Over half of mobile phone owners in Europe have two or more phone subscriptions. Same is true of many advanced Asia-Pacific countries from Hong Kong, Taiwan and Singapore to Australia. So too in advanced parts of the Middle East from the UAE to Israel. In Russia more than half of phone owners have two or more phone subscriptions. Even laggard mobile telecoms markets like the USA are starting to see this, with about a quarter of American cellphone users having two accounts or more (think of a Blackberry user with a company phone, also having a private iPhone).
I have been explaining this multiple phone subscription phenomenon for over a decade now, since it was first observed in Finland. And ever since I have been an independent consultant after I left Nokia in 2001, I have been having strategic marketing workshops with the leading mobile operators/carriers where I have always brought up the multiple phone ownership issue. Sometimes my customers have wanted to discuss it, at other times not. But regardless, it is a reality today. And the operators/carriers have to think about it. And now, we have a massive development in the story. Nokia has announced that in 2010 it will be introducing dual SIM phones to its lower priced mass-market phone line (ie the 'non-smartphone' models).
Again, this is not a world innovation. We've had dual SIM handsets out of China by miscellaneous third tier phone makers for many years. Samsung was the first of the big 5 makers to introduce dual SIM card phones last year and we have them here in Hong Kong for example. So Nokia is not creating this market, it is following the developments of the industry and adapting to it. (It is a wise strategic move by Nokia but one which will initially see some consternation by various operatots/carriers attempting to adjust to the new realities of this market).
Oh, I want to thank our dear friend (and publisher of all of our recent books) Ajit Jaokar the CEO of Futuretext, who blogs at Open Gardens. Ajit wrote about this announcement by Nokia as part of several other Nokia statements about its mass market phones for 2010, at Forum Oxford (free site but registration required) where Ajit and I are both co-moderators and many regular readers of this blog are also members.
NOT IN MY BACKYARD
But who will be seeing these dual SIM phones? I think its quite revealing that this innovation is not introduced at the top end of Nokia's phone line, but at the bottom. The previous big industry innovations were introduced first at the top of the range Nokia's first WiFi phone was a premium phone at the start of the last decade, and its first musicphones, first cameraphones, first touch screen phones, first 3G phones etc were all at the top end of the product line. But Dual SIM is coming to the mass market phones, not to smartphones.
So where will we be seeing these? I know the standard instinct by most mobile operators/carriers who subsidise phones, is that they hate dual SIM phones and don't want them. So don't expect them soon by the market leaders in America or Japan for example. Equally, if the local domestic phone market has no subsidies like say Italy, Israel, South Korea and Belgium, then the customer desire and willingness to pay for a feature, is the only thing that matters. All Nokia need do, is introduce those phones there, and they will certainly sell.
This blog is first of all of interest to those markets with subsidies but ones that are highly competitive, at ogver 100% penetration rates. Like many of the European markets like say Britain and Sweden, where this will now present a dilemma. How should the operators/carriers behave. Is there a competitive advantage to be had out of dual SIM phones? Will it promote promiscuity among consumers, or is it perhaps both a defensive method to hold onto profitable customers, and simultaneously be a competitive weapon to steal customers from rivals? Are there competitive marketing benefits out of a Dual SIM phone strategy?
THAT TRAIN LEFT THE STATION ALREADY
Now, first. If more than half of the total population of a country - like I said, all of Europe is at this stage - has more than one subscription - then the 'train has left the station' already. There is no way any one operator/carrier - can hope to 'put the genie back into the bottle'. That dam has broken, no fingers can plug the hole. How many more metaphors do you want haha.. Yes, that ship has sailed.
A dual SIM card phone today is not going to accelerate that move, it is in full swing already. What most customers today do, is what I call the "SIM card switch" ie they have two (or more) SIM cards, and whenever they have a need to switch networks, they unplug the battery from the phone, rapidly switch SIM cards, and are on the rival network. Except for some phones in some countries where the phones are 'locked' (a horribly bad attitude to customers, isn't this, punitive and treating customers like prisoners) or where a rival network is on a different technology - CDMA and GSM for example like in the USA or Japan or China - this will work in most countries using GSM. Thats nearly 90% of all of the phone users on the planet by the way who are now on GSM and its family of technologies. And even in the USA, Japan and China at least two of the operators/carriers do use GSM (or its 3G version, WCDMA/UMTS or its 3.5G version HSDPA).
