Dave Labuda Dave Labuda Founder, CEO and CTO - MATRIXX Software

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Deploying market efficiency in telecom

  • As the telecoms industry matures and shifts to providing primarily digital services, operators can look for examples of success to other industries that have mastered the art of creating the optimal value exchange with their customers.

    BillingYes, it may be hard for some to believe that other industries are ahead in this area, but it doesn’t take long to find some excellent examples. Retailers are the most prominent example and the ones we all interact with on a daily basis.  Both physical stores and online storefronts are able to constantly adjust their pricing, inventory, positioning, placement, product offers, and promotions based on customer interaction, behaviour and segmentation.  The goal is to drive to the optimal value exchange with every customer regardless of whether they are spending $10 or $100.

    For retailers, it starts with the selection of products they wish to stock. No hit and miss here. They monitor past sales of similar products and quickly work out how much stock they need, where to place it and who to market the new offers to. They work closely with big brands and often use ‘loss-leaders’ (products sold at near or below cost to attract customers) that they position carefully next to attractive alternatives - higher margin products.

    Retailers carve niches for themselves. Companies like Walmart appear to be cheap and cheerful and are geared towards people conscious of how much they can spend.  Costco may cost less for branded products but customers give up some convenience, range and often have to buy in bulk. Big brand specialty outlets attract higher spenders that wish to maintain an image. They all work to attract their target markets but are inherently the same in the way they operate.

    The market knows what to expect from each. It is as if they have trained their prospective markets by honing what can be termed as the ‘value exchange’ – each knows its customers and what they value and offers them what they actually want at the price point they think is appropriate.

    Years of data gathering determines where goods are placed on shelves or their positioning online. Premium places like display ends are ‘sold’ to suppliers keen to increase exposure and sales. Low margin big name brands are placed low or high on shelves so that when people seek them out they are confronted, at eye level, with competitive brands that yield higher margins to the retailer.

    As an example, when a customer looks for a bottle of wine, there are often many other items in the same aisle.  Retailers will strategically place wine openers, decanters, and other gadgets that will enhance the wine experience.  They’ll also place high end or recommended cheeses, crackers and chocolates nearby.  The wine is the primary purchase, the others are complementary and nearly always have higher profit margins. Amazon uses a very similar technique with its online retailing where each search result is accompanied with “customers that bought this also liked this.”

    Store loyalty cards are an excellent way of monitoring everything a customer buys at the checkout and the information is processed to create a personal profile that allows the retailer to promote items they know the customer wants. Most supermarkets print out ‘specials’ vouchers at the point-of-sale with discount offers for the next visit, and these are geared specifically to the customer.

    Every aspect of the retailer’s operation strives to achieve the best market efficiency. From sourcing goods, collecting, storing, distributing and delivering – it’s all about what the customer wants and relates that back to offering them products that maintain the best margins.

    Mobile operators, in particular, would be well advised to introduce their own form of ‘market efficiency’ as their customers provide them with a treasure trove of usable data on usage, Internet access, call patterns, location and travel. Properly mined, this data can lead an operator to contextual selling to each of their customers.

    Perhaps the first area that could be exploited is roaming. Operators know when their customers are leaving a country as an airport is the last time they log in before reaching their destination. Offering special data roaming plans before they leave, or when they connect at their destination is a start. This simple service, teamed with ‘dynamic pricing’ through their real-time charging platform could go a long way in keeping customers connected and adding valuable revenues, while keeping the customer abreast of exactly what they are spending and enabling them to control how much they spend.  And that’s what market efficiency is all about.

    Dave Labuda
    About Dave Labuda Dave Labuda works as Founder, CEO and CTO at MATRIXX Software
    More information : www.matrixx.com


  • Beheeddine HAJRI likes this
  • Beheeddine HAJRI
    Beheeddine HAJRI interesting.
    i'd say that telecom field is very large ..
    the commercial strategy is different from an actor to another.
    In what concerns the OpCos, i think that the challenge is to product and sell their own content. ...  more
    May 13, 2014
  • Sri Jagadish Baddukonda
    Sri Jagadish Baddukonda Completely agree. However operators today do conduct campaigns based on location etc and offer unique rating plans to the subscribers whcih are real time campaigns. The challenge is in doing exhaustive What-If analysis on the usage of a particular subscri...  more
    May 14, 2014