Postpaid "The Catalyst for the 5G Revolution"

The telecommunications industry has experienced significant changes due to the widespread use of mobile technology. This transformation has dramatically impacted how individuals communicate and access information. With the emergence of 5G technology, we anticipate a host of new services and opportunities, including ultra-fast internet speeds, augmented reality, Internet of Things (IoT) applications, and various other applications that rely on the speed of 5G. Therefore, telecom operators must identify the early adopters who will embrace this upcoming technological revolution.

Postpaid subscribers are more likely to embrace and adopt these advanced technologies, making them the torchbearers for 5G. Telecom operators can anticipate a surge in demand for data-intensive services from postpaid subscribers. By targeting this segment specifically for 5G technology, operators can capitalize on this demand and generate higher average revenue per user (ARPU) through premium customized 5G data plans and value-added services tailored to the specific needs of postpaid subscribers. This strategic approach allows telecom operators to tap into the revenue potential and cater to the evolving requirements of postpaid subscribers in the era of 5G.

 In light of the advent of 5G technology, telecom operators must focus on acquiring postpaid subscribers instead of relying solely on prepaid customers. It is essential for telecom operators to effectively communicate the compelling advantages that customers transitioning from 4G to 5G will experience as postpaid subscribers. By opting for a postpaid plan, these customers can fully unlock and enjoy the maximum benefits of the forthcoming 5G revolution.

Another advantage of postpaid plans is the lower churn rate. The churn rate refers to the percentage of customers switching to a competitor's service or discontinuing it altogether. As postpaid plans typically offer more benefits and are more expensive, customers are less likely to change to a competitor's service. It means that telecom operators can retain their postpaid customers longer, which is essential for building a loyal 5G customer base and reducing customer acquisition costs.

In addition to generating higher average revenue per user (ARPU) and reducing customer churn, postpaid plans offer telecom operators a range of other advantages. For instance, postpaid plans typically involve customers signing a contract for a specific period; This contractual commitment ensures a steady stream of 5G revenue for telecom operators throughout the agreement. Moreover, postpaid plans allow telecom operators to offer various 5G-related services, including augmented and virtual reality services, as well as value-added services like international roaming, premium content, and device financing. These services can create additional revenue streams for telecom operators while enhancing customers' overall 5G experience.

According to a PwC report, approximately 95% of mobile phone users in India prefer prepaid connections. However, despite their lower numbers, postpaid users contribute around 25% of the total revenue for telecom operators. With the emergence of 5G technology, this revenue share from postpaid subscribers is projected to increase from 25% to 40%. As postpaid subscribers are more likely to incorporate 5G technology into their daily lives, they will be crucial in advancing this technology and helping in its rapid growth and early adoption; therefore, telecommunication companies must recognize the growing significance of postpaid subscribers in driving the future expansion of 5G technology.

Despite the rapid growth of the telecom industry, postpaid mobile connections have a lower penetration rate than prepaid connections. However, the introduction of 5G technology presents an opportunity for telecommunication companies to revive and expand their base of postpaid subscribers. By strategically capitalizing on this technology, telcos have the potential to increase the adoption of postpaid plans and improve their market position.

Reasons for Low Postpaid Adoption

•     The following factors contribute to the relatively lower popularity of postpaid connections compared to prepaid connections:

Accessibility and Affordability:

The primary reason for the low adoption of postpaid mobile connections is their higher perceived cost than prepaid plans. It makes postpaid plans less accessible to most of the population, as many people are sensitive to prices and prefer the affordability of prepaid options. It is particularly true for individuals with limited incomes. Therefore, telecommunication companies must develop postpaid plans that align with 5G technology while offering a perceived value that appeals to customers. Prepaid connections are often more widely available and accessible to users, including those in remote rural areas or with limited access to traditional banking services.

Today a customer's creditworthiness effectively decides whether they are eligible for prepaid or postpaid services rather than their ARPU potential. Although these two metrics may be correlated (low creditworthiness clients tend to generate lower ARPU), they are by no means the same, and recognizing this fact can lead to the definition of better-targeted offers.

The high cost of postpaid plans can be attributed to the fact that these plans offer a lot of additional features and benefits. For example, postpaid plans often come with higher data limits and free access to streaming services. However, these features come at a higher cost, which may not be affordable for many people, but for 5G growth, these features are outmost important for telecom operators; hence synchronization of 5G with postpaid is of utmost importance for telecommunication companies.