So who has two phones? Its not going to be the unemployed or the young teenager or the retired person. Those young employed adults who are the most attractive customers to mobile, late in their teens or early in their twenties by age, who send 50 SMS per day, who use their phone for all major digital activities from search to web surfing to music downloads to gaming to social networking to maps to coupons to TV, video and movies - that customer type. The most heavy-spending first-time-employed heavily mobile phone addicted customer in the Industrialized World. Whose monthly phone bill is far more than twice the average - ie they spend something in the range of 60 to 80 to 100 dollars and more per month. And of course, of COURSE, these very astute mobile literate young adults, have more than one account and they optimize their traffic.
And in all markets of subsidies, they have two phones, and in most cases in markets of no subsidies, they still have two actual phone handsets. One is the superphone of every possible gimmick and ability - the over 500 dollar phones, often over 1,000 dollar phones - and the other is the cool 'party phone' that is very small but feature-rich cameraphone (with flash), that goes into the tightest jeans when partying on a Saturday night (remember the age demographic, these are between 18 years and 29 years of age, the partying crowd).
These customers will never 'unlearn' their love of using more than one network and optimizing on their 'deals' in the industry. They pick one network for better SMS pricing and the other network for better mobile internet/data packages, or one network for the better handset deal and the other for the better weekend call prices or whatever. They optimize.
Now, that is the reality. The most desirable customers, the heaviest users, the most addicted mobile industry customers, who always have the most capable phones, and out of whose disposable income, they do not have such commitments as children and their college fees, house mortgage payments etc. They party and have fun, and are employed, and they spend a totally disproportionate amount of their income on their phones. They definitely produce the biggest amount of paid data traffic from SMS and MMS to mobile internet surfing, to voting on TV shows to the craziest newest ideas services and apps, on their phones. And they all have at least one smartphone out of the two (or even three) they carry.
Now, when 'over half of Europeans' have two or more subscriptions, that is far more than the 18-29 year age group segment, obviously. Essentially most of the employed adults in Europe fall into this category, and even that does not account for half. So there are some recently retired, some very tech-hungry younger teenagers, and for example housewives, who also have 2 or more subscriptions. Not every phone owner with two subscriptions has two phones, some have just many pre-paid subscriptions on many networks to optimize their costs, while having one, often cheap handset, to carefully manage their costs. This is typical of lower income users in Europe, a single mom on minimum wage for example.
Regardless, worldwide there are 4.6 Billion mobile phone subscribers at the start of 2010. Out of those, 3.4 Billion are unique phone users, and 1.2 Billion global mobile phone subscriptions are now 'duplicates' ie 26% of all mobile phone subscriptions on the planet are duplicates by the same users. My company, TomiAhonen Consulting, analyzes those numbers more in detail. Some who have a second subscription, have also a third or fourth etc. So the total number of unique phone subscribers, who has at least one other account, is now just over a billion people. Of those, about half have two phones as well. And nearly 200 million people have at least 3 phone subscriptions.
This is a global trend and its a huge trend. Yes, 30% of the people who have a mobile phone on the planet, already in January 2010, have two or more subscriptions. The number of people who pay for two phone subscriptions is bigger than the number of broadband internet users, and bigger than the total number of satellite and cable TV subscribers on the planet. Its a huge number and huge opportunity.
And these customers have changed their behavior and expressed a clear preference. They WANT to have two or more subscriptions, because any one operator/carrier cannot satisfy all their needs.
IS STEALTH CHURN
This is very dangerous for mobile operators/carriers if they do not know it and prepare for it. In a very real sense, what seem like their 'reliable' customers - who often put meaningful amounts of traffic, even 'large' amounts of traffic - on their networks, are in fact already partially lost to at least one rival network and often put MORE traffic onto the rival network(s). That is VERY dangerous if the operator/carrier does not know it.
