Connectivity has only grown in relevance and importance in recent years, making it imperative for telcos to find ways to increase ARPU in telecom. However, there’s been a steady decline in the average revenue per user (ARPU) in the industry. It’s anticipated that consumer revenues will remain unchanged through 2030. According to Statista, telecom operators in Europe generated an average ARPU of 14.4 euros in 2020, in comparison to an average of 37.9 euros from operators in the US.
But first, what is ARPU?
ARPU is a key performance indicator in the telecom industry that measures the average revenue generated by each customer. It’s calculated by dividing the total revenue by the number of users or subscribers. ARPU helps service providers (SPs) understand how much revenue they are generating from each customer, which is critical for their business model.
In this blog, we’ll explore some of the most effective ways to increase ARPU in telecom.
1. Understand your customers
In an increasingly digital age, customers have drastically changed what they need and want. According to McKinsey & Company, generations are moulded by the context of their upbringing. Millennial and Gen Z consumers prefer to consume and value experiences and authenticity. The decision journey is also much more varied, with digital customers, needing multiple channels to communicate with a brand – whether it’s through chatbot, social media, or instant messenger.
Millennials and Gen Z consumers are now becoming a powerful force in the economy, and according to a report by Clearpay, they account for 25% of the total retail spending in the UK. The convenience of e-commerce has had a lasting effect on the telecoms industry, only reinforcing the need for digital-first strategies. And ignoring your customer’s needs can be fatal to telcos, even at a B2B level.
Big data analytics
No matter what industry you’re in, the most important way to increase ARPU is to understand your customers. One way to achieve this is by analysing the customer base and identifying their unique usage patterns and preferences. This can be done through big data analytics, which allows SPs to collect, process and analyse large volumes of customer data in real time. We’ll focus on how to utilise big data to increase ARPU in telecom in the next section of this blog.
Another effective way to understand customers is through data and surveys. Telecom companies can use digital channels to gather feedback from customers about their needs, preferences and pain points. This information can then be used to develop new products and services that better meet customer needs, which can lead to increased revenue and higher ARPU.
Lastly, SPs could also leverage customer feedback, reviews and ratings published across social media, review and comparison sites, app stores and more. It gives SPs a first-hand (and very honest) view of their own service and offerings. Since the reviewers are sharing their opinions and experiences with like-minded users, rather than a company, it gives the consumers more freedom in expressing their opinions of the product/service they’ve experienced. This type of feedback, also a form of eWOM (electronic word of mouth), provides valuable insights into customer pain points and areas for improvement. It’s one that’s easily accessible and an affordable method for companies to take.
SPs need to be mindful of the differences among their customers and how they interact with their service. By understanding the different types of customers, they are one step closer to meeting their needs. This in turn enables them to build stronger relationships, increased loyalty and higher ARPU over time.
2. Offer personalised plans and services to increase ARPU in telecom
Having analysed customer data and identified patterns in behaviour, the next step on the journey to increase ARPU in telecom is to personalise the experience. Let’s be honest, no one likes to feel like a number. The best way to change that is by tailoring plans, services and interactions with customer service to the unique needs and preferences of individuals. Creating a better customer experience (CX) can lead to increased loyalty and Customer Lifetime Value, and ultimately drives higher ARPU.
But how can SPs achieve that? They can start by segmenting their customer base based on factors such as usage patterns, demographics, and preferences. Subsequently, they can then create and offer customised plans and services for each segment.
Personalisation based on customer behaviour
Below are two examples of segmentation and personalization based on specific customer behaviour:
1. Heavy data users – those users need higher amounts of data so the regular plans won’t cut it for them. SPs should identify those users and offer plans with higher data limits through in-app recommendations or push notifications.
2. Frequent travellers – if an SP notices a user who often uses roaming they should be able to provide them with a package tailored to frequent travellers – with more attractive roaming prices tailored to their destination of choice.
This approach ensures that customers get plans and services that are aligned with their unique requirements, leading to increased satisfaction, lower churn and willingness to pay higher prices.
Personalisation based on historical data
Another way to personalise the experience is to analyse historical data such as browsing history, location data, and usage patterns. It allows SPs to gain deeper insight into their customer preferences. This information can be used to offer personalised promotions, discounts, and recommendations.
For example, an SP may identify that a significant portion of their users use most of their data to stream video content on their mobile devices. Based on this insight, the SP can create a personalised promotion for this segment of customers, offering a higher-priced plan that includes unlimited data specifically for video streaming services.
