Getting more from prepaid mobile services

Most companies offering prepaid mobile services destroy value by ignoring customer life-cycle management, an approach used successfully in many other service industries. Instead of tailoring marketing strategies to the behavior and probable lifetime value of specific customer groups, these mobile operators often deploy blanket promotions that give away value needlessly through discounts or free services.
While a lack of data makes customer life-cycle management particularly hard to implement in prepaid mobile services, innovative companies have mined usage patterns to create microsegments: homogenous groups of as few as 100,000 prepaid customers. They use this segmentation to launch customized marketing campaigns that encourage these groups to spend more.

Exhibit 1: The targeting of offers can be based on how close a subscriber is to becoming inactive.
Exhibit 2: One major Asian mobile operator reduced churn among its prepaid customers after using a segmentation program to target promotions.

In the current environment, costs are rising as price sensitivity increases. Six tactics can help companies get pricing right.

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