And there is no sense in asking the customers. Would you want to let your operator know you also use a rival? Of course not. You the customer, prefer to use this as your 'leverage' and you compare the two, for their prices and offers, and continuously revise your loyalty. It is not an 'either or' type of loyalty situation, like most people have with cars for example. You own a VW, you go in to the dealer to consider a new car, and its quite likely another VW, but you'll consider rivals like a Toyota or BMW or Ford when its time to replace the car, once every 3 years. With customers who have 2 phone accounts, they do that evaluation of whose network they will use today, several times every day. They 'churn' away from you several times a day. Even though your billing system says they give you above average traffic so your loyalty manager thinks these are happy loyal customers!
It is what we called 'stealth churn' in our book 3G Marketing with Timo Kasper and Sara Melkko in 2004. Then it was far less than 10% of global customers who were like this. Today it is three out of ten, and in many markets more than half of all customers are stealth churn customers. So this very truly is a different competitive situation, where new rules apply. And the clever operator/carrier adjusts to it, not tries to fight the change.
DUAL SIM PHONE REVEALS STEALTH CHURN
So if I was a mobile operator/carrier (haha, I'd be quite a marketing monster haha, as back in 1997 when I was last employed full time by a telecoms operator, I set a world record for stealing customers from the incumbent haha..) what I'd want to know, perhaps more than almost anything else, about my customer base, is which of the customers are exclusively 'mine' and which are 'stealth churn' customers and of course, which are customers which are no longer mentally on my network, either have already churned totally, or just waiting for their contract to expire (or prepaid account to run out) and have left.
And here the dual SIM phone is a most powerful weapon. If I was the operator/carrier, I'd ask Nokia and Samsung to bring the dual SIM technology also to high-end phones. And here is how I would do it.
First, I would offer dual SIM phones as a small addional cost option, always paid phone, so even if there are subsidies, the dual SIM phone would never be a 'zero dollar phone', and always with an equivalent model - by the same maker - as single SIM phone as alternative. This is very important. I would market dual SIM phones to my customers and in my stores - actively openly and with major marketing push. And I'd even offer equivalent subsidies for them (if subsidies exist in my market). But I would never, ever offer one model of dual SIM phone, where the maker does not have the exact same form factor and feature set on a single SIM phone alternate. And I'd price the difference at something like 20 Euros. So if the phones are sold SIM-free (prepaid, no contract) and the dual SIM phone costs say 149 Euros, I would place next to it the identical Nokia (or Samsung) model of Single SIM, for 129 Euros. And every salesperson, is taught, to pitch - to sell - to offer - the single SIM version, as an alternate - but not push it, to the customer. If either model is out of stock in that store, BOTH will be out of stock. Under no circumstances may my store sell a dual SIM model of a phone, if its single SIM 'cheaper sister model' is not in stock in that store.
Why this rule? So I give my customer base a legitimate choice every time, but the customer has to 'value' the dual SIM feature. So if my single SIM phone is subsidized for zero dollars, I still charge the customer 30 Dollars (20 Euros) for the dual SIM phone, but my sales staff is smiling and helpful and in no way try to 'push' the customer away from dual SIM phones, only indicate that single SIM variant is cheaper, otherwise identical in size, form factor, features, etc.
Now, I would KNOW which of my customers, who pick the dual SIM phone, and were willing to pay a little bit more for it, were actually true users of a multiple SIM phone. The only difference in the models is the dual SIM slot. No customer (or no rational customer haha) is willing to pay more for that feature unless they actually have two accounts (or intend to get a second account on a rival network).
It is not a perfect weapon to catch all of my customers who are 'stealth churn' customers, but it is certainly a major step in the right direction.