Postpaid connections are often perceived as more expensive than prepaid connections due to the inclusion of GST in the postpaid bill, leading to higher overall expenses. Therefore, telecom companies should address these concerns to improve the acceptance of postpaid plans, mainly when introducing them alongside 5G technology. One potential solution is for companies to consider absorbing the GST costs for postpaid subscribers by offering a buyback option within three months for the initial one-year period or finding alternative ways to alleviate the customer burden.

Offer Affordable 5G Postpaid Plans:

Operators can offer entry-level postpaid plans with lower monthly charges, fewer data limits, and separate 5G affordable data plans. These plans can help bridge the gap between prepaid and postpaid plans and make them more accessible to price-sensitive customers.

Flexibility and Control

Flexibility is another factor contributing to the low penetration of postpaid mobile connections in India. Prepaid plans offer more flexibility and control over usage, as customers can choose their plans based on their usage patterns and top up as per their requirements. In contrast, postpaid plans come with fixed monthly bills, which may not suit the needs of all customers.

With prepaid plans, customers can easily switch between plans per their needs. For example, if a customer anticipates high usage for a particular month, they can opt for a higher plan, and if their use is low, they can switch to a lower plan. This flexibility is unavailable with postpaid plans with a fixed monthly bill.

Offer Flexibility:

To increase the adoption of postpaid plans, telecom operators can offer more flexible plans that allow customers to switch between plans based on their needs. Operators can provide plans with rollover data, enabling customers to carry unused data to the next billing cycle, or plans with data top-ups, allowing customers to buy additional data when needed.

Credit Checks and Contracts:

Postpaid connections typically require credit checks and contract signing. This process can be time-consuming and may pose barriers for individuals who do not have a strong credit history or prefer not to enter into long-term commitments. On the other hand, prepaid connections do not require such checks or contracts, making them more accessible to a broader range of users.

Telecom operators often use credit checks to ensure customers can pay their bills promptly. However, this requirement can be a challenge for people who do not have a regular income or do not have a credit history. As a result, many people may be reluctant to sign up for postpaid plans and prefer prepaid plans.

Simplify Credit Checks:

Operators can explore alternative credit check methods such as Aadhaar verification, bank statements, or other digital or Non-digital ways,  which can help identify customers' creditworthiness without requiring a traditional credit check.

Upfront Costs and Hidden Charges:

Postpaid plans often involve upfront costs and may come with hidden charges such as activation fees, monthly line rental, or additional service charges. These additional costs can deter users who prefer transparency and control over their expenses. Prepaid plans, in contrast, usually have more superficial pricing structures without such hidden charges, making them more straightforward for users.

Control Over Usage:

Prepaid connections allow users to track their usage in real-time and adjust as needed. It helps users stay within their budget and avoid unexpected overage charges. With postpaid connections, users may have less visibility into their usage during the billing cycle, which can lead to bill shock or higher-than-expected charges.

Lack of Trust:

The lack of trust in postpaid plans is another reason for their low penetration in India. There have been incidents where customers have received unexpectedly high bills, leading to a loss of trust in the telecom operators. It has made many people wary of signing up for postpaid plans.

Reasons for the Lack of Trust in Postpaid Plans :

Billing Errors

Billing errors are another reason for the lack of trust in postpaid plans. Customers have reported receiving incorrect bills, being charged for services they did not use, or being overcharged for services. These billing errors can lead to frustration and mistrust among customers, who may switch to other operators or opt for prepaid plans.

You Get a Bill Shock

Bill Shock is common among postpaid users and may occur to almost all postpaid users at some point. A bill shock occurs when a user receives a bill significantly higher than their postpaid plan. It could be due to various factors, including international roaming charges while you were away from home or using more internet data than your postpaid plan's data limit.

Lack of Transparency

The lack of transparency in postpaid plans is another reason for the lack of trust among customers. Customers have reported that telecom operators do not provide clear information about the plans, their terms and conditions, or the services included. This lack of transparency can lead to confusion and mistrust among customers, who may feel that they are being misled or taken advantage of.

Postpaid connections do not have a spending limit, which means there will be no reminders, and your service will continue to function normally even after exceeding your plan limits. If this occurs, you are likely to receive a higher-than-expected bill, and if it happens frequently, you may develop the impression that a postpaid connection is more expensive than a prepaid connection.

