobile sub-base in Asia-Pacific.

Add to this rapid growth the remarkable pace of technology adoption. 

Today’s coolest device might become old-fashioned in about six months time as new devices are being introduced by manufacturers and carriers alike. This makes the whole exclusive positioning of smartphones very short-lived. 

If iPhones and various smartphone devices used to be perceived as luxurious items, today this socio-economical-mobile-device segmentation seems irrelevant.  Welcome to the prepaid world.

Last year was characterized by new prepaid customers that resulted in new post-paid customers being outnumbered.

The global shift of contract-based customers becoming prepaid customers could reshape the marketing approach of service providers, and carriers will need to invest extra efforts, provide improved service, and deliver more attractive offers to lure new customers and retain them.

These challenges can be overcome by offering prepaid customers smartphone devices.

Smart tone on smartphones
While prepaid carriers are increasingly altering their pricing strategies to include offers on voice, text and data, while remaining competitively low cost, data usage by customers will cause an increase in data average revenue per user (ARPU), especially as new and affordable smartphones are introduced to the market.

However, gifts are not enough to build loyalty, particularly with prepaid customers who will not stick with a carrier if not satisfied with the service received. 

Once a prepaid customer has been offered a smartphone, providing the right price plans and offers will be key to the retention of that customer, but also profit generation. 

Getting to know individual customers’ usage and behavior patterns, and then delivering offers in the right context and timing, is essential to success.

Contextual marketing generates a dialogue with each and every subscriber and, in turn, helps understand what each customer is willing to spend on.

Smartphones can expand the portfolio of services that can be offered to prepaid customers, and can significantly increase ARPU. Assuming, of course, that marketing is done in context. 

But it is important to bear in mind that to remain competitive, CSPs will need to develop better marketing methodologies including analysis, planning, execution and monitoring services covering their entire customer base. 

This requires not only real time contextual marketing and selling technological solution, but also marketing know-how.

Michal Samuels is marketing manager at Pontis, Glil Yam, Israel. Reach her at

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