Value-Added Services, or VAS, comprises non-basic services that mobile network operators provide to customers. It serves as an additional revenue stream for communication service operators, touching $690 billion in value by 2018. This growth rate tells you that VAS is now a main source of income for operators and they need to keep pushing to enhance their offerings.
Mobile VAS offerings help operators to attract more customers, reduce customer churn rates and maintain a market presence. They become a key factor for subscribers to select their operators.
Mobile VAS Costs
Typically VAS services are offered at a very nominal rate and no additional charge in some cases. However, the actual pricing structure for mobile VAS depends on whether the service is considered a rapport-building amenity by the provider or is seen as a source of revenue generation.
Creating Better Customer Experience with VAS
VAS represents a significant revenue opportunity for service providers because it helps to push consumers towards entertainment, utility, and other services on the go. However, what really adds value to these services is their range. The high variability of VAS enables operators to direct 30-40% VAS annuity budgets towards managing operational overheads. Operators need to add a strong control mechanism for variation in services into their framework.
Managed VAS models outperform vendor-specific models by using a standardized, comprehensive approach that targets end-to-end service management. This allows easy implementation of industry best practices, service level specifications, and the definition of processes that guarantee an optimized customer experience.
Managed VAS closes the gaps in service management by unifying operations under a single service umbrella. It allows automated probes to proactively measure service performance, ensuring better services for users while maximizing the service provider’s revenue.
VAS According to Network Operators
GSMA conducted a survey to understand the importance of VAS from the view of network providers.
Primarily Revenue Opportunity
Most service operators see revenue as the most important reason for launching a value-added service. Other metrics that were used included customer loyalty, brand relevance, customer churn, and market intelligence. Revenue was the highest-rated factor of all these, while market intelligence was ranked the lowest. This shows that when it comes to development services, mobile has a high potential for revenue generation, which makes it important for operators looking to create and deliver VAS.
2. Commercial Opportunity For Development and Other Sectors
Service operators believe that financial inclusion is the largest opportunity in M4D; they also see potential in other sectors. Given the choice, 33% of operators chose products and services linked to financial inclusion. Other areas with potential were identified as well, with 26% choosing education and 18% choosing health.
Operators Require Partnerships
94% of operators agreed that they lacked all capabilities required and that they would need third-party partnerships to engage users in mobile VAS, which is the right place for operator engagement.
Importance of Appropriate Business Models
The delivery of commercially successful VAS is not easy. There is no lack of consumer demand, with only 38% of operators naming lack of demand as a service delivery barrier. On the other hand, 57% agreed that the lack of appropriate business models is the real problem. There has been an annual increase in the number of products and services launched across all M4D sectors, however, successful business models are sparse.
Benefits of Value Added Services
Value-added services have multiple benefits for both the consumer and the service provider.
The main benefits to the end consumer are:
- Experience of new and superior service
- Competitive pricing proposition
The main benefits to the service provider are
- Increased availability of services
- Reduction in CAPEX and OPEX
- Revenue leakage plugged
- Enhanced customer experience
- Optimization of investment and cost
- Enhanced revenue growth
- Faster time to market
- A healthier bottom line is brought in
- Loyalty offerings
- Customer insights
Generating Revenue Using VAS
A few ways to optimize revenue using VAS are
- Capturing your customers’ imagination, since they all react differently to different propositions.
- Creating interactions and engagement to understand customer needs better.
- Identifying gaps and fulfilling needs
- Offering a range of pricing models to develop sustainable revenue paths.
A wide range of mobile VAS allows service operators to differentiate themselves from the competition. This gives an edge to both the service providers and the customers. The customers get an experience that goes above and beyond their daily requirements. At the same time, the service providers get an increased rapport with their clients which creates an opportunity for increased revenue. Value-added services cost extra to both the customer and the service provider, but for operators, they have the potential to enhance growth and uses very significantly.