http://www.MVentur.com THE 3 THINGS CARRIERS NEED TO GET RIGHT NOW: MOBILE DATA + CUSTOMER EXPERIENCE + RESEARCH The Optus CEO recently declared his company’s shift to “sustainable profit growth”, moving from “raw subscriber acquisition” to an emphasis on retaining and increasing revenues from existing customers. Sustainable profitability means retaining existing customers and encouraging them to spend more money on mobile. Central to this proposition in the era of data is understanding why. Monetizing the increase in data use means building a better customer experience around social context. Customers don’t consume data, they consume what data does for them. Understanding the motivations and drivers behind data usage will provide more solid foundations for pricing and marketing strategies. Carriers need to upgrade their marketing strategies: without context-driven customer experience, data is simply a commodity. Competing on data volume and price will become a race to the bottom that operators will lose to new entrants wanting to establish a foothold in the market.

1. MVENTUR MEMO Q1 2013: CARRIERS
THE 3 THINGS CARRIERS NEED TO GET RIGHT NOW: MOBILE
DATA, CUSTOMER EXPERIENCE AND RESEARCH
The Optus CEO recently declared his company’s shift to “sustainable
profit growth”, moving from “raw subscriber acquisition” to an emphasis
on retaining and increasing revenues from existing customers.
Sustainable profitability means retaining existing customers and
encouraging them to spend more money on mobile. Central to this
proposition in the era of data is understanding why.

2. THE 3 THINGS CARRIERS NEED TO GET RIGHT NOW: MOBILE
DATA + CUSTOMER EXPERIENCE + RESEARCH
The Optus CEO recently declared his company’s shift to “sustainable
profit growth”, moving from “raw subscriber acquisition” to an emphasis
on retaining and increasing revenues from existing customers.
Sustainable profitability means retaining existing customers and
encouraging them to spend more money on mobile. Central to this
proposition in the era of data is understanding why.
Monetizing the increase in data use means building a better customer
experience around social context. Customers don’t consume data, they
consume what data does for them. Understanding the motivations and
drivers behind data usage will provide more solid foundations for pricing
and marketing strategies.
Carriers need to upgrade their marketing strategies: without context-
driven customer experience, data is simply a commodity. Competing on
data volume and price will become a race to the bottom that operators
will lose to new entrants wanting to establish a foothold in the market.
THE 4 KEY BENEFITS OF ETHNOGRAPHIC RESEARCH ON DATA
FOR CARRIERS
The best way to understand customer drivers is to research mobile data
in context i.e. in the malls, street and homes (not focus groups and
online) where people actually use data. This ethnographic approach
yields 4 key benefits for operators:
1) Drive product development road map by identifying customer pain
points and usage profiles. Identify the quick wins that operators can fix
to improve customer experience.
Smartphone customers who experience between fewer problems with
slow mobile web speeds spend an average of $11 more per month than
those who experience considerable problems ($140 vs. $129,
respectively). (source JD Power)
2) Develop relevant marketing messages to help migrate the sales
strategy from being about selling commodities on price to being about
selling the premium of social benefit.

3. Rohan Ganeson, MD of retail sales at Optus recently said of the
carrier’s intentions to ramp up retail investment that , “We want
interactions with Optus to exceed expectations and the feedback, both
good and bad, from our pilot stores will be invaluable in helping us
shape the experience for the rest of the transformation”. Success at the
Frontline will depend on arming the retail staff with the most competitive
insights.
3) Empower frontline and service employees with insight on how
customers use/could use data and help them cross-sell other data
products in the operator portfolio.
4) By identifying the power users and influencers, operators can
dedicate more resources to these key market makers. The power users
(20% of the market) currently use 80% of data traffic, with top 1%
generating 17% of traffic (source Cisco).
All 4 benefits combine to create a better customer experience which in
turn reduces customer attrition (churn), increases individual revenues
(ARPU) and drives recommendation (NPS).
WHERE TO START?
Youth drive mobile trends.
They are already at the forefront of change. Youth are both the heaviest
users of mobile internet and those with the greatest social need to make
operator rollouts successful. Youth are the influencers. Technologies that
reach mass market adoption often filter through the youth market first
(e.g. SMS, Facebook, Messenger). Not only do youth influence each
other but data from the 2013 Mobile Youth Report shows that they exert
a significant influence over the adult market.
Compared to adults, youth are more likely to use mobile internet
services like social networking (50% vs 12% for adults), photo sharing
(38% vs 12%) and streaming videos (24% vs 5%) (source Gallup).
Quantitative research into mobile data consumption patterns cannot
reveal the offline scenarios in which youth use mobile internet. Mobile
carriers need qualitative research to step into the 3Hs (homes, hangouts
and hideouts). Actionable insights for marketing and innovation can only
be achieved when we understand how and why youth use mobile
internet.

