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Stephen Salmon from Pitney Bowes Business Insight, says location based services are on the up. He explains why right here.
In February 2008, research from Gartner predicted that the number of LBS subscribers worldwide will be 43.2 million at the end of last year, up from 16 million in 2007. In three years time, the report estimates subscriber numbers at a mouth-watering 300 million. LBS revenues were envisaged to have risen by almost 170% over the course of 2008, up from $485 million in 2007 to over $1.3 billion.
Other research reports have made even higher forecasts: Berg Insight
predicts that that there will be over 100 million European mobile LBS users by 2012; and an ABI Research report suggests global mobile LBS revenues will hit $13.3 billion by 2012. In the technology-based industries, we have all learned to be somewhat sceptical of analyst predictions, but even if subscriber numbers and revenues reach the mere halfway point, then this will represent tangible evidence that LBS has come of age.
LBS boom time
This growth has stimulated strategic acquisitions by the network operators (witness, for example, Vodafone’s acquisition of Swedish GPS applications firm, Wayfinder,) along with huge growth in LBS application development. LBS applications are being developed on a range of platforms including APIs from Google and Yahoo. These embrace include some simple but compelling ‘where’s my nearest’ ideas, such as restaurant or taxi finders (one of which has been set up in collaboration with lastminute.com). Another example is wikinear.com, which serves up Wikipedia articles relevant to the current location.
So what will the commercial model for all this LBS market growth be? Almost certainly, a level of bundled service will always be needed to encourage initial usage of any given application, with additional usage or functionality then charged thereafter. Just as certainly, technology firms and network operators will need the support of expert partners who really understand geo-information- based services, along with the potential hurdles and pitfalls that they present when being introduced to market.
According to our recent research, customer churn rates in some Western European countries have fallen significantly over the last year. We attribute these falls to effective CRM strategies, loyalty initiatives and retention activities. However, the introduction of new services, while offering new revenue opportunities and the ability to grow margins, inevitably also introduce new possibilities for customer dissatisfaction if those new services do not meet expectations of functionality, reliability, accuracy and service coverage. Therefore, it is critical to get service delivery right first time.
Helping marketers
The importance of geo-positioning technology is also wider than just LBS introduction. Take the example of a typical headache for mobile marketers, namely how to profile pre-pay customers so that they can receive targeted cross-selling offers. This is a crucial question for mobile operators in the next two years, as prepay customer volumes continue to rise. Of course, the contract versus pre-pay balance varies widely from country to country, but whatever its scale, the pre-pay challenge is universal across the globe.
One top operator in continental Europe is using location intelligence to surmount the problem. Each pre-pay customer’s phone, using GPS, reports its physical location when switched on and when subsequent calls are made. The operator was therefore able, using location intelligence, to build a picture of pre-pay customers, about whom no information is gathered at purchase.
Since the most pre-pay phones are set up in the place where they are bought, an understanding could be built up of how productive each outlet was in terms of sales. Usage and location patterns were analysed to build a series of customer types, such as the office worker (primary use in the evening at home or in the day from a single location), the mobile worker (main usage during working hours in many locations).
Likely home locations were identified through an analysis of correlations between last call at night and first call in the morning. These home locations (which did not intrude on the personal identity of the customer in any way) could then be enhanced with geo-demographic data associated with that location to further build the customer’s likely profile. Using this information, the operator has now been able to direct properly targeted cross-selling and loyalty initiatives at its pre-pay customer base, with a level of intelligence and segmentation similar to its contract customer strategies.
Get involved
In conclusion, it really does seem that LBS is now properly under way. No operator can afford not to be in the game, as it will rapidly become viewed by customers as a must have and by marketers as a key way of differentiating. But at the same time, introducing new services opens up the door to potential relationship risk with previously satisfied and loyal customers, if new services do not come up to scratch or meet customer expectations.
It is therefore imperative that location-based services are conceived and implemented on the basis of true location intelligence, supported by experts who really understand the practical implementation of geo-based applications.
Pitney Bowes Business Insight delivers the ability to operate more effectively by better organising, sharing, evaluating and decisively acting upon customer-related and location-centric data.
Ed says:
Smells like Big Brother to me! Would you want an operator tracking you with every call, without prior consent? I wouldn’t. And why do they do this? So they can flog more stuff to you! I’d rather be phoneless, thanks.
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