Innovation is a buzz word which will excite us all the time. As the saying goes necessity is the mother of invention and this is so true for emerging telecom markets. Developing world Telco’s work under a variety of constraints that compel them to find innovative ways to run and grow their businesses. If you track the initiatives of Telco’s from the emerging markets especially in the last five years, you would see that innovation has almost become a routine for them, they do it every now and then. They have gone to the extent of innovating without even recognizing it. We in Flytxt have ourselves partnered with Telco’s for bringing out many such unique innovations in how they engage with their consumers and market their products/services. Let us look at the top 4 unique characteristics of emerging telecom markets and see how they have led to innovation in terms of technology use, roll out of products/services as well as in improving customer experience.
Explosion of Data
Generally, emerging markets are tipped to become major supplier of Big Data by 2020 as per IDC’s predictions. India has 4% share of digital information stored globally by 2012. We are already seeing an explosion in data volumes in emerging telecom markets. It is typically characterized by huge volume of subscribers and mostly prepaid connections. As the growth reaches its peak, the focus of operators in these economies, amidst high competition and low ARPU, is shifting from customer acquisition to customer retention and stimulating higher usage. The challenge for Operators here is to generate new revenue streams and create incremental revenue. In order to achieve these goals the operators had to start relying on Big Data technology and analytics to draw insights from thousands of segments of subscribers and accurately predict what offers will work best for these subscriber segments to drive up the revenue.
Declining Revenue Growth
Operators in emerging economies still have majority of their revenue coming in from traditional voice and messaging services. However with competition and regulation, the revenue from the traditional segments is shrinking. This calls for operators to focus on new market segments like rural for increasing their reach as well as on new VAS products and services. Operators need to devise effective up-selling/cross-selling strategy to push in data and VAS products to existing subscribers. Since most of the VAS products have extremely short lifecycle, operators look for technology that could enable them identify the opportunities to market these products in the right context and in real-time too. Contextual selling requires not only an in-depth understanding of the subscriber’s needs and preferences but also capability to predict his needs in the next moment.
Competitive and Regulatory Challenges
Most of the emerging markets are characterized by competition and tight regulations. Regulators give a lot of importance to prevent over pricing and customer spamming. Securing Privacy of customer data is another challenge especially with operators’ having huge subscriber base. This called for innovation in technology that could transform individual subscriber data to non Personally Identifiable Information (non-PII). For example, Flytxt works with an Indian operator having more than 20 million subscribers to derive insights on the go from billions of transactions and profile updates to create persona reflecting their usage behavior and preferences. This persona could help in more micro segmentation, ensuring that right offers and content are recommended to right subscribers.
The Capex Pressure
It was essential to ensure that these technological innovations are affordable enough to be adopted by the emerging economy CSPs as they are already under revenue and margin pressure. Hence there was a need for a new revenue share based business model where CSPs could pay as they go and reduce their upfront Capex spent. Further, it was necessary to have adequate skill sets and expertise to take full advantage of this technology but in emerging markets these resources are scant. A fully managed marketing outsourcing model was developed to take care of these challenges. A Consulting-Technology-and-Execution Model could open up opportunities for operators to focus on their core operations of network management and customer acquisition leaving out the responsibility of generating incremental revenue and reducing churn to this managed marketing service provider. Performance based pay out model was a perfect icing on the cake for operators in emerging economies. .
There are many more…
Emerging markets will continue to pose more threats and challenges as competition leads to consolidation and customer acquisition leads to retention. New constraints and market realities would call for increasing degree of innovation! In emerging markets unlike developed world scale of innovation is going to be as critical as scope of innovation.