education, and mobile applications. This will give the operators an opportunity to enhance ARPU and increase customer stickiness. At present, in India contribution of VAS to overall revenue is 10% compared to the figures of about 30% in developed markets. So, there is an immense opportunity for growth in VAS adoption and revenues.
But are the Indian operators ready to make use of this opportunity?
VAS Scenario in Indian market
A report from Deloitte on MVAS, estimates the size of the Indian VAS market at 158 bn and predicts it to grow to 671 bn by 2015. In addition, contribution from VAS to overall revenue is estimated to grow from the existing 10% to more than 30% in 2015. In the next 5 years, VAS ARPU is also expected to grow by 48%.
Pushing VAS Usage
The key to unlock the potential opportunities presented by VAS lies in harnessing the power of subscriber data. This applies equally to both VAS providers and the operators.
Today, VAS providers and telecom operators use basic systems to analyze VAS subscriber behavior. The emphasis of analysis is on the overall behavior. The scope of such systems is limited to ad hoc reports and analysis. Today, another characteristic of the operator approach is the use of elementary profiling and untargeted campaigns to push VAS usage.
To unleash the full potential of VAS, operators and VAS providers need to walk the extra mile—adopting analytics and
The key to unlock the opportunities presented by VAS lies in harnessing the power of subscriber data
employing unconventional data sources to study subscriber behavior. It’s necessary that VAS and mobile operators have a well-defined analytics roadmap to exploit its benefits.
Analytics can help VAS providers and operators in improving the acquisition, enhancing the usage, and improving the retention of VAS subscribers. By using segmentation and profiling, the VAS behavior of subscribers can be understood better. Accordingly, focused campaigns to up-sell/cross-sell services would be possible. Currently, operators are exploring the use of micro-segmentation to profile the subscribers at very small group sizes to be able to map the subscriber groups better. This along with focused campaigns would achieve the below outcomes: Increase in VAS adoption Improved profitability of VAS services Better returns on Vas-focused marketing campaigns
Apart from the conventional usage of analytics mentioned, there are other areas where it can be used innovatively to enhance VAS penetration and profitability.
New VAS Analytics Frameworks
VAS Value Matrix: It helps to study the subscriber movement across VAS categories. Based on IAMAI’S report on MVAS, we propose this analytical framework that helps to capture the shift of values (perceived and practical) in urban and rural consumers for various VAS services. As depicted, VAS categories are measured based on their practical value—real value to subscribers and perceived value—value customers perceive of the category.
VAS Share to Overall Revenues in Countries
South Korea Japan Germany USA China India
Mobile Penetration (%) 106.5 97.88 135 96 67 71.5
In the above figure, initially urban customers attached a high perceived value to music that has less practical value. Also social media apps, mobile internet had less practical value and perceived value. But today, social media apps and mobile internet have high perceived value and practical value. This might be due to the launch of 3G, penetration of smartphones, and the explosion of apps. Rural scenario presents a different picture, earlier mobile internet and social media were considered to be low in practical value have shifted to high perceived value now. These shifts indicate the change in subscriber behavior and preference using which VAS service providers can come out with more relevant offerings.
Market basket analysis is a concept in retail, where every customers purchase is categorized into groups like grocery, healthcare, cosmetics, etc. Similarly, a telecom operator/vas service provider can group services subscribed by a customer into groups like education, music, news, sports, etc. Marketers can study the performance of each category and try to study the relation between categories and come out with offers.
VAS Usage Profile— Scatter Graph
Another important framework being proposed here is the VAS profile matrix. VAS profile matrix is the perceptual mapping of subscribers and subscriber groups across popular VAS categories. This matrix helps operators to identify different customer segments and also