It is that time of the year of strategic planning retreats. You can be brilliant by asking your colleagues a simple question: what is our captive market and how do we plan to leverage from it?
A captive market is that niche of clients that are already yours, all you need is to provide new service offerings to optimize them. A telecom company, for example, have mobile phone subscribers on their network. The nature of the telecoms gives it access to all contact details of all its subscribers.
One of the reasons Uganda telecom lost the market was the inability to fully tap into her ‘captive’ market. You have about 100,000 subscribers. All they need are value-added services. That is why when MTN introduced mobile money, following the success of the same by Safaricom Kenya, it was an instant hit. MTN did not only introduce a new service to the existing customers, but the company also marketed aggressively thereby getting a critical mass of clients to enable swift break-even point.
Because of the concept of the ‘captive market’, no telecom makes a lot of money from voice calls nowadays. The voice call product exists because it is a core competency or a basic product any telecom must provide. However, to succeed, a telecom must generate high average revenue per use (ARPU). The ARPU is driven by innovation and value addition. A telecom of the future does not just offer basic additional services like voice bundle packages, data bundle packages, betting solutions, it spurs innovation by first opening its system to external innovation to create an ecosystem. It invests heavily in supporting innovations to test their skills on their open API (application programming interface) to integrate services that solve common social problems like crime, insurance, education, health, education, farming and a plethora of so many things that need a mobile phone as an enabler of convenience.
When I consulted for a telecom once, my advice was: get the community of innovators to think for you. To innovate. Open your system to innovation so that it is plug and play. Once you set up a sandbox of sorts where anyone can try their ideas, and the ones with the potential to succeed get a kickstart, the telecom company is sure to thrive.
What is your captive market?
If you are a School, you have so many parents who drop their children. What other service do you sell to them? If you are an insurance company, you have so many companies that have bought insurance e.g. third party insurance, what other services can you sell to them or which partner can you work with to leverage on the revenues they earn from your clients. If you are a financial institution, you know what I am talking about – non-interest income is an indicator of innovation if it is not about nebulous bank charges and transactional fees but rather a result of innovative solutions that drive customer value and convenience.
At the strategic retreat, do not forget to ask: what is our captive market and how are we leveraging from it. Remember, the strategy is about making choices on how to win with our stakeholders specifically customers and strategic partners against the competition. And asking about the captive market helps you explore a way to increase revenues which we need to grow. And the strategy is mainly about growth.
Copyright Mustapha B Mugisa, 2019. All rights reserved.