Abstract
The focus of many Mobile Network Operators (MNOs) over the last two to three
years - in terms of tariffs - has mostly been on migrating prepay customers to
contracts where, it is perceived, the higher ARPUs typical postpay customers
generate will deliver growth and EBITDA improvements. Outside those markets
where prepay dominance drives MNO strategies, considerably less attention has
been paid to developing optimum prepay tariffs that can deliver ARPU growth
and improved retention within that portion of the customer base.
In markets where prepay dominates (notably Italy) greater levels of innovation
in prepay tariffs have been demonstrated, as shown in the Maximising Wireless
Profit (MWP) report The Success of 3G Services in Italy: A Case Study, March
2006. The lack of many of the mechanisms for retention automatically available
for postpay customers (contract period and billing relationship, for example)
means that the main challenge for the prepay segment of the market is
retention rather than initial adoption. Despite this, surprisingly little
attention has been paid by most MNOs to loyalty schemes for prepay customers.
Prepay customer registration was examined in the MWP report Relationship
Building Strategies for Prepay Customers (April 2006) and prepay upgrade and
loyalty programs in the MWP report Prepay Upgrades in Europe (August 2006).
In this report, MMD examines the impact of prepay tariffs on total
connections, prepay share of the total market, net additions, ARPU and
effective price per minute in seven European markets which show great
diversity in terms of maturity, competition levels, innovation, population
density and regulatory background. The objective of this report is to identify
and examine best practice and innovative prepay tariffs and loyalty programs
to provide insight to MNOs and inform them in developing the optimum approach
to their own customer base. We analyse and identify the two key critical
success factors in developing a sustainable and profitable prepay offering.
Using examples drawn from, for example, Sweden and Denmark where tariffs have
been launched which have had a significant impact on adoptions, we recommend
approaches to assist MNOs in optimising their approach to their own prepay
customers.
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