The introduction of promotional services, such as O2’s Priority Moments, could have a dramatic impact on a mobile operator’s customer loyalty and drive down churn. In doing so, mobile marketing could become one of an operator’s core elements in retaining subscribers, subsequently placing infinitely more value on the role of mobile marketing than afforded to the service presently.

 

Churn costs mobile operators billion of dollars globally every year. But if mobile marketing can be used strategically by a mobile operator to tackle churn, it could potentially save an operator millions, if not hundreds of millions of dollars annually.

 

This is an alternative way of looking at the value of mobile marketing, and instead of focusing purely on the revenues derived directly from campaigns alone, it is looking at a vastly broader picture. Mobile operators are some of the biggest spenders of marketing dollars globally, focusing on customer retention as opposed to customer acquisition. Not surprising given that in developed mobile markets the cost of acquiring one subscriber is significantly greater than the cost to retain one.

 

While O2 has invested big in Priority Moments, it could yet prove to be one of the best defense mechanisms against churn. Other operators will inevitably follow suit, the only question is at what speed.

 

Priority Moments is a pull-based model (PBM), using messaging (via O2 More) and in-app notifications to drive traffic to the relevant sites. Messaging and in-app notifications will be critical in encouraging user engagement and, ultimately, loyalty.

 

Messaging will perhaps be the critical cog in the short- to mid-term. It has the volume, the immediacy (95% of messages are read within three minutes), the open rates (upwards of 98%), and can attract response rates of up to 50%. Most importantly though, it does not have the acknowledgement, or credibility, that an incredibly powerful channel should command.

 

The fact SMSes had been restricted to 160 characters, with seemingly little creativity, has been the major deterrent for the majority of ad agencies to promote messaging to their clients. But brands and companies are now recognizing for themselves the role that messaging can have, and are starting to develop their own mobile database.