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Mobile Customer Acquisition & Retention

Market & Data Reports - 15/04/2009 Mobile Customer Acquisition & Retention

Squeezing Customer Growth and Profits through Innovative Practices

This report examines the innovations being brought into acquisition and retention practices of the mobile market for the MNOs in developed markets It is based on case studies and assessments of innovative practices put in place by operators performing in acquisition or retention.


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Key questions
• What are the innovative practices to acquire and retain customers?

• Can operators perform both in acquisition and retention?

• What about the financial performance of successful acquisition and retention players?

• Acquisition and retention strategies are expensive, but are they profitable?

• Among retention and acquisition, what is the main driver of profitability ?


> Database includes (Excel):
• Data by Country & Operator: 30 Operators in 13 Countries
Contents
1. Executive Summary

2. Introduction & Methodology

3. Acquisition Performance

3.1. Best performers in acquisition

3.2. Device-based acquisition practices
3.2.1. Handset exclusivity practices
• Case Study: AT&T strong iPhone 3G activations
• Case Study: Orange France: iPhone exclusivity boosts acquisition
3.2.2. New opportunities driven by broadband-led device diversification
3.2.3. New handset subsidisation practices reducing acquisition costs
• Case Study: E-Plus Germany: turning handset subsidies into profit
• Case Study: DT family package

3.3. Segmentation key to attracting customers in increasingly sophisticated market
3.3.1. Multi-brand strategy
3.3.2. Basic offers: offering simplicity and value for money
• Case Study: O2 UK (Telefσnica Group): SIM-Only pioneer in the UK market
3.3.3. Plans targeting entire families
• Case Study: T-Mobile USA: Family Allowances

3.4. Pricing strategy
3.4.1. Abundant and unlimited offers
• Case Study: Softbank Japan: introducing the unlimited flavour
3.4.2. Home-zone pricing
• Case Study: T-Mobile@home: including Homezone

4. Retention Performance

4.1. Countries with best customer retention performers
4.1.1. Churn in advanced markets
4.1.2. Churn management and innovative practices to retain customers

4.2. Tariff reduction and free services
4.2.1. A proactive strategy in the post-paid market
• Case study: O2 UK: an original approach
• Case study: NTT DoCoMo: discounts to acknowledge tenure
4.2.2. Encouraging tenure in the prepaid market through discounts or credits
• Case study: Orange UK: innovative prepaid loyalty initiatives
4.2.3. Retention strategy and lifetime management

4.3. Handset renewal: an important stage in the customer lifecycle
4.3.1. Subsidizing handset replacement: a standard churn management tool
• Case study: NTT DoCoMo: an innovative handset sale method
4.3.2. Letting customers choose between a subsidy or a better tariff

4.4. Point-based loyalty programmes for a truly global loyalty approach
4.4.1. Definition and characteristics
4.4.2. Earning points
4.4.3. The catalogue of rewards and their different objectives
4.4.4. Indirect Benefits
4.4.5. Can point-based loyalty programmes be extended to the prepaid market?
• Case study: “Davantage” Orange France: a global and convergent approach

5. Does Commercial Success Lead to Better Financial Performance?

5.1. Commercial performance review
5.1.1. Cross analysis of commercial performance
5.1.2. Similar commercial profiles for operators in certain countries
5.1.3. Differentiated strategies in other countries
• Case study: Verizon Wireless: a customer focused strategy
5.1.4. 2006-2008: Are operators commercial performances stable or variable over time?

5.2. Financial performance review
5.2.1. Analysis of financial results with regards to commercial performance
5.2.2. Is retention the main driver profitability ?
Methodology
A Decision-Making Report

For the present study, we have collected quarterly churn rates as well as the quarterly customer base of a list of 30 operators from 13 advanced markets.

An original Benchmarking tool

To benchmark acquisition and retention performance, we have collected subscriber base information and churn rates published by operators. Other indicators listed below derive from calculations.

Database Structure (Excel) – data collected during the period from Q1 2006 to Q4 2008:

Countries
• Total country subscriber base at period end
• Mobile penetration at period end
• Total country net additions during period

Operators
• Operator subscriber base at period end
• Operator market share at period end
• Operator net additions during period
• Operator average subscriber base during period
• Operator monthly churn rates
• Operator churners during period
• Operator gross additions during period
• Operator gross additions during period as a percentage of average subscriber base
• Operator share of net additions during period
Tables & Figures
Table 1: Operators covered in the study
Figure 1: Commercial and financial performance for the Q1 2006 – Q3 2008 period
Figure 2: Total gross additions as a share of average customer base in 2007
Figure 3: Churn rates in 2007
Figure 4: Typical breakdown of gross additions per type in a mature mobile market
Figure 5: Total gross additions as a share of average customer base in 2007
Figure 6: World smartphone shipments
Figure 7: Cumulative iPhone 3G sales by Orange France
Figure 8: Smartphone mobile web traffic market share for February 2009 (worldwide)
Figure 9: RIM Blackberry Storm
Figure 10: HTC G1 also called Google phone
Figure 11: Vodafone UK mobile data analysis as of March 2008, YoY Growth
Figure 12: Netbook shares in worldwide laptop sales
Figure 13: Different models of Netbooks
Figure 14: SFR France MID, UMPC and PC dongle offers
Figure 15: Typical SAC breakdown
Figure 16: NPV of different handset /payment combinations with identical tariff (in EUR)
Figure 17: DoCoMo payment method for handsets with Value Course Plan
Figure 18: Increasing complexity in mobile segmentation
Figure 19: Target segmentation of the multi brand strategy of the E-Plus Group
Figure 20: Proliferation of no-frills and other second brands in Germany
Figure 21: UK SIM only comparative website logo: "Best SIM Only"
Figure 22: Market share variations in the UK market between 2004 and 2008
Figure 23: European mobile termination rates as of July 2008
Figure 24: Flat rate mobile data pricing in France and UK - Price per GB as of 1 November 2008
Figure 25: Softbank market share and share of net additions during the 2005-2008 period
Figure 26: Home zone pricing Genion from O2 Germany
Figure 27: Churn rate in 2007
Figure 28: Acquisition and retention costs as % of total Vodafone revenue in selected operations
Figure 29: comparison of operators' performance both in acquisition & retention
Figure 30: EBITDA performance and churn rates in 2007
Figure 31: Commercial and Financial performance in 2006 and 2008
Operators covered in the study
 


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