In previous blog posts on bundling, we have covered why telco bundling is a smart way to grow your audience in emerging markets and how soft bundles help tap into the dominant prepaid mobile user base of emerging markets. To acquire and retain users from these partnerships, a seamless and fast customer on-boarding process coupled with active upselling is critical. Let’s take a look at how to achieve that.
Getting a user to sign up through a bundle deal and converting them into a paying user consists of four parts: (1) bundle offer activation, (2) authentication with the merchant, (3) transition from bundle offer to paying user and (4) making sure consumers remain on as paying customers. What is needed for these steps to take place?
How can consumer participate in the bundle offer?
Based on the market and the service itself there are many different offers that can be compelling for the consumer:
- If you’re on existing telco package X, get discount/Y months trial/Y months for price of 1
- Sign up for telco package X, get discount/Y months trial/Y months for price of 1
- Buy prepaid SIM card, get discount/X months trial/X months for price of 1
- Buy 5GB of mobile data, get discount/X months trial/X months for price of 1
To generalize, consumers eligible for a bundle need to purchase something from the mobile operator, and in return they get a better service offering from the merchant than other consumers.
Once the exact details of the bundle setup are fixed, the mobile operator and merchant need to set up a way to provision the bundle offer to consumers who are permitted to use it.
Merchants need to know which users are eligible for the bundle offer when consumers end up on the service page or app to provide the bundle benefit. User authentication with bundling takes place with two steps:
- Consumer triggers their bundle offer with the mobile operator (e.g. signs up for a specific telco package) and mobile operator notifies the merchant
- Consumer starts using the merchant’s service and merchant provisions offer to consumer
The first step is something that only the mobile operator has control over, while the second step can be resolved in several different ways:
- Consumer activates offer on carrier website through carrier-hosted flow
- Consumer receives unique code from carrier, redeems it on merchant homepage
- Consumer receives URL via SMS, activates offer on merchant homepage
Fortumo’s Bundling Platform users the third approach as it provides the least amount of steps that the user needs to take in order to activate their offer and thus increases the amount of people who are likely to participate in it. As an example, here is how user authentication via Fortumo would look like for a prepaid SIM card user (click for bigger):
Merchants need to pay special attention to the fact that some consumers will already have an account with their service, while others will not. Depending on the conditions, some users might not be eligible for the offer (e.g. they already redeemed it for their account in the past) and for some, registration with the merchant has taken place through a social media platform. All the different scenarios need to be mapped out and a specific on-boarding flow generated for them.
Transition from free trial to paid account
Once the consumer has fully redeemed her bundle offer, she need to start paying for it when the bundle offer expires. If the user has been brought in through mobile operator channels, it also makes sense to leverage their infrastructure for payments. In this manner, the user does not need to provide any additional details (such as entering their credit card number) and the upgrade to a paid account is frictionless.
If the user is billed through mobile operator channels, it can be done in one of two ways: the mobile operator directly charges the user on their phone bill for the service or the charge is done through carrier billing. The main difference here is that with direct-to-bill prepaid users can not be charged. Merchants who want to target the entire carrier user base need to either integrate both methods, or go for the easier approach of simply using carrier billing for everyone. From the mobile operator perspective, the second approach is also more convenient, as invoicing systems in use do not have the flexibility needed for quickly setting up such charges and usually evolve a complex, time-consuming process.
Retention of converted users
When agreeing on bundle partnerships with mobile operators in emerging markets, merchants should always aim to also have the prepaid subscriber base included in the bundle deal. Just one look at the distribution of the audience gives an answer as to why:
- India: 95% prepaid, 5% postpaid
- Indonesia: 98% prepaid, 2% postpaid
- Russia: 78% prepaid, 22% postpaid
- Pakistan: 96% prepaid, 4% postpaid
- Philippines: 95% prepaid, 5% postpaid
Depending on the market, the metrics of the prepaid audience would have to be 4x to 50x worse in order to not justify their involvement in bundle offerings. Fortunately, there are several effective tactics that can be used to ensure that prepaid bundle results end up on a good level.
As mentioned in the previous blog post, the main challenge of the prepaid audience is that they do not have an open credit line with their carrier. If a charging attempt happens, it could fail as they do not have sufficient account balance for it. There are several ways how to overcome this:
- Localized service packs: Instead of billing users on a monthly basis, weekly service packs can be created with pricing set accordingly; consumers are more likely to have $3 on their account to pay for 1 week access compared to $9.99 for 1 month. Providing such an option to users gives them the opportunity to pre-select a package that is more affordable to them;
- Step-down charging: Should a charge attempt fail, an attempt will be made to charge the user at a lower price (and duration). While similar to the previous solution, this can also be used as a stand-alone mechanism, without having to create separate service packs. Modern direct carrier billing platforms support dynamic pricing means that this approach can be highly flexible (e.g. instead of 1 month, attempt to charge for 29 days; if that fails, 28 days; then 27 days and so on);
- Grace periods: Users can be given continued access without a payment to the service in case of insufficient balance, and the charge can be attempted again at a later date. With sufficient data on the market, charge attempts can be retried at times when users are more likely to have money on their account, without negatively impacting their experience with the service.
- Mini-bundle offers: With carrier billing integrated, the mobile operator also has motivation to keep the consumer a paying user of the digital service as they receive a revenue share from each transaction. When users unsubscribe and churn after the bigger bundle deal runs out, tailored offerings can be created to bring those users back to the service. For example, an initial offering might involve getting 1 month of free service with the purchase of a $10 SIM card. If such a user activates the bundle offer but then does not continue as a paying customer, a follow-up offer can be sent: “Load 5GB of data onto your account and get 2 weeks extra access”. In case the mobile operator is willing to surcharge the user, the additional revenue can be split with the merchant and another attempt is made to get the user to upgrade to a paid account.
The key for all the mentioned activities to succeed is active communication with the consumer. For this, both the mobile operator infrastructure (SMS) as well as push notifications by the merchant can be used. While with credit card based billing and postpaid users it does not make sense to inform users of an occurring charge (increasing the likelihood of unsubscribing), the effect is opposite with prepaid users. Notifying users after a charge has failed will also give loyal users the opportunity to resolve the issue and not have to go through the subscription process again.
Such activities can have a significant impact on billing performance. As an example, recently we implemented SMS notifications for one of our merchants in the Vietnamese market. With 89% of people having a prepaid SIM card, low account balance errors are inevitable. To mitigate this, if the user payment failed, they were notified of it with a link to top up their SIM card online. As a result, we saw a 23% uplift in revenue as users topped up their account for the retry attempt.
Congratulations, you’ve managed to get to the end of the post and hopefully have a better understanding of what bundle partnerships require to succeed. If you’re a digital merchant looking to acquire new users and grow your revenue through carriers, consider Fortumo’s Bundling Platform for it and get in touch.