A recent Gartner research report predicts what many wireless executives have long feared: Average revenue per user (ARPU), a key metric for how well carriers are monetizing subscribers, will decline in the next two years. This gloomy forecast comes on the heels of billions of dollars spent on spectrum acquisition and high-speed networks, widespread usage of powerful handsets and rock-bottom prices. Gartner also notes "Wireless data continues to be one of the most important issues in this market as a means of increasing ARPU." However, it seems no one is quite sure how to make use of these ubiquitous, broadband wireless pipes.
Ringtones and personalization only go so far, and Wall Street is clearly expecting carriers to step up with a service portfolio that gets its most lucrative customers (i.e. mid-market businesses) to loosen their purse strings.
Wireless email convinced companies to spend on high-end handsets and low-end data plans. But this isn't the killer app--as services between carriers aren't differentiated, there is a low barrier to switching providers and the ARPU lift isn't great enough.
So what kind of applications will boost ARPU for carriers? The stickier the app is. the better. The next killer app must provide such a high value that the idea of switching to another provider and starting all over is almost unthinkable. Email and consumer applications don't fit this description, but business applications like customer relationship management (CRM) software, used to coordinate sales and service activity, does.
The most mobile workers in a business are often in the sales organization. There is also a clear strategic reason to have customer data readily available to a sales force: Sales reps have a first-mover advantage when they can react to the latest information, enabling them to get a jump on the competition and win the deal. Management can be updated on sales forecasts immediately after remote sales meetings, resulting in a more accurate picture of top-line revenue. On the service side, nothing makes a customer happier than a service rep making an on-site visit to resolve their issues. Wireless CRM appears to be a good fit demographically too, since mobile workers are almost always early adopters. And if the application is developed and marketed properly, it will create "stickiness" with customers. CRM drives business processes deep into a company that prevents them from easily switching providers.
There are, of course, numerous examples of applications that deliver a fantastic experience on handhelds, and almost all of them are on the consumer and entertainment side. We've seen the explosion of consumer multimedia as a revenue-driver for carriers, and the fortunes of Apple have turned on the user experience delivered by the iPod.
By contrast, the world of mobile CRM applications is mostly clumsy and complicated--the antithesis of an ARPU-boosting application. Even worse, today's mobile CRM applications are relatively expensive and often involve partners who add cost and complexity. Carriers would do well to take a page from the consumer usability playbook and roll out intuitive CRM that's "pick-up-and-play" easy to use. It must be easy to buy, deploy and maintain without the cost of third-party technology partners.
Just as the iPod doesn't skimp on features to offer a compelling user experience, neither should the wireless industry. The right mobile application will have to walk a fine line, offering plenty of workflow and customization to justify a premium price and deliver real-world benefit, while featuring a superior user interface that doesn't make using the solution too difficult to use.
The problem for carriers in selling CRM has been two-fold: The first is product complexity. CRM solutions have long depended upon VARs and systems integrators to put solutions together for customers. However, there are CRM companies dedicated to removing product complexity, especially for small and mid-size businesses, that make it easier for a carrier's sales organization to sell.
Second is that the business practices of most CRM companies simply do not match how carriers do business with their customers. No carrier sells customer service (though I'm sure they wish they could), but this has been standard practice in business software. Finally, CRM providers must be able to guarantee application availability. Dropped calls are bad enough, but with a new, cutting-edge service, the solution must be there, period. As such, very detailed service level guarantees are a requirement for carriers and end users.
The wireless industry has caught its breath over the last few years. Consolidation has taken place, handset interoperability issues have been largely resolved and high-speed wireless data networks have been financed and built-out globally. The only question now is, how are carriers going to fill those pipes and recoup that investment? By targeting the broad mid-market where their best customers already are, focusing on the needs of the most mobile employees and delivering an iPod-like user experience.
Natalee Roan is chief marketing officer of Entellium, a Seattle-based hosted CRM provider.