Using targeted marketing campaigns, such as SMS or email the SP can communicate this personalised offer to eligible customers. It would be best to offer discounts and incentives, such as free trial periods for premium video streaming services or discounted monthly subscription rates to entice the users to upgrade to the new video streaming plan.
The result? Higher ARPU, lower churn and increased loyalty among the video streaming segments. And that’s just one example. Each SP could identify tens, if not hundreds, of specific segments and create a unique value proposition for each one of them.
Personalised customer service
According to McKinsey & Company, 71% of consumers expect personalisation from a brand and 76% get frustrated when they don’t find it.
Source: McKinsey & Company
Good customer service is one of the best ways to differentiate yourself from the competition. Customers have come to expect it. When done right, personalisation builds trust and enhances customer engagement, all while allowing an SP to build a deeper relationship with their customer base. But how can telcos make their customer services more personal?
A few solutions are to:
- Address the customer by their name, and get to know your customers.
- Leverage customer data.
- Deliver seamless omnichannel experiences.
It’s important for SPs to get the right balance. Over-personalising the service can be too much and even be tiresome to the customer, potentially turning them away from the business entirely. Ultimately, a personalised service should be designed to genuinely serve the customer. Whether it’s through curated product suggestions, or continued experiences starting from the chatbot to a customer service associate in instant messenger. Providing personalised value in the service and communications to customers makes a massive difference between a sour experience and gaining a loyal customer.
3. Improve service quality
With so many options available to consumers, businesses must work hard to attract and retain customers. One way to do this is by enhancing network infrastructure and service quality. This could mean investing in faster internet speeds, upgrading equipment, or expanding coverage areas to ensure that customers have access to reliable and high-quality services.
SPs can harness the power of data and analytics to identify trends and patterns in customer behaviour. By analysing large datasets, companies can identify key trends and patterns that may be invisible to the naked eye. Those patterns include seasonal variations in usage, changes in customer preferences, or emerging market trends. This information allows SPs to make more informed business decisions, improve products and services and enhance the customer experience.
4. Cross-selling and upselling to increase ARPU in telecom
Cross-selling and upselling are important strategies for businesses looking to increase revenue and enhance customer loyalty. According to Hubspot, 72% of sales professionals who upsell and 74% who cross-sell say that the strategies drive up to 30% of their revenue. In recommending additional services or upgrades to existing customers, companies not only increase their revenue, but also provide a more comprehensive and valuable experience. Improving customer satisfaction by providing a more complete solution. For example, an SP could offer a bundle package that includes internet, streaming services, and phone services at a discounted rate.
On top of this, through analysing customer Doing so effectively and successfully could increase ARPU and reinforce brand loyalty with customers.
5. Implement loyalty programmes to increase ARPU in telecom
Implementing a loyalty program is a great way for telcos to reward customers for their loyalty and encourage them to continue using their services. By offering incentives such as discounts, special promotions, and exclusive access to services, SPs can create a sense of appreciation and value for their customers.
Through rewarding high-value customers, companies can encourage them to continue using the services and potentially spend more over time. Telcos can increase customer retention, enhance customer loyalty, and ultimately drive long-term growth. For example, rewarding customers with points for every certain amount they spend. Or by implementing referral programmes, offering an amount of data for every new customer that signs up to the service using their personalised referral link.
Another option is to add tiered membership levels to offer increased benefits and rewards to consumers who have been with the service for a long period of time. Such as access to priority customer support, faster data speeds or access to premium content and discounts. Not only does this encourage customers to upgrade their membership level but it also creates a sense of exclusivity, thus it can increase ARPU in telecom as customers strive to unlock higher membership tiers and more rewards.
In conclusion, focusing on tactics to increase ARPU in telecom is crucial for success. ARPU is a key metric that provides insight into customer behaviour and revenue streams, allowing businesses to make data-driven decisions that can lead to increased revenue and improved customer retention.
Implementing strategies such as personalised plans, improved service quality, cross-selling and upselling, and loyalty programs, telcos and SPs can enhance the overall customer experience and increase ARPU over time. Ultimately, by prioritising ARPU as a key performance indicator, businesses can stay ahead of the competition, build long-term relationships with their customers, and drive sustainable growth in the telecom industry.
If you’re struggling with increasing your ARPU, Mobilise’s HERO solution can help. Contact us here for a demo or to find out more here.