4. Operators should start developing their future customer propositions by
employing ethnographic research to understand how youth are using
data today.
WHAT SHOULD THE 3 OUTPUTS OF ETHNOGRAPHIC RESEARCH
BE?
The key outputs of ethnographic research should help operators identify
which users and activities within mobile data are most conducive to
profitability (e.g. We found that 15% of SingTel customers now generate
85% of the data traffic but not necessarily 85% of their profits).
MobileYouth ethnographic research focuses on building operator
customer propositions around a solid context-driven customer
experience. The 3 deliverables of such research are:
1) A gradation of young data users based on behavior and attitude as
opposed to more traditional demographic segmentations.
2) Pen profiles of key data users that identify both drivers and the offline
scenarios where they use data. How do pen profiles vary by usage
scenario and handset? (e.g. NPS for mobile internet varies by handset
ownership: Apple +49%, HTC +41%, Samsung +23%). Profiles
providers operators with a natural starting point by identifying youth
market influencers.
3) Reframing of app categories based on social context (e.g. arranging
meetings, while watching TV, photo sharing) as opposed to traditional
formats (e.g. games, business, utility). Already 60% of youth use mobile
data to organize gatherings, and 45% of youth use mobile data to settle
arguments (source Pew Research). These behaviors are more relevant
to young people’s social lives and are unlikely to change as they enter
the adult world.
POSITIVE CUSTOMER EXPERIENCE FOR DATA CREATES A
BARRIER TO MARKET ENTRY
In an interview with Rutgers, Verizon CEO McAdam spoke of the early
days the mobile industry where operators focused on monetizing
negative customer experiences (e.g. roaming charges, paid voicemail
etc) but that left the door open to new players (such as Verizon
Wireless).

5. “It was a pretty ugly experience,” he said. “There was a good opportunity
for someone to come in and disrupt the environment – to consolidate
and create scale.”
Verizon successfully disrupted the environment by building its culture
around customer need as opposed to customer revenue maximization.
As operators talk up the opportunity to maximize customer data revenue
through pricing structures which by comparison to fixed line offerings are
archaic, they too expose themselves to external disruption. By contrast,
focusing on the customer experience has enabled Verizon to maintain
the lowest churn and highest customer recommendation rates in their
market, despite rivals paying extensively for iPhone exclusivity.
Today, operators need to re-engineer their cultures around the customer
experience of data and leverage ethnographic insights to guide their
strategies.
If operators fail to get data strategies right now they leave the door wide
open to profit erosion from new competitors such as Google who thrive
in fixing broken technology experiences. As the handset industry has
learned, once they invite new players like Apple in, it’s impossible to
regain their market position.
By Graham Brown
Lead Consultant, MVentur

6. About MVentur
MVentur is the world’s first youth mobile consultancy.
We have 2 roles:
1) Advisor to our clients
We oversee marketing plans, act on advisory panels and consult our
clients. Find out more about our consultancy work.
2) Commercial think tank for the mobile industry
We promote progressive marketing ideas that help mobile companies go
beyond advertising. Read more about our youth mobile opinion pieces.
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