Reclaiming a Lost Opportunity:
Why Mobile Network Operators
Missed Out on the App Economy
Reclaiming a Lost Opportunity: Why Mobile Network
Operators Missed out on the App Economy -- And How
Gateway Apps are the Key to Fighting Back
Mobile Network Operators (MNOs) face a dilemma: they fund the networks
and subsidize many of the devices that power the digital landscape, and yet
they are mostly marginal players in new digital ecosystems such as social
networks, search, app-stores, apps, video distribution, cloud-services and
personal storage. Ironically, the very smartphones that are so central to MNO
strategies threaten to accelerate this marginalization.
In 2012 the smartphone passed a little noticed threshold in the US: smartphone
owners now spend as much time interacting with their phones as they do watching
TV - approximately four hours a day in both cases. Moreover, close to half the
people watching TV are using a smartphone or tablet simultaneously. Although the
immersive power of the flat-screen TV is undeniable, a formidable rival for user
attention has emerged.
Digital titans have made mobile their primary battleground. Facebook’s weakness
in mobile hurt its IPO, and as its mobile revenue has exploded, so has its stock
valuation improved. Apple, Google, Amazon, Microsoft are all increasingly anchored
around mobile. Although the mobile battleground is varied, the primary front is in
mobile applications (apps), both native and mobile web. The battle for positioning
is ruthless, hypercompetitive and ultimately arbitrated by users – even Apple had to
bow to user preference for Google’s Map for iOS over its own version. Despite more
than one million apps available and over 100 billion downloaded across the various
stores, most users regularly use only 10-15 apps, and the top 100 apps drive 90
percent of revenue and usage.
In this context, MNOs have fallen behind in their share of mobile user attention.
Until the smartphone explosion, MNOs commanded virtually 100 percent of user
attention, whether via voice or SMS or through pre-loaded (“on-deck”) content. By
contrast, MNO’s presence today in the app space is at best marginal. We are not
aware of a single MNO app in the top 100 enterprise apps in the US, and globally
most MNO apps languish far down in the charts. Even with core services such as
messaging, third-party apps such as WhatsApp are gaining against MNO services,
and voice is likely to face a similar fate as third party voice apps deliver equal or
even superior experiences in 2013.
MNOs have an imperative to become leaders in apps or they will face long-term
consumer irrelevance as the app economy surges forward. Estimates from NPD
and Flurry bear this out: between 2010 and 2012, daily voice usage in the US has
declined from 35 minutes to 20 minutes, while daily app/mobile web usage has
surged from 133 minutes to 197 minutes.
This is not to suggest that MNOs should seek to reclaim the content and gaming
spaces where they are competitively disadvantaged. Instead, MNOs need to harness
the multiple ways in which they already interact with users today – via TV, radio,
newspaper, stores, online, SMS, email, call center, IVR, chat, and social networks
– and integrate them into a smartphone-mediated experience. This is what we call
the “Gateway App Strategy.” Although this paper focuses on MNOs, it is equally
relevant to any subscription business.
The Gateway App Strategy is based on three premises: Convenience, Capability,
and Superiority
1. Convenience
Today, 30-50 percent of interactions between smartphone customers and MNOs are
handled via a smartphone, even though this is motivated by convenience (as mobile
devices substitute landlines and computers) more than by design. For example,
estimates from Nuance and Critical Path suggest that more than 30 percent of
calls to customer care are made via the mobile phone and more than 30 percent of
MNO emails are opened on the phone. By definition, 100 percent of MNO SMS are
delivered by phone.
2. Capability
Every interaction between a customer and an MNO can technically be intermediated
in part or in whole via a smartphone, preferably via a Gateway App. For example,
smartphones can enable a chat session or voice call with a service representative,
schedule a store visit based on proximity or user preferences, or channel social
network interaction via Twitter or Facebook.
3. Superiority
A well-designed app experience can employ the processing power, usability and
contextual awareness of the smartphone effectively enough to become the preferred
mode of interaction across any channel. Just like Google, Facebook or LinkedIn’s
apps are becoming the preferred mode of interaction with those brands, so should
the Gateway App.
Building on these premises, we would typically organize a Gateway App Strategy
along the following lines:
1. Build an intuitive user journey, from first contact to completion. Users
expect maximum value for minimum effort. Gateway Apps should work “out of
the box,” with zero customer effort. Using built-in network authentication, device
analytics and customer information, they should provide critical data or services to
help users complete their desired tasks, within seconds of opening the app. After
a successful launch, it is key that the entire experience remains intuitive and fast,
that it does not break, that it does not degrade into a non-mobile optimized session,
and that its users can complete all their desired tasks within the same environment
– their mobile device.
