One sign that the telecom market is reaching maturity is that telecom players have shifted attention from general offers to more honed ones, tailor made for certain groups or communities. However, operators are using these offers mainly to keep their current customers happy rather than setting their sights too high on attracting new ones. Given Romania’s high SIM penetration, the bulk of these firms’ revenue comes from their existing customer bases.
By Otilia Haraga
“Because the mobile telephony market is saturated with the rate of SIM penetration among the population at over 130 percent, mobile networks are aware that keeping their current customer base and even increasing it is the key to success,” says Madalin Lazarescu, research manager at IDC Romania. He explains that competition on the mobile voice segment is fierce and operators do not seem to be gaining much, instead being obliged to make more and more advantageous offers to clients. On the medium and long term, however, these offers could become profitable and keep clients in the network or bring in new ones. Operators can then sell other services to these customers, such as mobile internet, television and content, while for business clients there are dedicated solutions such as M2M, sales force automation and MVPN.
“It is still rather difficult to attract new clients and retain the current ones in the network just by launching beneficial offers, given that your competitors are doing exactly the same thing. Therefore, operators are personalizing their offers and addressing certain niches which they are discovering through market research,” says Lazarescu. Access to some popular services such as mobile banking, advertising and content offered in collaboration with partners is welcome and increases the chances of success for newly launched offers.
“What is for sure is that as the market becomes more mature, you have to look to segments. You cannot simply roll out big advertising and expect everyone to come to your stores and buy your products,” says Julien Ducarroz, chief commercial officer at Orange Romania.
All large mobile networks have come up with offers aimed at various sections of the public, such as students, families, the Romanian community abroad or a certain company.
For instance, Vodafone has launched a postpay tariff called Vodafone Family, which confers certain benefits for calls between family members who have 2,000 minutes within the family per month and some price reductions. Vodafone Romania representatives explain the company’s approach to devising group deals.
“First of all, in creating offers for specific groups and communities we take into account customers’ needs starting from an analysis of their profile. We look at consumption behavior and use the data in internal and external studies.”
The Combine for the Vodafone Prepay Card offer, which targeted groups of up to four friends, managed to bring more new users into the network (users who teamed up attracted new friends to the group in order to receive more minutes when adding credit), but this type of offer has also increased fidelity among current users. Vodafone Romania had 9,663,000 customers on December 31, 2009.
Another mobile firm has set its sights on the Romanian diaspora. The RCS RDS service called Digi Mobil Spania mainly targets Romanians living in Spain. Launched in 2008, it consists of a single SIM card with two mobile phone numbers, one Romanian and one Spanish.
Nor has the business community been neglected. Last week, Orange launched a joint offer with cosmetics company Avon called MyAvon Mobile, which targets exclusively Avon representatives for postpay, prepay and internet services.
According to Razvan Diratian, commercial director of Avon for Romania & Moldova, there are more than 140,000 Avon representatives at the moment.
Orange is therefore aiming to gain
more clients and keep its existing ones loyal.
“I would say the project will take one year due to technical integration,” says Ducarroz. Avon is also a corporate customer of Orange, using its services. The project stemmed from the idea of community and the fact that there is a lot of communication between the 140,000 representatives and this network needs a dedicated service. Moreover, there are several advantages as far as communication within the sales structure is concerned, according to Diratian This type of alliance has to fit from a brand perspective, meaning that the two companies must share the same values, adds Ducarroz.
Currently, Orange has 10,694,000 customers in Romania. The operator’s revenues in the first five months of this year reached EUR 800 million, of which EUR 269 million were posted in the third quarter.
“Because we have a 45 percent market share, it is hard for me to say that we will develop something that excludes Orange customers. Anyway, when you are on a mature market, 90-95 percent of your revenues come from existing customers. So, to say I am focusing only on new ones is the wrong strategy on a mature market, says Ducarroz.
He adds that when telecom players were growing rapidly, as they were ten years ago, it made sense to go for new customers.
“Any company will tell you now that its first target is the loyalty of its base. Hopefully there will be a halo effect and those loyal customers will encourage their friends to join the network,” he says.
Orange is on the point of launching a new offer for special groups in partnership with Dinamo soccer club, which will target soccer fans.