A customer who is acquired at zero costs, costs you nearly
nothing to service, pays you money in advance and yet who receives minimal
customer service. Most businesses would salivate at such a customer. But why do
telecom companies focus on their postpaid customers(who take min 1-2months to
recover their channel partner commission, who pay late/have credit period, who
need expensive payments/collections mechanism etc)? One reason is that postpaid
customers, as the conventional wisdom goes, have higher ARPUs than their
prepaid peers, and are likely to stay longer on the network. However, they also cost the telco more for
bill delivery, credit costs and customer service. In an era where these costs
are almost fully variable, one can tangibly accurately estimate the relative profitability
of prepaid and postpaid customers. Just imagine, a prepaid customers costs you
nothing to acquire(in direct cost terms), pays his own channel commission(that
Rs 1-3 channel fee) and gives you valuable float. He IS rewarded with better tariffs(usually)
but that’s owning to competition and not from any benevolence of the telecom
operators.
|
Particulars
|
Prepaid
|
Postpaid
|
|
Tariffs
|
L
|
H
|
|
ARPU
|
L
|
H
|
|
Loyalty
|
L
|
H
|
|
Customer Service Quality
|
L
|
H
|
|
Credit Risk to Airtel
|
L(zero)
|
H
|
|
Customer Acquisition Cost
|
L(zero)
|
H
|
|
Tariff flexibility
|
H(RCV)
|
L(few plans)
|
|
Customer payment costs
|
L(they pay it)
|
H(Airtel bears it)
|
|
Risk of outgoing calls barred due to zero balance
|
H
|
L
|
|
Bill shock risk
|
L(balance post every txn)
|
H(unless daily alerts opted)
|
|
MNP Risk
|
L(may just change SIM)
|
H(are likely to be pursued by other operators)
|
|
Loyalty likely due to
|
Personal choice
|
Corporate relationships
|
|
Bill Delivery Costs
|
L(zero)
|
H(mandatory)
|
|
Free Itemized Bill on Email ID
|
No(same Rs 50 charge)
|
Yes
|
