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Aug 04 2015

Innovative prepaid mobile pricing plans

The traditional “one-size-fits-all” strategy for prepaid mobile pricing plans is now outdated. Customers are demanding more innovative price plans that give them greater control over what they subscribe to and how much they pay. If mobile operators segment their prepaid customer base, they can better address their customers’ needs with relevant data offers and create-your-own price plans.

SUB-BRANDS ADDRESS THE DIVERSE NEEDS OF NICHE CUSTOMER SEGMENTS

A sub-brands strategy is 1 approach operators use to address the diverse needs of niche customer segments. Sub-brands let mobile operators tailor their offers to make them more relevant for specific customer needs. Prepaid customer segments are based on demographic and usage behavior which, in turn, can lead to targeted plans and promotions.

Figure 1 shows 5 distinct categories of sub-branding.

Figure 1. Customer sub-segments for prepaid mobile services

THE GLOBAL MOBILE TEEN/YOUTH MARKET PROVIDES HUGE OPPORTUNITIES

Teens and tweens heavily use mobile services. This offers opportunities for service providers who create offerings to attract both teens and parents.

Fast-growing demographic

Among mobile service customer sub-segments, 1 of the fastest growing is the teen/youth market. According to a recent study of teens conducted by Pew Research Center:

  • Nearly 75% have or have access to a smartphone
  • 94% report going online daily
  • 24% say they are online almost constantly

This market is also the greatest user of multiple social networking sites, specifically Facebook . Given this growth, many prepaid mobile pricing plans aimed specifically at the youth market are starting to appear.

Figure 2. The global youth market is a great user of social media

The impact of parental concerns

As smartphone usage by teens increases, parental control of young smartphone and social media users is now a reality. More parents are concerned with safety -- how much time their kids spend on the phone and what apps they’re using.

Figure 3 shows that 70% of parents monitor their child’s online activity while on Facebook and other social media sites. Also, 46% of parents have password access to their children’s accounts.

Figure 3. Parental concerns about their kids’ smartphone usage -- From Zact U.S. Mobile Family Survey

These concerns have led to a number of prepaid programs oriented to kids that keep parents in mind. One of the most successful prepaid mobile pricing programs in this sub-segment is Kajeet.

Kajeet's service plans consider the safety of its users in many facets. Mobile downloadable content such as wallpapers, ring tones, and games are screened to ensure that they are child appropriate. The free parental controls are accessible by parents logging into their accounts. The services are organized into 5 different managers, with flexible pricing plans.

  • Contact Manager: Block unwanted calls
  • Feature Manager: Prevent unsafe website access
  • GPS Phone Locator: Find your kid
  • Time Manager: Set time limits
  • Wallet Manager: Keep costs down

CUSTOMERS DEMAND MORE INNOVATION

Prepaid customers no longer want low-value apps. They seek customizable plans to meet their individual needs and price points, including personalized offers that let them pay only for services they want to use. With these “create-your-own” plans, customers can choose different units for voice, SMS, and data, along with optional apps -- both prepaid and postpaid.

This helps to control costs and drive down bills. However, the customer may not have complete control of all the elements within the package. For example, minute increments, SMS, or data volumes may be fixed.

Mobile operators are now experimenting with creating their own schemes. Examples of create-your-own plans in the U.S. that will help prepaid mobile subscribers have more control over monthly spend are as follows:

  • Virgin Mobile: Adjust plan to add or remove voice minutes, text, or data allowances any time of the month, directly from any device
  • Go Smart: Select specific applications (Facebook, Spotify), without subscribing to a data plan
  • Ting: Make payments only for what has been used, instead of paying a flat rate for “unlimited” everything

Prepaid mobile pricing continues to grow and its customer base is becoming more demanding. To attract new customers and encourage loyalty among existing customers, mobile operators need to experiment with innovative and value-focused prepaid application pricing plans. Customer savvy mobile operators should consider the following:

  • Better segment customers and price plans based on demographic and usage behavior
  • Deploy a sub-brands strategy to take address the diverse needs of niche customer segments and improve ARPU
  • Accept that “one-size-fits-all” plans are ineffective
  • Target offers and relevant promotions for prepaid customers to induce loyalty

Additionally, mobile operators should adopt billing and charging capabilities that offer greater flexibility and faster time-to-market in launching any new service and pricing plan.

An example of a highly reliable and flexible charging system is SurePay from Alcatel-Lucent. With SurePay, carriers can simultaneously offer a variety of charging options for a wide range of content types. SurePay supports many different tariff plans including shared data plans for consumer and enterprise subscribers.

If mobile operators follow these few pieces of advice, then they will be on the path toward overcoming many of the challenges that face the industry, such as reduced ARPU, lack of loyalty and high churn. It was been my intent to provide examples on how to address these challenges through new and innovative ways of providing prepaid services to customers.

RELATED MATERIAL

Smart Plan solution pageSurePay product page

To contact the author or request additional information, please send an email to networks.nokia_news@nokia.com.

About Barbara Sampson
Barbara is responsible for marketing/marketing communications for the Alcatel-Lucent P&C portfolio, which includes policy management, charging, and diameter signaling. For years, Barbara has supported a number of marketing-related functions across the company, including market research, competitive intelligence, strategic planning, demand generation, and business development. She holds an MBA specializing in Marketing from Fairleigh Dickinson University and a Bachelor of Science degree also specializing in Marketing from Rider University.
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