LOCK FIRST SIM TO YOUR NETWORK
Second, if in any way legal in your market, you want to lock the phones to the SIM card on their primary SIM card slot. So when the phone is turned off, and on again, it will always first connect to your network. And then offer the customer an easy one-button switch convenience or make it as easy as possible to switch between the second SIM (your rival network) and yours. Make it totally easy. Make sure the same button has the 'reverse' feature, so its also one-button-easy to have the custome switch 'back' to your network. Ask the handset makers to put the second SIM into an easy slot on the outside, to be 'hot-swappable' so the customer can swap several SIM cards between all of my rival networks, if the customer so desires.
Note, that if you offer your customers phones with dual SIM slots, most regulators will like this, and you should get 'permission' that this is ok, and good for competition, even if your SIM is 'locked' on the primary slot. Certainly, in any market with subsidies, this is realistic and legitimate, as you the operator/carrier offered a handset subsidy to a phone which can connect to your rival networks. It is 'fair' then to lock the primary SIM to your network. Any customer of yours who has paid their bill (or has some balance left on the prepaid account) can then access any rival networks (typically GSM in most cases obviously) which you have now 'subsidised'. If you 'subsidise competition' ie you 'help the customer to pick networks' that is a very bold brave move to boost competitiveness in your home market. The regulator should be willing to even relax the rules of 'no locking of phones' if those are dual SIM phones.
Then you want the phone OS to offer an alert feature to you the operator/carrier, when the phone has switched networks, to what SIM card was inserted. You can't go further, and 'spy' on your rival networks, obviously, such as track their phone behavior, but it is a VERY valid bit of data if you know the SIM card on the second slot.
You get to know how MANY rival networks that phone user is actively using now. You will know WHEN those rival networks are used. So for a given user, you know that this customer of Vodafone, is also using T-Mobile on the weekends. So for this customer, there is no point in attempting to get more of their business, by pushing your 'Orange' network rival package, or offer that customer a cheap weeknights call package. For that customer, you want to create a competitive package unique to T-Mobile/Weekend users..
But you get much more. You get to know how MANY rival SIM cards are there. Does this customer have more than one SIM card from one network (including yours, could be an older SIM card from a woman who changed names due to marriage and you never knew it was the same person). And obviously the more frequent case, where that one customer uses three or more networks. You get to know all the competitors to your service.
MAGIC OF OMEGA CUSTOMER
And the telecoms economy is a wicked place with bizarre rules of its economy. One of the strangest beasts of this space is the termination charge, of interconnect regimens in the industry. In some markets the end-user is punished by this feature (again, laggard USA is still one where customers get penalized this way) where mobile phone customers are charged for incoming calls and messages. Most of the industry has moved beyond these 'receiving party pays' models, and the full cost of the mobile call or message transmission is charged only to the 'calling party' (except international roaming). So, in most countries, like say all of Europe, within national calls, you never are charged to receive calls or messages on your phone. In reality there is a cost, but the 'termination charge' covers this cost.
That termination charge is counted for every single call that crosses networks, so if a T-Mobile caller calls an Orange phone, then T-Mobile will bill the full cost of the call, to that caller (or deduct the call from the prepaid account). But at the end of the month, Orange will charge T-Mobile for x amount of millions of minutes of calls that were terminated from Orange's network to T-Mobile's network. Then of course there are x millions of minutes going the other way, from T-Mobile's network back to Orange's network. The end balance of minutes is actually paid by one party, so called net balance billing.
And then if it is a call within one network, one Orange caller calling another Orange phone, then no termination charge is paid in termination fees, as the total phone bill is charged to the caller in the Orange network. But all advanced operators/carriers internally still calculate the 'originating part' and the 'termination part' of any call or message between their own customers on their network, to calculate the profitability of their customer base. A heavy spender on a network is not necessarily a highly profitable customer and a low spending customer can be very proftable if that customer receives a large amount of calls.
In actual fact, it means that every incoming call to one mobile phone subscription, is money for the operator/carrier, even if that is a 'calling party pays' country. And now the dual SIM phone is a very valuable tool in this fight.