Changing Postpaid Plan

Switching postpaid plans can sometimes result in higher billing amounts, primarily due to pro-rata billing. It occurs when changes are made to a postpaid plan during the billing cycle, leading to charge adjustments. Addressing this issue is crucial to establishing trust among potential postpaid subscribers and instilling confidence.

• The key to addressing all of the misconceptions above lies in educating customers.

To increase the adoption of postpaid plans in 5G, telecom operators should educate customers about the benefits of postpaid plans in 5G and address any misconceptions they may have.

Operators can conduct awareness campaigns highlighting the benefits of postpaid plans in 5G, such as higher data limits, more various IOT services, and free streaming services. They can also address customers' concerns about hidden fees or unexpected bills by providing transparent billing and offering bill alerts.

Telecommunication operators should prioritize clear communication with customers regarding their postpaid plans. They can accomplish this by employing knowledgeable sales personnel offering comprehensive information about the plans, including terms and conditions and available services. This proactive approach will help dispel misconceptions, enabling customers to grasp the advantages of 5G postpaid plans and fostering increased trust in the operator.

• ·        Now the pressing question arises: Is it necessary to acquire postpaid subscribers to foster the development of 5G technology?

Telecommunication companies have long recognized the value of transitioning customers from prepaid to postpaid plans. It is because postpaid customers tend to use the network longer and historically exhibit higher usage patterns. As a result, the lifetime value derived from postpaid customers is significantly higher, making them crucial for successfully implementing 5G technology.

• ·        Postpaid customers will play a vital role as the backbone of 5G technology for several compelling reasons.

Higher Data Consumption:

5G technology promises blazing-fast speeds, massive capacity, and ultra-low latency, enabling users to consume data at unprecedented levels. Postpaid subscribers typically exhibit higher data consumption patterns than their prepaid counterparts, and they are more likely to engage in data-intensive activities, such as video streaming, online gaming, streaming high-quality multimedia content, and business-related activities.

 With the advent of 5G, data consumption is expected to escalate further as users embrace bandwidth-hungry services like virtual reality and augmented reality experiences. By acquiring postpaid subscribers, operators can leverage their higher data consumption patterns to drive increased data revenue and fully capitalize on the potential of 5G networks.

Postpaid subscribers typically exhibit higher data consumption patterns than prepaid subscribers, as they are more likely to utilize data-intensive applications, stream high-quality multimedia content, and engage in business-related activities.

Network Utilization:

Introducing 5G technology brings network slicing capabilities, enabling operators to divide their networks into virtual networks tailored to specific customer segments and use cases. Higher data consumption patterns make postpaid subscribers critical users of these network slices. Telecom operators can allocate dedicated network resources to postpaid subscribers, ensuring optimal performance and quality of service. This strategic approach optimizes network utilization and delivers an exceptional user experience, meeting the demands of postpaid subscribers seeking reliable, high-speed connections.

Telecom operators have made substantial investments in robust network infrastructure and advanced technologies to unlock the full potential of 5G. Postpaid subscribers play a crucial role in justifying these investments, as they are more willing to pay for superior network performance and quality of service. By targeting postpaid subscribers, operators can allocate resources to enhance network coverage, increase capacity, and optimize the user experience. This strategic focus on quality of service allows telecom operators to differentiate themselves in the market, attract and retain high-value customers, and gain a competitive advantage in the 5G landscape.

 Enhanced Customer Loyalty:

Postpaid subscribers generally exhibit higher levels of customer loyalty compared to prepaid subscribers. The contractual nature of postpaid plans fosters a stronger relationship between subscribers and their service providers. Operators can leverage this loyalty by offering exclusive benefits and personalized services to their postpaid user base. These benefits can include priority customer support, faster complaint resolution, access to premium content, and early access to new services. By providing an exceptional customer experience, operators can cultivate long-term customer loyalty, reduce churn rates, and strengthen their market position. In the 5G era, where competition will intensify, having a loyal and engaged postpaid subscriber base will be critical for operators to sustain their growth.

Service Innovation and Upselling Opportunities:

5G technology unlocks new possibilities for service innovation, enabling operators to introduce various value-added services and applications. With their higher spending power and inclination towards premium services, postpaid subscribers offer a fertile ground for upselling and cross-selling. Operators can introduce innovative offerings such as IoT connectivity, smart home solutions, enterprise-grade services, and virtual reality experiences. By targeting postpaid subscribers, operators can diversify their revenue streams, increase ARPU, and differentiate themselves in the market. The ability to offer advanced services tailored to the evolving needs of postpaid subscribers positions operators as providers of cutting-edge solutions.

