Competition for mobile customers in Southeast Asia is intense. Alessandro Cannarsi, a partner with Bain's Telecommunications practice, discusses what matters most to mobile users in Southeast Asia and how telcos can do three things to deliver a better user experience and win in the region.
Read the Bain Brief: A New Strategy for Southeast Asian Telcos
Read the transcript below.
ALESSANDRO CANNARSI: The Southeast Asian telcos are facing intense competition. All markets are now saturated with more than 100% penetration rates. Churn is very high. New promotions are launched every month.
And despite growing data usage, revenues are actually flat on a per user basis. So it is clear that [continuing to offer] more and more data for the same price and try to steal each other's customers is no longer a viable strategy. At Bain, we've surveyed 4,000 mobile users across Indonesia, Malaysia, Thailand, the Philippines and Singapore. And we found that across all those markets, usage experience matters more for them than price and promotions.
What they want is clear. Customers want to be always connected; good call quality and no call drops; a smooth video and social media experience. And they're ready to pay more for it. In fact, we found that customers who get better experience are happier. They become promoters. And promoters are worth three to five times more than detractors on lifetime value terms.
So we believe that operators can deliver better business outcomes by focusing on a differentiated usage experience. To do that, they need to do three things. First, they need to focus on the customer segments that really matter—that is, the data-hungry, urban segments that are ready to pay more. Second, they need to measure their network performance from a customer's lens, which means, for example, measuring how many customers are getting poor or good video performance, as opposed to average network speeds. And finally, they need to prioritize their network investment to those areas where improving customer experience would generate more value. For Southeast Asian telcos, this approach results in more rational capital allocation, higher revenue per user and higher customer loyalty.