Obviously, if incoming calls are not charged to the caller, but are actual money to the operator, then the operator really wants its customers to 'prefer' to use that operator's SIM card as the active card on the phone, rather than a rival's subscription.
I called these customers "Omega" customers five years ago in my third book. Omega customers are the termination call customers, and my consultancy TomiAhonen Consulting have modelled that something like 4% of all customers on the network seem to be very poor customers in terms of outgoing calls, but generate more than 10% of the total profits of the network, due to high volumes of inbound calls and messages. These customers are so profitable, that they could easily warrant free iPhones or N97s or Blackberry Bolds in markets where handsets are heavily subsidised. They are that profitable - but their monthly bill is tiny - and often are on prepaid accounts, so they often get very poor treatment by their operator/carrier. Omega has legitimately been called the billion dollar issue for the industry, the biggest single pot of hidden gold still in mobile telecoms, and advanced mobile operators in Europe and Asia have been 'mining' for these Omega Customers for many years now using technologies such as those by our friends at Xtract. Omegas can be relatively easily identified, and through some cross-referencing with the billing system, these 4% hidden Omega Customers can be spotted - and then offered very high VIP status in those networks. If these customers are more than 3 times as profitable as the average customer on the network - they are VERY high VIP quality customers and must be kept from churning...
Back to dual SIM phones. If we know which of the customers select dual SIM phones and are willing to pay a bit extra (real money) for those phones, we know at least a part of the total subscriber base who are 'hidden churn' customers. Much more importantly, we know which competitor networks that customer uses, and we have some insights of when the customer uses rival networks. Now we can use this info and build strategies for it.
Very importantly, while it is by no means a perfect insight, we get some indications of customers who are 'very likely one network' customers - those who select single SIM phones, of a model where a dual SIM phone exists - will not be total customer base, because many phone models currently do not offer dual SIM variants, but at least in those cases of that customer selecting the single SIM version, we can be relatively sure, that this customer is 'ours' and has no rival networks.
From our customer database, we need to start to gather 'rival network user' info, of our existing customers. And we have to start to build strategies to win in the multiple loyalty market place.
I have been advocating for example to ask for the info when customers join the network, by offering to search for, and giving for free if available - parallel phone numbers. So, when a random customer walks into my store, I say we have a free offer to get the equivalent phone number on our network, of the number they have currently with a rival. Would the customer like us to see, if a similar number is currently available? Then if the customer gives the number, we run it through our 'system' which while it looks for the number, also obviously is designed to register that phone number (and thus info on the rival network) to that given prospective customer's info page.
There are competitive tools to fight in the multiple SIM card environment. I've blogged about Kyivstar's innovative idea of the Golden SMS gimmick. Very good to get prefernce, that your customer prefers your SIM to your rivals' SIM cards. Especially for incoming calls ie your profitability.
MULTIPLE PHONE OWNER SERVICE
Then I'd launch a service to cater to this segment, to make me the innovator in my market, and to capture an unfairly large portion of those customers who have more than one subscription. I'd offer a basic standard SMS price service to send an alert message to another (domestic rival network) phone number, whenever there was a call or a message sent to your phone number, only whenever your subscription was not connected.
Note, this service works on all phones, not just dual SIM phones. So, if I am a Vodafone customer, and my subscription is 'live' so I have the SIM card on a phone which is turned on, then Vodafone knows that number is active. The service will not send any alerts, as it will physically ring my phone for calls, and actually deliver messages to my phone. Then, when Vodafone notices that the phone was turned off, it knows the customer has probably switched on another network (done the SIM card switch). Now, if someone calls the Vodafone phone or sends a message, I send the alert to my customer, on that rival network. First, notice the beauty - I charge basic one consumer rate SMS charge (not a premium SMS charge) for this - it is still a viciously profitable service for me - I offer a 'service' to my customer, and get to bill the customer for it, but the consumer feels it is so dirt-cheap, they will not mind paying for it. I will not let these alerts be charged from the 'free messages' buckets.
But now I know at least one of the phone numbers and one of the rival networks my customer uses. Again, I can design marketing campaigns, to then have those customers, who use multiple networks, to over time, give me more than half of all the traffic, and in particular, to give me most of the termination traffic.
