How In-App Purchases Can Make Telecoms Companies Relevant Again

By siteadmin

How will the “In APP Purchase” business model regain market share for Telecom Providers still making a living off long distance rates

The old model of a telecoms company making money from you every time you make a phone call or send a text are gone. This is prompting most of the big operators to look for alternative ways of staying relevant and generating revenue from their customers. One of those is through in-app purchases.

In-app purchases are big business. In fact, they are the primary revenue model for many of the world’s most popular apps. The big app stores – Apple’s App Store and the Google Play Store – both have facilities that make it possible for customers to process a transaction for an in-app purchase. This usually involves having an electronic wallet and a credit or debit card attached to it.

For many users, however, this is inconvenient. It is a hassle as it is another billing process they have to manage, plus many people don’t have access to a suitable card. In some countries, over 97 percent of people don’t have a card they can use to make an in-app purchase.

That number is not as significant in the US, but it is still a substantial number, particularly when you add in those who would choose a different option if it was available.

The Telecom Provider Alternative

An easier way for users to pay for in-app purchases is through their mobile phone bill. They can only do this, however, if their carrier offers mobile phone billing at the appropriate app store.

Telecoms companies that have this feature in place will give customers a compelling reason to sign up and/or stay with them. They can enhance this even further by offering additional services such as giving customers the ability to manage or limit the amount they spend. This is particularly beneficial in family situations where parents want to restrict in-app purchase by their children to a reasonable and affordable level.

Applying Business Models from Other Industries

In-app purchases are not the only business model that telecom companies can borrow from other industries. Take advertising as an example.

The companies that make the most from advertising on the internet right now are Google and Facebook. They both have large user bases, but that is not why advertisers battle each other for space on their platforms. The real reason is the data that Google and Facebook make available to advertisers. This allows advertisers to plan campaigns, target specific audiences, test different strategies, and measure results.

Google and Facebook both have access to a lot of data, but so do telecoms companies. Most of them do not use it, however, and some may not even collect it properly. This is because data is not a part of their business model. Maybe it should be.

That said, harnessing the opportunities of data will not help telecoms companies regain market share in the same way that enabling in-app purchases will. It does, however, show there are options outside the old and outdated model of making truckloads of cash by charging users huge rates for long-distance calls.

The lesson is that constant innovation is crucial. That innovation must keep telecoms companies relevant to their customers and/or provide a means of generating revenue.