Beating 'Build It, and They Will Come'
MayInfo's Christopher Cherry explains how location intelligence and demographic data can be used to rollout new services profitably.
Once a carrier has determined which among the various newly developed mobile applications will likely create the most demand among customers, it faces an entirely new set of challenges. As carriers race to deploy these services, they must bear in mind that all services do not appeal to all consumers. While it is true that services like high-speed data, mobile gaming, push-to-talk, mobile communities, location aware services, ring tones, and wallpapers are rapidly entering the marketplace, where exactly does an individual carrier focus its efforts to gain maximum share? Will high-speed data service provide significant revenue everywhere? Will mobile communities appeal to all? Is mobile gaming for everyone? Most likely, the answer is "no."
Instead, in order to create new revenue streams and increase stickiness carriers would do well to identify target customers for each new service, and then locate geographic pockets that contain high density clusters of these target customers. Demographic and location analysis can help determine where these concentrations exist, and allow carriers to rollout specific services to specific market areas in a manner that will maximize the take rate and revenue stream for each service rollout.
Let me provide a few examples:
Perhaps the ideal high-speed data consumer is a business person over the age of 40. Or maybe the ideal mobile gaming consumer is a 20-something fresh out of college, working his or her first job. Perhaps culturally, a particular service is more appealing in one area of the country as compared to another. Perhaps certain business segments have a need for field force tracking capabilities available through mobile location services.
With these types of considerations in mind, wireless carriers (and MVNOs) can set their minds to answering the question, "Where are these groups located?" To get the answer, they can turn to analyzing detailed demographic information when planning and deploying new wireless services.
For example, a service provider launching a multiple handset family plan can examine the "Households with Children" data. This data is readily available and identifies block groups with the highest concentrations of households with children of the target age. Taking a look at this data enables the carrier to pinpoint areas in which multiple handset family plans will have the highest success rates.
To put in another way, if a carrier is deploying mobile gaming services targeted towards college kids, it would not make much sense to launch in an area where retirees greatly outnumber college students. By analyzing the demographics by age, carriers can ensure that this won't happen.
Carriers can also leverage detailed business demographic information. They can analyze the number of employees by industry type within certain market areas, for instance, or they can identify geographic concentrations of businesses according to SIC (Standard Industrial Classification) or NAIC (North American Industry Code). This data can help a carrier target business-specific services to the areas in which the demand will be greatest.
The Bottom Line
With the US wireless market reaching upwards of 180 million subscribers in 2005 and revenues of $100 billion, the stakes have never been higher. Carriers are increasingly looking to expand their coverage areas and offer new services to increase revenue. As the market crowds with seemingly limitless new capabilities, customers' attention spans can absorb only so much. At the same time, however, new infrastructure and new services need to pay for themselves quickly and efficiently. Carriers need to be able to focus new services and capabilities where they can quickly achieve maximum impact. By incorporating demographic analysis into the very core of service enhancement strategies, carriers increase the chance that their deployment decisions go straight to the bottom line.
Christopher Cherry is the Strategic Industry Manager, Communications at MapInfo.