Phones Come First
By Peggy Anne Salz, Mon Feb 07 10:00:00 GMT 2005

Most segmentation strategies focus on up-selling and cross-selling services.
But such efforts are misspent if users don't own handsets that deliver a compelling multimedia experience in the first place. A growing number of operators are growing wise to this paradox, and their solutions may be surprising.

While problems of compatibility, interoperability and pricing continue to dog the progress of mobile data services, evidence is mounting that technology alone is not entirely to blame for sluggish adoption rates. In fact, it's the customer experience -- and the way operators market it -- that requires the most improvement.

Some operators are getting the message and taking more responsibility for the user experience. But O2 in the UK has gone one better. Its informal "Walk Out Working" campaign not only trains customers to use the phones they buy; it makes sure they can use mobile data services when they leave the shop. What's more, O2 follows up with a few well-targeted free alerts and images to further whet user appetite for still more mobile data content and ultimately promote viral marketing and sharing between users.

Laurence Alexander, the CEO of O2 Online, revealed in December that this approach, and the launch of several new MMS-based services including a talent search for England's next supermodel, has allowed O2 to report an overall "marked" increase in mobile data services adoption. It reports upwards of "600,000 MMS alerts delivered to users on a weekly basis."

Trust Is Good, Control Is Better?

Such examples clearly show operators can significantly influence user behavior by improving training. Imagine the results if they would go a step further and make sure users have the right handset from the start.

In the early days of mobile data services, devices were the bottleneck and operators were happy to have handsets -- any handsets -- on the shelves. The user experience handsets delivered was a secondary concern. That mindset is changing fast.

Indeed, handset quality and usability are a prerequisite to successful mobile data services. T-Mobile, for example, is one of a growing number of operators to conduct internal audits of the handsets it sells, with the intention to separate the good from the bad. In the case of T-Mobile, this data will be fed back to handset manufacturers, who will likely implement improvements based on these benchmarks. Other operators are short on patience, and intend to simply remove handsets they believe don't do their mobile data services justice from their shops.

This is a novel approach -- but it falls short. It certainly assures that users will only choose from top-notch handsets, but makes no effort to match individual user behavior with handset capability.

Telenor's New Twist

During the early stages of its 2004 MMS launch, Norway's Telenor identified a contradiction between those customers it believed were most likely to use the mobile data services -- females age 15-25 -- and the customers who actually had the proper feature phones -- males age 25-35.

This disconnect caused Telenor to link its segmentation strategy and its retail approach. The result was a drive to actively target what it calls the "early majority" segment -- females age 16-19 -- with multimedia-capable phones. Based on its past experience with SMS, Telenor knew that young males were the early adopters -- but it was the early majority females that made the service a mainstream success.

To replicate this, Telenor would effectively have to play matchmaker and make sure young females bought multimedia-capable handsets. With this model in mind, it launched an ambitious advertising campaign to encourage young female users to buy the handsets it was certain would deliver a superior mobile data experience. Telenor also trained retailers to aggressively market these handsets to users.

The results are encouraging. Before launching the advertising and retail campaigns, Telenor estimated 75% of multimedia messages were sent by young males. Today the split is 50-50 between young males and females -- and there's every indication that females will soon lead in usage. In addition, Telenor saw MMS traffic rise from 16 million messages in 2003 to 45 million in 2004.

You Get What You Pay For

Telecom Italia Mobile has developed a breakthrough model to determine which customer segments are heavy data user, and which ones could be if they got a little encouragement. More importantly, it has engineered a unique retail strategy to see this through from start to finish.

TIM has quite literally put its money where its mouth is. The operator has not only determined which phones perform better than others, it has come up with a system of perks and bonuses to reward sales staff when they sell the right phone to the right user. Sales staff also receive an additional bonus when customers actually use data services.

Predictably, TIM is tight-lipped about the results, but it has revealed mobile data traffic, specifically MMS, has increased by a factor of four.

"Fancy handset design can be a total disaster from the operator perspective," notes Han Weegink, global market development manager with LogicaCMG, a telecom services company instrumental in TIM's data services approach.

He urges operators to recognize the commercial success of data services such as MMS is tightly linked to the usability of the user's device. "Operators can't control sales channels, but they should do much more to influence them."

Back On Track

To make sure customers use data services -- and assure die-hard data users use them the most -- operators are called on to make the perfect match between handsets and user groups.

This has to begin at the point of sale. Independent shops have their own agenda: they sell the phones that bring them the biggest margins. There's not much operators can or should do to change that model. However, operators can be far more imaginative in their campaigns and their compensation to make sure customers aren't swayed by factors that might compromise the end-user experience.

With text services operators didn't have to pay much attention to the devices. With data, this hands-off approach won't do.