Time to Go Mobile–But Not Without a CRM Strategy


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In the past, mobile services were about voice; today they are increasingly about content. Or as Anssi Vanjoki, Nokia’s multimedia chief said even as far back as 1998, "We’re moving away from the business of ears to the business of eyes."

But it won’t happen without successful CRM strategies.

Chinese success stories
During the 2000 Sydney Olympics, Chinese mobile pioneers offered "good news" messages when Chinese athletes won medals. The short message service (SMS) proved a great success.

In late summer 2002, Coca-Cola ran an SMS ad campaign in China, featuring an interactive contest. Contestants could win a year’s supply of Coke or Siemens cell phones. More than 4 million messages were exchanged, and 50,000 Coke ad jingles were downloaded in the 35 days in which the "Coke Cool Summer" promotion ran across China.

Last year, the Supergirl—an American Idol-style contest on Chinese television—became a national pastime. Some 9 million SMS votes were dialed in for the final voting. In 2008, many expect mobile phone TV to soar with the Beijing Olympics.

Yet, SMS arrived in China relatively late and, initially, many observers thought that the "European success story" would never become a success in China. The reason it did has less to do with new technology than with efforts at CRM strategies.

In my book, The Mobile Revolution, I explored the making of mobile services worldwide. Based on interviews with 80 leading senior executives, the book has at least two lessons that relate directly to CRM and apply worldwide, particularly in emerging economies.

Until recently, customer relationship management was haunted by an anomaly. How can marketers reach and touch the customer, if they lack the technology for doing so? The new mobile services—rich voice, messaging (SMS, MMS, LBS), the Internet, content services and, ultimately, mobile phone TV—provide the great missing link. That’s the first lesson.

Tighter integration among the handsets, networks and service provisioning is boosting increased usage, new revenues from non-voice services and brand-based relationships between mobile network operators and their customers.

The secret of success has a lot to do with China Mobile’s effective revenue-sharing model. Following in the footprints of NTT DoCoMo in Japan, China Mobile’s cut (15 percent) is relatively low, compared with that of the service providers (85 percent). Such incentives boost content production, user traffic and the future of the new medium.

As far as marketers are concerned, effective revenue-sharing model is necessary but not sufficient. Success requires CRM strategy. That’s the second lesson.

"Reach and touch"
In the early 1990s, mobile penetration was still low (less than 10 percent, even in the cutting-edge markets); subscribers deployed postpaid contracts; and the services were simple (voice). Today, the penetration is high (more than 100 percent in the lead markets); new segments have been attracted with prepaids; and the services are differentiated (voice plus SMS).

The problem is that, with increasing diffusion, average revenue per user (ARPU) is decreasing.

In high-income markets—first in Japan, later in Western Europe and the United States—the decline has been reversed with new content-driven services. In these markets, the relatively high GDP per capita makes possible the adoption of new services.

Low-income, emerging markets are haunted by relatively low GDP per capita. How can these markets reverse their declining ARPU?

Consider the Chinese case stories. These campaigns were not successful because each deployed a new marketing channel (SMS) but, instead, because all used SMS to develop more sophisticated CRM strategies.

In the past, competition was about attracting new subscribers. Today, it is increasingly about retention. To marketers, new mobile services are a direct means to "reach and touch" their customers. In the future, the challenge will be to deploy these services to identify and segment customers while building on interactions to customize new offerings.

At first, new mobile services will be popular as a novelty, as evidenced by the lead markets. Over time, these services, too, will be commodified. Mobility may be the missing link to truly reach and touch the customers. But it is CRM strategies that will make or break this link.

Dan Steinbock
The India, China and America Institute
Dan Steinbock, Ph.D., is the ICT research director of the India, China and America Institute, the faculty spokesman of the Forum To Advance Mobile Experience of the CMO Council and the author of The Mobile Revolution (Kogan Page, 2005).


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