14 Nov Why the Life Time Value (LTV) of a mobile number is worth over $100,000
Cloud Communications companies are pulling ahead of the pack every passing month. A fundamental metric that these companies see differently than most is the value of the plain old telephone number. They continue to report in-account expansion from enterprise developers unlocking more and more use cases to improve user engagement. Some are also switching earnings KPIs from per-seat to per account revenue to better account for CPaaS expansion. UCaaS per-seat KPIs are commoditized and upside is limited to number of users. CPaaS on the other hand continues to show unprecedented elasticity and scalability when it comes to upsell within the same user base.
Let me try to illustrate this point with an example. I’ve had my +1 (512) mobile number for 18 years now. In that period I’ve switched multiple mobile operators (about once every 2 years) and mobile devices (about once every 3 years). Each time my mobile operator makes a silly billing error and catches me in a bad mood, I switch. The number is ported within hours and I don’t lose any sleep. The mobile device on the other hand has been from the same vendor for the past 8 years. They figured a way to lock me in with valuable (to me) data, photos and other adjacent services (reasonably valuable and competitively priced). It makes me count to 100 every time I feel its time to switch my mobile device vendor.
Now lets do some math. For simplicity, let’s say that my average monthly spend on mobile service is $70. In reality it often goes way higher because of international roaming when I’m on the road, but let’s ignore that for now. I remember at least 6 mobile operators (MNOs and MVNOs) that I’ve used in the past – AT&T (MNO), Virgin Mobile (MVNO), Cricket (MNO turned MVNO), T-Mobile (MNO), Sprint (MNO). Between these the average LTV for my mobile account is (18 years /6 operators) * ($70 * 12 months) = $2,520.
If there was a magic way for any of the operators to keep me as a customer for as long as I’ve had the same mobile number, the LTV would have been $15,120. That’s as much money as buying a new high end smart phone every year!
Now let’s assume for a moment that there is a magical way to add average in-account expansion (after churn) of 20% per year (less than half of the CPaaS expansion rate of a public CPaaS company). We end up with a compounding formula that looks something like this:
And the LTV comes to the humble number of $107,617 !
How did we go from today’s real world mobile number LTV of $2,520 to a 42 times bigger amount?! Its the subtle power of compounding, which CPaaS provides to Communications Services Providers like no other tool in the 150+ year old telecom history. Yes, maybe 18 years is an unrealistic life span for any vendor to keep a customer. Maybe 20% annual in-account growth for 18 years is not sustainable. Sure. Play with the numbers. See if you can come up with results lower than LTV of $25,000!
So then what are a few applications that would possibly make me reconsider switching service providers every two years:
- Voice mail that works. SMS notification and an email with link to a recording of my voice messages that doesn’t reach a limit every week. Google and Apple have been able to upsell me and millions of other users on paying a few dollars a month to keep email and files in cloud storage forever.
- Call and SMS Filtering. OTT apps like Viber and Whatsapp have long proven successful the notion of filtering calls from numbers that aren’t in my phone’s address book. A savvy service provider could add an extra filter that lets through during business hours calls from numbers in my company’s CRM account. Maybe even record a transcription of these calls and store them in the CRM. AI is getting better and useful with sentiment analysis.
- Intelligent IVR. Screen unknown callers. Route business calls to the correct company line (sales, support) when I’m not available to answer.
- Accessible SMS archive. Slack figured that short message conversations are valuable to people and companies. Give users a choice to store them safely in the cloud for a fee. Enable integrations with third party apps that can do something good for the user with the data. Slack’s own success story is largely based on ecosystem of integrated apps.
The good news is that all of the example apps above already exist in the Restcomm Marketplace and are available from our CSP partners.
Its important to note that a mobile business number can be virtual and offered via UCaaS solution such as Sprint Multiline or a direct MNO licensed mobile number. As WhatsApp’s new A2P pricing demonstrates, the mobile number in itself has extremely high and long lasting value, regardless of the delivery channel – GSM, 4G or OTT.
If you are a CSP executive not taking advantage of the compounding power of CPaaS yet, contact us now!