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In the backdrop of intensifying competition, compounded with spiraling marketing costs and declining ARPUs, mobile operators now realize that customer retention and effective up-selling/cross-selling are the keys to success. The exclusive focus on acquisitions has resulted in a large number of subscriber acquisitions, but the challenge now is to retain the subscribers and maximize the value of each subscriber. Having equaled each other in pricing and technology offerings, operators are now focusing on creative strategies to engage customers and keep the relationship going.

Today, the mobile is not just a technology for talking, but a personal infotainment media device which people carry wherever they go. For the majority, it is more than a gadget, but an extension of their persona, reflecting their unique attitudes and preferences. Operators have realized this huge potential and mobile VAS is gaining an increasing significance in their product, service differentiation, and revenue strategy. Marketers have to promote the right products at the right time to the right users. This is possible only with specialized real-time mobile marketing technology.

VASt Opportunity!
For mobile operators in India, the opportunity is huge. The total number of subscribers is approaching 400 mn, and according to Gartner, this figure is slated to cross 771 mn connections by 2013, growing at a CAGR of 14.3%. Though this in itself is an excellent scenario, operators also realize that success is not just about subscriber numbers, but more about ARPUs and revenues.

VAS presents the opportunity for operators to address the challenge of declining ARPUs from voice usage. Gartner sees further decline in voice tariffs in 2009 as new operators start offering their services. Revenue growth will be triggered by increased adoption of value-added services, which are relevant to both rural and urban markets. In its latest report, the research firm also adds that voice usage will increase steadily, but VAS usage will grow even more strongly.

Today, operators realize the potential of VAS, and are constantly churning out newer concepts and services for better customer experience, and to differentiate themselves. Currently, VAS services are largely entertainment-driven with cricket, Bollywood, and astrology being the most popular and highest revenue generators. With 3G rollout around the corner, the Indian mobile VAS market is on the threshold of a next growth phase.

However, along with the opportunity, VAS also poses many challenges like short lifecycle of prepaid subscriptions. VAS is very much content driven, and content is driven by popular culture--music, movies, TV, sport, etc. Most VAS products have extremely short lifecycles and cater to unique personal interests of users. In other words, they appeal to specific, and often narrow customer segments. The conventional product and offer-centric marketing approach cannot effectively address the increasingly complex nature of VAS products viz. large number of services, extremely short product lifecycles, and highly granular customer segments.

Need for Mobile Marketing
The relevance of VAS products depends on the subscriber's unique taste, mood and context as well as the latest trends. Conventional direct marketing approaches, suited for marketing products and offers with longer shelf life are far from ideal for this fast changing environment. Fortunately, the mobile channel, with its unparallel immediacy and intimacy is a channel perfectly suited to such an environment. Anyone who assumes that marketing on mobile is the same as other direct marketing channels is making a serious mistake. The mobile channel has unique potential for marketing VAS products.

When it comes to mobile, everything becomes personal and intimate, and evokes a strong reaction. These attributes present both opportunities and dangers. Any message that excites one subscriber will probably irritate another. Let us imagine a situation where a senior business executive receives a 'two-for-one movie promotion' during a business meeting. He might possibly dismiss it as spam whereas the same message could prompt his 18-year-old daughter to take up the offer. Similarly, a message relevant to a customer at the right time can be viewed by the same customer as spam if received at an inappropriate time. Success of mobile marketing depends a lot on marketers' ability to remain tuned to the needs of their customers, and then responding to them relevantly with the right offers at the right time.

Role of Operators
Operators and value added service providers (VASPs) are in a unique position to make the most out of the mobile marketing opportunity which is essential for VAS revenue enhancement. Operators, own and control mobile media, and have practically unlimited access to customer intelligence. Unlike traditional media, in the mobile channel, operators can interact with customers, get their reactions, respond immediately and measure ROI in real-time. And mobile is the only channel for operators to connect with the many millions of subscribers in a targeted and personalized manner, especially with the youth and rural segments.

In order to effectively leverage the unique advantages of the mobile channel, operators have to redefine their business and technology strategies. Customers drive the market, and operators need to adopt a proactive and personalized approach. Though operators realize the opportunity today, the mobile marketing chain is currently underexploited. The VAS marketing team within an operator's organization often has no access to real-time customer information. Lack of appropriate technology and tools often force marketers to depend on intermediaries to execute campaigns and to forgo the ability to receive and respond to subscriber reactions in real-time. This results in under-utilization, and devalues the mobile marketing channel and provides poor results.

The immediacy and intimacy of mobile channel also calls for operators to be highly sensitized to their responsibilities. A wrong message at a wrong time will not only estrange customers, but will also damage both their own reputation and that of the brand. Unsolicited marketing from irrelevant sources and lack of control over frequency of messages can easily turn off their customers and stimulate increased churn. The need to address this is recognized by most operators.

Effective and responsible mobile marketing is necessary to increase VAS penetration and revenues. This calls for operators to institute appropriate technology and processes to ensure marketers have sufficient real-time visibility and control over the mobile marketing channel and the mobile marketing process.

Effective Strategies
Operators are looking at creative ways of promoting VAS services to their subscribers. Optimum results can be achieved only by exploiting the full potential of the mobile as a direct conversational marketing channel.

Dr Vinod V Vasudevan
The author is group CEO, Flytxt
vadmail@cybermedia.co.in