• ·        The arrival of the 5G revolution enables telecommunication companies to embrace a diverse range of solutions and strategies to expand their subscriber base of postpaid customers.

Analytical Marketing:

Analytical marketing uses customer data to identify which consumers will most likely benefit from which products. It involves using consumer information to create microsegments, or personas that describe smaller sets of customers rather than necessary, big-picture details. It also includes detecting specific behaviours that prompt a new product offer, such as suggesting an international data plan to a customer who frequently sends texts to friends in other countries.

The first step in leveraging analytical marketing is to gather data. Companies must balance obtaining high-quality, comprehensive information and maintaining trust with the consumer.

Market Segmentation:

To increase postpaid subscribers, telecom operators must identify and target specific market segments more inclined towards postpaid plans. Conduct market research to understand potential postpaid subscribers' demographics, preferences, and needs. Segment the market based on age, occupation, income level, and lifestyle. This segmentation will help operators create targeted marketing campaigns and customized offerings that resonate with the specific needs and desires of the identified segments.

Enhanced Value Proposition:

To attract customers to postpaid plans, operators need to emphasize the unique value proposition that postpaid subscriptions offer in the 5G era. Highlight the benefits of 5G technology, such as faster speeds, lower latency, and enhanced connectivity for bandwidth-intensive applications. Emphasize the advantages that postpaid subscribers enjoy, such as higher data allowances, priority access to network resources, and value-added services like exclusive content or personalized customer support. By clearly communicating the advantages of postpaid plans in the 5G context, operators can persuade customers to choose postpaid subscriptions over prepaid options.

Value-Added Services and Experiences:

To entice customers towards postpaid plans, operators should focus on offering value-added services and experiences. Provide access to exclusive content, such as streaming platforms, music services, or premium apps. Offer priority access to new features and technologies, such as augmented reality experiences or IoT connectivity. Collaborate with relevant partners to create exclusive offers and partnerships, such as discounted access to events, travel benefits, or lifestyle perks. By providing additional value beyond basic connectivity, operators can position 5G postpaid plans as premium offerings, enticing subscribers to upgrade.

Tailored Pricing and Packages:

Develop pricing strategies and packages that are specifically designed to attract postpaid subscribers. Offer flexible pricing options that cater to potential subscribers' varying needs and budgets. Introduce tiered pricing plans with different levels of data allowances, add-on services, and benefits. Consider offering promotional discounts or incentives for customers who sign up for postpaid plans, such as discounted rates for a limited period or data bonuses. By tailoring pricing and packages to meet the specific requirements of postpaid subscribers, operators can entice customers to upgrade from prepaid plans.

Exclusive Content and Services:

One effective strategy to increase postpaid subscribers is offering exclusive content and services only available to 5G Postpaid subscribers. Collaborate with content providers, streaming platforms, or OTT (over-the-top) providers to offer exclusive access to popular shows, movies, or live events. Provide value-added services like cloud storage, personalized recommendations, or premium customer support. By providing unique and desirable content and services, operators can create a sense of exclusivity and differentiation, attracting customers to opt for 5G postpaid subscriptions.

Personalized Marketing and Customer Engagement:

Implement personalized marketing and customer engagement strategies to build stronger relationships with potential postpaid subscribers. Utilize customer data and analytics to understand individual preferences, usage patterns, and needs. Develop targeted marketing campaigns that deliver relevant messages and offers to potential postpaid subscribers. Engage with customers through personalized communication channels, such as emails, SMS, or app notifications, to provide tailored recommendations, loyalty rewards, or special promotions. By offering a personalized experience and demonstrating that their needs are understood, operators can foster trust and loyalty among potential postpaid subscribers.

Postpaid Branding

An effective branding strategy plays a critical role in promoting postpaid plans. There is a need to create a separate brand image or identity for 5G postpaid plans and their subscribers to establish a distinct identity within the realm of the telecom market. Given the similarities in products and prices among companies, it becomes challenging for them to differentiate their brand in the industry. Developing a successful postpaid brand requires more than meeting basic expectations in a highly competitive market. It entails crafting a compelling brand narrative that resonates with the audience over time. Becoming the preferred company or brand requires patience, consistent communication, and meticulous planning. However, the rewards justify the dedicated effort and careful execution.

