Best Practices in Digital Sales for Telcos-Part 1
By : Rajkumar Solanki
AGM - Analytics & Consulting
Product Portfolio Sizing
Telecom marketers today have more sophisticated and user friendly Marketing Automation tools at their disposal. It has become easier for them now to plan, design and execute multi-channel marketing campaigns – outbound and inbound. And with the increased application of AI/ML techniques, there is a lot of hype around how marketers can now take personalization to the next level. Marketing systems can now automatically choose best product/offer from available options for each customer fitting their historical behavior and contextual needs.
However, increasing the level of personalization will bring in additional complexity in micro-segmentation, product/offer management as well as impact measurement and reporting. More the products, higher will be the permutations and combinations an AI/ML model has to consider while choosing the right one for each customer. This may eventually lead to higher computation overheads and thereby, higher operational costs.
Hence, it is imperative for the marketers to first arrive at an optimum product portfolio size.
Macro & Micro Factors Influencing Product Portfolio
Marketers need to consider multiple factors while deciding on the product portfolio, some of which are elaborated below:
- Industry: Maturity level of the industry including the number of players, their relative market power, regulatory guidelines, etc. will guide the level of customization and size of portfolio.
- Market position: Higher level of customization should ideally be adopted by incumbents or market leaders, since the size will allow for economies of scale and better ROIs. A new entrant or a challenger should prefer a broad base approach for ease of communication as well as to curtail costs and support higher marketing spends.
- Elasticity of consumers: Elasticity of the customer’s incremental spend is a very important factor. Running highly personalized campaigns on a relatively inelastic customer base will not yield any incremental revenues for the marketer.
- Ease of communication: Personalized campaigns need to very meticulous in communicating with the consumer, failing which, the entire program may fail to get traction
- Data/Smartphone penetration: Smartphone users may be easy to communicate with, considering the ease of reading as well as language/script compatibility on these devices. However, with 4G being the dominant operator across the globe, and low-cost device ecosystem growing, this may cease to be a factor.
- Distribution network: For markets with low literacy levels (or complicated product constructs), a good distribution network is critical for the success of personalized campaigns, since channel partners are a critical link between the marketer and the consumer.
Approaches to Product Portfolio Sizing
Based on the above factors discussed, marketers can follow any of the below approaches to come up with an optimum product portfolio size:
- Conservative approach (low or no level of personalization): This approach is usually best for new entrants and challengers, wherein a clear value proposition makes it easy to recall for value seeking customers. A popular example of this approach is discounting for new acquisitions only. However, if not calibrated well, it may backfire for products/services with low entry barriers; leading to rotational churn, thereby increasing acquisition costs per customer.
- Balanced approach: As the name suggests, this approach utilizes the incremental gains from segmented products, while trying to maintain the open market product penetrations. It would be fruitful if segmented benefits are offered to a very limited customer base with specific needs. An example is offering sachet packs only to customers who do not purchase longer subscriptions.
- Simple scale up: Recommended for scenarios where the profit margins are slim and personalization is primarily based on customer’s usage/spend level. Buy more save more campaigns are a typical example of this approach. Other methods of using simple scale up can be progressive rewards or loyalty based rewards.
- High personalization: High personalization is recommended for cases where the brand is well established and commands good engagement with the customers. The primary objective of this approach is to increase profit margins by driving incremental spends at a more granular level. While simple scale-up will look at the customer’s behavior, marketers can also add context to the offering, depending on stages of the customer’s journey. Since this approach can be very granular and complex, it is imperative to have omni-channel marketing automation capabilities to do this without compromising on customer experience.
- Segment of One: This approach is recommended only for cases where the products are promoted on a one-to-one basis, and the marketing campaigns focus on other aspects of the brand. Personalized VAS services can be one such example, wherein the benefits can be decided basis customer’s profile. In order for marketers to move closer to Segment of One, it becomes necessary to augment marketing automation with machine learning capabilities which can make it possible to utilize large data volume beyond human cognition.
Choosing the right product portfolio size is important to extract maximum revenue from a CVM program. While every market is unique, above approaches can be used to make the decision more structured and exhaustive for better results.