2. Integrate and then replace notification channels. Many MNOs use SMS or
email for notification. These channels are almost always disconnected from one
another, from the app experience and from other modes of customer service. For
example, MNO SMSs often do not allow a response, cutting off a critical feedback
loop. In the short term, the MNO should maximize the use of these “free” channels to
push the app. An MNO with ten million users may be sending upwards of one billion
notifications per year via SMS/email. Assuming a 1-2 percent app adoption rate,
they should be able to drive almost 100 percent app adoption with no incremental
distribution cost through SMS and email push. These channels can also be tested in
small sample sizes, giving the MNO confidence prior to a comprehensive campaign.
In the medium term these channels will be displaced by In-App notification (e.g.
Apple’s APN), allowing much tighter integration of the operator “push” activity into
the user response.
3. Make the app the customer gateway. The app should maximize self-service,
but also choice. For example, a user may want to switch from a text self-serve
mode towards a voice self-serve mode, via an IVR session launched through the
app. Or a user may want to engage with a human via chat or a live call via the app.
By funneling live sessions through the Gateway App, many expensive (for the MNO)
and frustrating (for the user) calls may be eliminated altogether, because the desired
task can be completed without human intervention (for example, checking account
balance). By channeling the remaining calls through the app, including automatically
porting customer, device, and prior transaction data to the care representative,
MNOs can reduce user authentication time and handling time. MNOs can also
better predict call flows (app usage will be a leading indicator of call usage) and
manage call volumes (for example, initiating chat sessions for customer problems
which are likely to trigger voice calls, which are longer and more expensive).
Given the potential benefits of app-centered care, MNOs should heavily promote
and incentivize customers to access all services via the Gateway App, including
providing priority access or even charging for calls not made via the app.
4. Integrate 3rd party services consistent with the MNO proposition. Success
in the prior steps can help the operator establish credibility with the user. A satisfied
user may now be ready to adopt other services using the Gateway App. These
services could include mobile commerce aggregation, over-the-top communications
services, personal cloud storage and other products that fit within the MNO brand.
It is critical that any services retain the same standards of usability and reach of
the core MNO-related app services. By promoting frequency of usage in these
adjacent services, MNOs can ensure that their app remains a top destination. In the
short-term they should also price these services for break-even or even be willing to
subsidize some services if the net benefit is superior.
5. The Cool Stuff. What we have described above is highly valuable but only the
beginning. The amazing power of smartphones could allow MNOs to deliver truly
transformative experiences. For example, the Gateway App could be integrated
with operator TV advertising through recognition technologies to deliver a secondchannel experience. IVR agents mediated by the Gateway App could be used for
third-party engagement that could drive entirely new revenue lines. More broadly,
given the rate of advances in hardware, software and methods associated with the
smartphone, the range of what is technically possible will keep on expanding.
6. Go to War. Once MNOs are satisfied that they have built an effective app, and
gained confidence of app adoption and usage via SMS and email push, they are
ready to deploy an aggressive, multi-channel app adoption strategy. For example,
instructing store or call center reps to recommend or push the app following a
contact, promoting the app via mass-market media, promoting the app with online
users, and promoting the app and directly integrating it into social networks.
Other brands and enterprises often boldly promote their apps, even featuring them
as part of expensive TV campaigns. Once MNOs have a truly compelling app, they
could employ these strategies as well.
These prescriptions are not for the faint of heart. MNO systems are typically inflexible
and not easily manipulated to yield compelling user experiences; managers in charge
of SMS and email may resist the idea that their channels will be cannibalized once
they have helped drive Gateway App adoption; IT organizations and established
vendors will promise that they can deliver world-class implementations, despite
poor track records and limited experience in the mobile app domain; customer care
managers will resist such a fundamental change to their mode of operation.
Despite these barriers, MNOs possess compelling assets to leapfrog from app
laggard to app leader. Moreover the migration can more than fund itself through
significant savings in areas such as customer care calls. An operator with ten million
subscribers could save between $30M and $100M a year in customer care call
reduction alone by fully deploying a Gateway App strategy. After several decades of
user experience fragmentation, in which users and operators communicate across
an ever-growing number of disconnected channels, the Gateway App offers the first
opportunity for a truly integrated experience.
Senior management needs to steel itself to overcome the many barriers to success,
and lead their organizations to face the challenge of becoming “mobile-centered”.
Without minimizing other priorities, the failure to properly participate in the mobile
experience land-grab will consign the Mobile Network Operator to an ever-dwindling
role in an app-centered economy.
About MobileAware
MobileAware helps mobile network operators deliver extraordinary customer
outcomes in order to drive incremental revenue, improve retention and reduce total
cost to serve. The company’s innovative technology enables operators to rapidly
build and launch a mobile support and sales presence that is tightly integrated
with their existing systems and accessible from any device. This enables users to,
for instance, change their plan, upgrade their device, resolve technical problems
and explore new services without assistance. MobileAware has helped many of
the world’s largest operators – including Orange, T-Mobile, TELUS and Vodafone –
provide customer journeys that outperform the ordinary experience.
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