Create an engaging story.

When customers emotionally connect with a company's brand, they are likelier to exhibit loyalty and make purchases. One effective way businesses achieve this is by crafting a simple, emotionally resonant brand story that aligns with their products. Recent studies indicate that consumers of all ages prefer supporting brands that share their intrinsic human values. Therefore, businesses must incorporate their values into advertising their postpaid products. By establishing an emotional connection with customers, companies can build trust in their brand and increase the likelihood of postpaid product purchases. The key to achieving this lies in telling an authentic and relatable brand story that evokes emotions in the target audience.

Focus on your strengths and find USP for Postpaid products.

In order to increase their postpaid subscriber base and differentiate themselves from the competition in the prepaid market, postpaid businesses need to identify a unique selling proposition (USP). This postpaid USP can be expressed through various means, such as offering cutting-edge technology, providing competitive pricing options, delivering exceptional customer service, or embodying a clear purpose that underpins their postpaid offerings. The postpaid USP will play a crucial role in setting the business apart from others in the industry, allowing them to establish a distinct identity and attract customers who resonate with its unique value proposition. By effectively communicating and leveraging their USP, postpaid businesses can gain a competitive advantage and drive growth in their subscriber base.

To better understand your postpaid offerings' unique selling proposition (USP), it's helpful to empathize with your customers and make decisions from their standpoint. By doing so, you can identify the distinctive concept behind your 5G postpaid plans, which are tailored to cater to specific customer segments. In the highly competitive telecom market, mobile operators often encounter difficulties in effectively promoting and positioning their postpaid products without a clear USP.

Rewards Programs

Telecom operators can offer rewards programs to customers who use 5G postpaid plans. These rewards can include discounts on bills, free data, or device upgrades. It will incentivize customers to use 5G postpaid plans and increase their trust in the operator.

Partnerships and Bundling:

Form strategic partnerships with relevant companies and brands to create attractive bundled offerings for postpaid subscribers. Collaborate with device manufacturers to offer exclusive discounts or early access to the latest 5G-enabled smartphones. Bundle services like home broadband, OTT platforms, or IoT solutions with postpaid plans to provide subscribers with a comprehensive connectivity ecosystem. These partnerships and bundles increase the perceived value of postpaid plans and provide subscribers with a seamless and integrated experience across multiple devices and services.

 Incentives for Prepaid to Postpaid Migration:

Implement incentives and promotions to encourage prepaid subscribers to transition to 5G postpaid plans. Offer discounted or free trial periods for postpaid services, allowing prepaid subscribers to experience the benefits of postpaid plans without financial commitments. Provide special migration offers, such as data bonuses, device upgrades, or discounted rates for the first few months of the postpaid subscription. Communicate the advantages of postpaid plans, such as higher data allowances, better network performance, and access to premium services, to showcase the value proposition of upgrading.

Conclusion:

In anticipation of the 5G revolution, telecom operators must prioritize implementing effective business strategies to expand their postpaid subscriber base. By directing business strategies and campaigns towards postpaid plans, personalizing offerings, delivering value-added services and experiences, improving customer support, cultivating partnerships, incentivizing migration, and increasing awareness about the advantages of postpaid plans, operators can successfully attract more than prepaid subscribers. These strategies will foster revenue growth and position operators as frontrunners in the 5G era, offering superior connectivity and enhanced services.

As the 5G era dawns, telecom operators will recognize the vital role of postpaid subscribers as valuable assets. These subscribers will contribute significantly to service quality and catalyze the substantial network investments of telecom companies. Their importance in pursuing success within the 5G landscape cannot be overstated. By acknowledging the significance of postpaid subscribers and adapting their strategies accordingly, telecom operators can harness the full potential of 5G technology. It will pave the way for a future characterized by seamless connectivity, innovative services, and enhanced user experiences.

Therefore, it is of utmost importance for Indian telecom operators to strategically realign their focus towards acquiring postpaid subscribers, recognizing the multitude of benefits they bring. By harnessing the capabilities of 5G technology through postpaid connections and delivering exceptional services, operators can fuel revenue growth drastically, fortify their competitive position, and facilitate a seamless transition into the 5G era. Postpaid subscribers are a critical revenue stream and are pivotal in establishing operators as frontrunners in the 5G landscape, providing unparalleled connectivity and enriched solutions.