Home Latin America 2007 Digital marketing gets personal

Digital marketing gets personal

by david.nunes
Roni GrosfeldIssue:Latin America 2007
Article no.:18
Topic:Digital marketing gets personal
Author:Roni Grosfeld
Title:Director Latin America
PDF size:224KB

About author

Roni Grosfeld is the Director for Latin America at Pontis. Prior to joining Pontis, Mr Grosfeld held a variety of management positions at Comverse, the last of which being responsibility for maubets in Belgium, Luxembourg and northern Africa. Previous experience includes overall responsibility for Africa, Asia Pacific and Australia on behalf of a bio-medical firm. Mr Grosfeld holds a Bachelor of Science in Business Administration shared between universities in Belgium and USA (Magna Cum Laude) and has wide international, cultural and linguistic experience deriving from the fact that he has lived in Africa, the Middle East, Europe, North America and now in South America.

Article abstract

Telecommunications, especially mobile, is growing rapidly in Latin America. Nevertheless, the competition is getting stronger; the churn rate in Latin America is the worldís highest. Convergence complicates the task of most service providers; they now have to provide many more products and services to increasingly demanding consumers just to keep up with the competition. Mass marketing approaches are often counterproductive; to stay ahead in todayís market, service providers must offer flexible packages that meet the evolving needs of their clients.

Full Article

Growth and opportunities Latin America Five years ago Latin America was still one of the most closed and monopolistic mobile telephone markets in the world. As it opened up, growth rates in the number of mobile telephone users in some countries rose over 100 per cent, while at the same time the overall average growth rate in the rest of the world was only about ten per cent. In many cases the controlling interest of Latin American mobile operators is now privately owned – typically by a well-experienced multinational operator from North America or Western Europe – and competitive. According to studies by Research and Markets, mobile phones have overtaken fixed lines in service in every Latin American country except Cuba. In early 2007, there were 308 million mobile subscribers in Latin America compared with 96 million fixed lines. Paraguay leads the trend with ten mobile phones for every fixed line in service. Today the telecommunications market is making giant strides since it recovered from the 1999-2003 economic recession. There are considerable differences among the various nations and indeed within each nation due to the pronounced inequalities between rich and poor and the urban and rural areas. Research from Strategy Analytics states Latin America has the worldís highest rate of churn among wireless subscribers with an average churn of 2.57 per cent. With the strong competition between the major players to capitalise and build on the opportunity for growth, marketers within the Latin American telecommunications sector will need to adopt new techniques if they are to capitalise on the huge potential to reduce churn and drive ARPU. Mass marketing to user centric marketing This notoriously competitive and rapidly evolving market is bringing marketers within this sector new and ever escalating challenges, but also tremendous opportunities. Operators are facing a complex environment managing a digital product and service portfolio that often spans thousands of items while fighting even harder to drive new revenues from existing customers and reach new customers. The current shift towards delivering converged offerings of broadband, mobile and entertainment services now means that dominating mobile, cable, VoIP and IPTV can be essential for their survival. Moreover, against this shifting technological landscape, customers are increasingly demanding a more personal service. Accordingly, many operators have already started to deliver packaged and tailored products that are aligned with differing customer needs and preferences. In the saturated mobile market, operators struggle with high customer churn and continuous price erosion as new low-rate operators and MVNOs, mobile virtual network operators, enter the market. Customer acquisition costs are high, so retention is a top priority in a market characterised by low levels of product differentiation where customers simply shop around for the best deal. Combine this competitive landscape with the added complexity of the products on offer – more products are being brought to market at an ever increasing rate through a variety of different channels to users with varying subscription types and devices – and the scale of the challenge for marketers within this sector is evident. One-size-fits-all marketing However, the traditional mass-marketing one-size-fits-all approach is no longer tenable in this environment. Services and bundles of products are offered with limited flexibility in terms of customisation or personalisation and, as such, many of the messages delivered will fail to convince a user to adopt a new service or purchase a new content item. Mobile advertising, for example, touted as a solution for driving revenue from third-party advertisers through personalised messages or access to content, such as the offer of free downloads, has generated huge quantities of hype. Although such techniques represent an important, often missed opportunity they will not deliver the expected return on investment if poorly targeted, mass communicated, or delivered at the wrong time. Take the mobile phone, for example. Many users treat the mobile phone as an extension of their personality; they personalise their devices with distinctive ringtones, ëwallpaperí and additional content in accordance with their individual tastes and preferences. Customers resent mass marketing but relevant, targeted offers, delivered at the right time with incentives are often welcomed. The key challenge for marketers, if they are to survive and thrive in this sector, is to leverage their strengths and to target the right customers at the right times with exactly the right propositions. The personal approach In the digital environment, customer communications can take many forms; it has the potential to shape a successful, long-term customer relationship. Marketers need to be able to communicate with customers on a personal basis and at the right time. The ability to reach the right customer, with the right message via the right communication channel at the right time is essential. In this sense, the industry needs to follow the example set by on-line service providers who have long maximised the potential of the personal approach with interactive suggestions linked exactly to the usersí preferences and real time behaviour (e.g. browsing or purchasing). ëAmazon-likeí recommendations based on buying patterns can be used by operators to promote a cross-sell of related content items, or to use up-sell techniques in order to encourage customers to purchase additional content, such as music bundles, all based on the lifestyle characteristics of a carefully segmented group of customers. Operators now need to adopt these more sophisticated techniques by using marketing delivery platforms to address specific, well-defined customer segments with relevant offers. The arrival of new solutions specifically designed for marketers within this sector lets them to do this by monitoring usage of services or products in real-time to enable behavioural-based targeting. Without these new tools, behavioural-based targeting has simply not been possible. If mobile marketing is non-intrusive, delivers value, protects the subscriberís privacy, stimulates interest and is relevant to the consumer, there will be a higher propensity for service adoption. To achieve this, operators need to be well acquainted with user interests and preferences to ensure they understand the user in every way possible and can therefore customise every single interaction. A marketing delivery platform provides telco marketers with an end-to-end, design-execute-measure environment, to deliver real-time targeted and personalised marketing offers. This ties together the marketing design, on-line sales, dynamic communications and product offer processes, effectively automating the marketing IT. Such systems dynamically configure products for customers – including special terms – in real time, based on their preferences, history and current usage. This may seem logical, however, in reality, it marks a significant step forward in an industry hampered by silo-based thinking, lack of flexible interaction between the operatorís diverse departments and a non-systematic, non-automated approach to targeting customers. Building ARPU This personalised approach to communicating with the customer has been proven to deliver compelling results. Recently, a cable operator recognised that its key competitive advantage was the delivery of video-on-demand, VoD, yet many subscribers were failing to purchase this premium content. Through targeted promotions to different consumer categories the operator was able to convert users that had never bought content in the past, and by analysing relationships between content categories was able to design cross-sell offers that leveraged purchases from one category to promote purchases in another relevant category. This not only drove VoD subscribers to pay for premium movies but also introduced customers to new categories, increasing overall sales in the promoted categories by 42 per cent over a nine-month period. Operators within this region are already using approaches such as this. Operators such as Nextel Argentina are now embracing this targeted approach in order to seamlessly create targeted packages for their corporate customers based on their personal preferences and profiles. This will be used to create a variety of exciting new customer offers, including upgrade packages, service bundles, top-up benefits and other cross-sell and up-sell opportunities. With a high level of personalisation, targeting capabilities and long-term perspective, operators will realise the rich potential of targeted marketing to ensure their success. It is by embracing this strategy that operators will be able to out-perform the competition and improve levels of customer retention and profitability.

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