Boost ARPU through Subscription-Based Business Models
By using advanced technology and hyper-targeted bundling, telcos can offer their customers a personalized telco plan that gives them the benefits they want and a boost an ARPU boost for telcos they’re looking for, as the market pushes to commoditize the telecom industry.
Bundling
Telecom service bundling has been a staple of telco plans for decades. The “Triple-Play” model bundling landline, wireless, and TV services was the gold standard in telco bundles. And consumers like it too – according to a Deloitte survey, 57% prefer bundles over individual services due to cost and convenience.
Now with cord-cutting and the explosion of subscription services over the last few years, telcos are finding a new bundle cornerstone…streaming services. According to a 2023 Omdia/Bango report on the state of bundling in telco, 20% of online video subscriptions come from telco bundling and it is expected to grow to over 25% by 2028.
In addition to streaming, telcos are now testing out a variety of bundled services. Some interesting ones include Telkom Lend (South Africa’s Telkom) that gives small businesses and entrepreneurs access to capital in 24 hours, and GoWell (UAE’s e&) who rewards subscribers for hitting their fitness goals with prizes and fitness gear discounts.
By applying innovative service bundling telcos can unlock higher ARPU by creating perceived value for users without necessarily increasing costs significantly.
Personalization
Telcos often have access to large volumes of customer data that can be leveraged to personalize the customer experience. AI and data analytics can then be leveraged to offer custom plans, value-added services, and loyalty rewards that are tailored to the individual customer preferences, maximizing lifetime value.
McKinsey provides additional insights about the effectiveness of personalization for telcos. Their research found that “companies that excel at personalization generate 40% more revenue than average players.” These companies utilized analytics-driven “customer value management” to drive revenue growth.
O2 has leveraged its data and integrated personalization into its marketing. In one example O2 repurposed a TV advertisement to its mobile audience by using mobile usage data (device, location, etc.) to make personalized offers such as the current recycling value of their phone, best upgrade offer, what others with their same phone were upgrading to, and the location of the closest store.
Another telco that is delving into an analytics-based focus on improving the customer experience is Globe Telecom, the largest mobile operator in the Philippines. It found limited use in the standalone NPS metric so added in NLP and AI onto its rich dataset. This allowed it to tackle previously unachievable opportunities like:
- Real-time Churn Prediction
- Real-time Customer Journey Segmentation
- Personalized Communications and Marketing
- Human-like Chatbots
While much of AI integration and hyper-targeted personalization is still in its infancy, forward-thinking telco operators are taking notice.
5G and IoT
5G and IoT is monetising new use cases in both the consumer and business markets - from smart homes to autonomous vehicles to manufacturing. Telcos are poised to capture new revenue streams by capitalising on these emerging trends.
For consumers, the home base was always a key connection point for telcos – from the landline to internet connection point, telcos had an innate advantage over other businesses. With the Covid pandemic driving people into their homes for work and education, demand for telco services increased and the connection point strengthened.
With connected homes, broadband is the backbone of the system. Telcos can leverage smart home devices and IoT products around the home as value adds and bundle into their plan. This often takes the form of broadband companies shifting customers into higher-speed pricing tiers (as device internet usage increases).
On the business side, with the rollout of 5G, IoT device connections are projected to hit 18.8 billion in 2024, a 13% growth rate.
Deutsche Telekom is tapping into that demand, especially in the industrial sector by offering IoT bundles for services: 1) Asset tracking of tools, machinery, and equipment can reduce losses from theft of high-value assets; 2) Industrial machine monitoring allows manufacturers to use real-time data to optimize machine operation and reduce costs including downtime; 3) Service button retrofit that can be programmed to order spare parts, initiate pickup for a full container, or report technical malfunctions.
Optimization
Optimizing the subscription experience by using real-time data insights to improve customer satisfaction and reduce churn, is helping some telcos find more predictable revenue growth.
This real-time optimization includes customer service response time and problem resolution improvements through the use of big data models, Generative AI-driven chatbots, and micro-improvements throughout the customer journey.
Dell and SK Telecom demonstrate this through their recent collaboration. By applying Large Language Models (LLM) to power up AI-based chatbots, they were able to reduce response times (over human customer service agents), shift routine customer service inquiries to chatbots for resolution while freeing up humans for more complex customer calls where human interaction is more effective, and grow revenues by using chatbots to upsell and cross sell more consistently and effectively.
Better ARPU
ARPU is no longer just about guiding customers into higher priced plans. By using advanced technology and data-driven telecom personalisation, you can offer a tailored, value-rich service experience that customers desire. Taking this approach turns users into loyal, high-revenue customers.
triPica’s Customer Engagement and Billing platform helps telecom service providers with their outdated BSS modernisation and customer engagement systems, paving the way for dynamic digital offers and compelling bundles. By managing the technology foundation, triPica enables telcos to evolve into techcos, leveraging innovation to captivate customers with personalized, enticing offers while maximizing telecom ROI.
