How Telcos can reduce churn

With the advent of mobile technology and increased connectivity, telecommunications operators are finding that managing “customer churn” is an increasingly complex and in some cases, expensive exercise.

Customer churn or the propensity of the customer to jump from one mobile operator to another as their service provider of choice, is a common phenomenon in Southeast Asia, especially in countries like Malaysia, Philippines and Singapore.

It is not unheard of for a customer to have more than one SIM card for different uses; for example, to sign up for a data plan with one operator while being a customer for cheap international calls with another and yet another for local calls. This way, they seek to reap the benefits of attractive tariffs on campaigns and contracts promoted by the operators.

In a recent study done by industry analysts, the customer churn rate in Asia was an estimated 23% in 2014 compared to a relatively low and stable market in Europe where it was about 10%. Similarly, the need to be online and connected was a key determinant for customers in moving from one operator to another, leading to many telecommunications companies to fret over customer loyalty and pricing.

Challenges facing mobile network operators

As we become more digital and connected in Singapore and indeed in Southeast Asia, the importance of being able to retain customers and their prolonged interest is becoming a critical issue for marketers in the mobile operator space.

How we keep our customers loyal to our plans/contracts and how can we get them to engage and spend more, thereby increasing their Average Revenue per User (ARPU) – becomes the fundamental question that keeps them awake at night.

With a high customer attrition rate, telecommunications operators inevitably face the cost versus revenue conundrum that plagues markets with large customer churn rates.

The economics of servicing a reduced ARPU base, means operators are less inclined to innovate, create new products and solutions. Customers in the long run get lesser value for money with limited technology and services innovation, reduced options and variety and almost negligible reduction in tariffs.

Recognising this cycle of reduced value, marketers at European network operators have focused on building customer brand loyalty and “stickiness” through a very simple solution.

Advergames or mini-games are simple user friendly, browser based games that one can play on mobile phones.

In Europe, Mobile Network Operators (MNO) like Turkcell have introduced successfully Advergames to entice and ensure retention of customers, through increased interaction and social sharing.

Turkcell’s rewards-based Advergames service

The popularity of advergames at Turkcell, one of Turkey’s largest mobile operators with more than 34 million subscribers, has made the operator re-look their marketing strategy for retention within specific demographics of customers.

Working with Branded Mini-Games, Turkcell rolled out a user friendly, rewards-based mini-games subscription service called Hediyeli Oyun.

This service enables Turkcell subscribers to play mini-games on their mobile phones, to score game points, and to exchange these game points for weekly prizes such as voice minutes or SMS and mobile data.

Reward points can be increased based on the number of times users play and the high scores accumulated from playing the games. Subscribers to the mini-games service pay a weekly subscription fee of 4 Turkish lira (RM5.70).      

One of the major obstacles for MNOs in this highly advanced digital era is that over the top (OTT) communications services such as instant messaging and Voice Over Internet Protocol (VoIP) are challenging traditional MNO controlled services such as voice calls and short messaging services (SMSes), plummeting the usage levels of these core services.

Such rewards-based mini-games subscriptions utilise these services by reminding users about them, hence promoting its consumption. The user is also psychologically challenged to earn their rewards via their skills, arousing in users a need to treasure their hard-earned rewards and to encourage its usage.         

The Hediyeli Oyun Advergame Service experienced an average of 20% week-on-week increase in subscribers, amassing 27,668 weekly paid subscribers by Week 8 of the service’s launch. The mini-games had also been played in an excess of 66,000 times, with more than 71% of users engaging with a mini advergame for at least five seconds.
The Advergames are currently customised to Turkcell’s brand and it is possible for advertisers to promote their own advergames within this mini-games service instead of leveraging on Turkcell’s branded games, enabling further monetisation from advertisers and sponsors.    

Singapore and Southeast Asia

The advergaming trend is likely to further develop in Singapore and Southeast Asia due to increased smartphone penetration and connectivity, along with accessibility to communications bandwidth, leading to four out of five smartphone users having played a game on their device.

As technological advances continue to make rapid developments and setting trends in the mobile phone market, Advergames will be among the stable of initiatives riding on the wave of the ever changing and fluid LTE services industry.       

In Asia especially, the in-game advertising spend (or Advergames) market size was a staggering US$84mil (RM319.4mil) in 2014. This is expected to grow between 17% to 19% per annum in Asia.     

MNO’s and other brand owners need to re-think how to engage customers through play, increasing interaction and building a relationship. Increasing loyalty, customer spending (ARPU) and learning more about the customer has become a game – marketers need to recognise the value and learn to play.


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