This service I would now bundle with all dual SIM phones, and all sales people would be taught to sell it when the phone is sold. I would have on the service such aspects as not being activated at night (unless the customer wants to) so when the phone was off because the customer was sleeping) and for international travel, jet flight etc. I would still let my customer know lost call attempts when the phone was turned off for such uses, but not send costly SMS alerts to my rival networks if its clear my customer was asleep or shut off the phone on a flight, etc.
Why do I want the phone number of my rivals? Because I have a network with millions of customers. This one customer may have switched networks today when doing the SIM card switch, or when using the dual SIM phone, but the rest of my customer base did not. There will be some customers of my network, who will be calling 'the other number' of my customer! This info is golden. I can tell, not perfectly obviously, but I can rank customers, based on those of my 'multiple SIM' customers who truly 'cost me traffic income' ie who have a large amount of traffic from other customers in my network, calling them on the rival SIM, or who have little such traffic. Guess where I bleed profits... Guess where is the priority in 'converting' these partially loyal customers to be 'more loyal' to me..
BUNDLE WITH DUAL SIM PHONE
And yes, obviously - OBVIOUSLY - I want to bundle this with the dual SIM phone. Now I say, if you select this service, then when you put in any rival network SIM card into the second SIM slot on the dual SIM phone, my service will always monitor if you have turned my SIM card off, and send you the alert to that same phone, but on the currently active SIM card, even across multiple networks...
Why? Because I want to know under what situations, and for how long, the rival networks are preferred. And I would build 'recapture' marketing strategies on this insight - note, it is insight my rivals cannot have, unless they too offer dual SIM phones.
PERFECT WEAPON FOR CHALLENGER OPERATORS
Now, who will do this? I think this is typical of the weapon best suited for the challenger operator initially. If I was T-Mobile in America or Three in the UK or Softbank in Japan etc, I would use dual SIM phones, and make a marketing strategy to become the 'second preference' of phone, where I know the majority of customers are on the bigger networks. With a dual SIM phone, the customer can continue with the published phone number, and fullfill any 'contractual agreements' to the rival network and have their home and business phone or the two networks for network coverage reasons or pricing reasons or whatever. But with the dual SIM phone, I can help my customer, that in those times, when carrying two phones is not convenient - like partying for example - then use my dual SIM phone as the only phone and still have the two primary networks in the pocket. And as the customer learns to love this feature, within a few years we should have dual SIMs in most major phones including top end smartphones, so suddenly my dual SIM phone would become the preferred phone for all situations.
If handset subsidies are allowed in my market, I'd pick a few of these phones, and do a targeted campaign with suitable phones (remember need of having parallel 1 SIM phone model) to attract in particular the heavy user young first-time employed adult. And offer this as the "preferred second phone". Now, in a market of 4 operators for example, if I am the smallest but the only one with dual SIM phones - and these have similar subsidies to other phones by all 4 operators, those custoemrs - and only those customers - with more than one subscription, will be attracted to my offer.
When renewing their next contract, my dual SIM phone (and its multiple phone number alert feature) will be very attractive, to the most profitable and desirable age demographic in my market. I will capture not the 'single subscription' clients, but a disproportionately high part of the multiple loyalty customers. And then - since I know which other network(s) my customer prefers, I can lay the work for future marketing campaigns to take the vast majority of the total traffic. And I'd become the winner in the stealth churn wars.
Imagine if American Express had a feature on its credit cards, to monitor your wallet, to see what other credit cards you have, and when you use them? Amex would be MOST happy to 'subsidise' this 'wallet technology' to get into every pocket, to learn which customers use what rival cards and when. It would be a magnificent marketing advantage. We have that now in phones. Certainly it is a worthwhile addition to our marketing mix and operators/carriers have to learn to use it wisely. We can thank Samsung and Nokia for bringing this innovation to major branded handsets, and I hope soon we will see it as a standard feature of all phones in all markets.