Benefits of eSIM for service providers: 6 use cases
During the autumn of 2019 two major smartphone manufacturers announced several of their models were now equipped with eSIM functionality. During 2020 many more will follow suit. By 2025 GSMA estimates that more than 2 billion eSIM devices will be shipped. This is a strong incentive for the industry to go for eSIM.
Service Providers’ top line has for several years been flattish, so how can service providers use eSIM not just to cutting costs but to increase their top line? The future demands new ideas to increase revenue streams in an evolutionary way.
It is well known by part of the industry that the introduction of wearables like smartwatches enabled by eSIM capability generates additional monthly subscription fees.
So, how about primary eSIM devices? Can Service Providers get more money from those devices?
During the fall of 2019 - we identified the eSIM benefits for service providers, and six different use cases that I will outline in this blog post - which is the first in a series of five. We also conducted a ConsumerLab survey with smartphone users in five countries, who represent some 200 million users across the six different use cases. The result of that study will be discussed in the next blog post in this eSIM series.
Firstly, let’s have a look at the use cases:
I'll start with the green ones, which are an extension of service providers’ current available offerings.
Travel specials target travelers that would like to make use of mobile connectivity abroad. Having the internet in our pocket has dramatically changed our lives. But when travelling, the habit nowadays is to either use Wi-Fi hot spots or buy a pocket router and use a prepaid local SIM. The question is, are there any winners in this game?
Juniper research estimates that the silent roamers - roamers that do not use mobile data when roaming, only hot spots - accounts for 51% of total amount of roamers in 2018, presenting a huge revenue opportunity.
The “travel specials” target this segment, offering a local tariff and typically adding a service charge When visiting a country, end users simply download an additional eSIM and are on their way to a connected vacation.
Another business model might be airlines or travel agencies offering complementary mobile data to their customers. This means:
- The airline or travel agency has a new benefit to offer to their customers
- The visited and home service provider receives additional revenue and improve customer experience
- The consumer reaps the benefits of overseas connection
Connected consumer devices
Connected consumer devices is all about secondary devices (smartwatches, tablets, laptops etc.). When we started working on these use cases my colleagues and I thought that the key here was the smartwatch. We'll all witnessed the success of the eSIM enabled smartwatch, but when the result from our ConsumerLab survey came out, the smartwatch didn’t even make it into the top three connected consumer devices.
Number 1, that is the most wanted, was the laptop. Today, most of us connect the laptop via tethering or public hot spots when out and about. Tethering works fine but drains your battery and when you are out and about you do not want to drain the battery of your lifeline, the Smartphone.
WiFi hotspots are also becoming a concern for many business users because of the security aspects, here a cellular connection is preferred.
So, an add-on subscription of say 2 Euro per month for a laptop, 2 Euro per month for the tablet. Things start to add up.
Excel in connectivity
At first glance, one sees a scenario where apps on your device switch between different service providers based on who provides the best coverage. Sounds like a nightmare? Well, the good news is this isn't what consumers are expecting.
What consumers are looking for is some kind of service insurance when having a critical situation - at times you need to get in contact with someone and you have no coverage - situations like your car break down in the middle of nowhere, you lost your key, you need to get hold of your child. Here, people are prepared to pay like an insurance fee, say 1-2 Euro per month to be able to activate another eSIM. When making the call, extra charges for the actual call (normal tariff) will also take place. How many services have you launched lately that gives an ARPU of like 2 Euro to a minimal cost? And if you are adding the laptop and or tablet, you are getting up to some 4-5 Euro extra per month. But there is potentially more.
The result is:
- Increased top line for Service Providers from selling the insurance service
- Increased satisfaction and peace of mind from consumers
Try and buy
Going beyond the “all you can eat” offerings, what can you sell? How can you communicate the value to the consumer?
Try and buy is something that has been used for a long time in marketing. When it comes to content and apps it is also used extensively and now, we can see the same thing also in mobile communication. Examples of the type of service offerings that could benefit from "try and buy" includes:
- Premium speed
- Special content and event offers
- New devices, services and business models (glasses, smart calling, child locator etc.)
Again, this is a simple way forward. In this scenario, consumers download an additional temporary eSIM subscription, valid for say 3 days. During these 3 days they can try out the new offerings for free (your present bundle you still pay for). If the consumer like the service, a simple click will turn the temporary subscription into permanent.
Now, would you need an eSIM to do this? Not really, you could send an SMS or RCS with clickable links to targeted subscribers. But with eSIM you can also reach consumers that today are not your subscribers. Here is where we will see true benefits for proactive service providers.
- Increased top line for Service Providers
- Consumers will benefit from more innovative packages provided
So, how can we take the next step in mobile marketing? Looking back, this is what the evolution has looked like:
- Telemarketing: if you have a reach rate of 20%, a qualification rate of 40% and a conversion rate of 60%, that leads to a 5% conversion rate in total
- Application-2-person SMS: 95% of all texts are read within 3 minutes (Source: Forbes)
- Application-2-person RCS: Looks very promising and can provide interaction but is currently not supported by Apple
For consumer goods companies the questions are - how to increase interaction, how to better target individuals and ultimately how to increase conversion rate. Is there a role for the eSIM here? There is no magic involved to improve conversion rate. You need:
- A targeted proposition
Here is an example:
Imagine you are a major company in the apparel industry. Winter is coming and you want to launch your new winter collection. In your campaign you invite customers to scan this bar code and become a VIP with three days exclusive access to our new range. The consumer goods company may use a different service provider than what the consumer is using. With a temporary eSIM this can be solved. Scanning the barcode results in an eSIM is download. This eSIM gives the consumer access to a VPN and AR (augmented reality) client. The subscription related to this new temporary eSIM is handled by the apparel company.
Based on this example, the consumer can try on (with the AR client) the new collection on their smartphone, tablet or laptop, for e.g. three days. Send video clips to their friends or post on social media to get comments on how the new collection fit them. Apart from getting more consumers to try a collection by moving the dressing room to the smartphone, the apparel company will also get more information about their customers and their behaviors, allowing for future targeting.
- The consumer gets a great customer experience
- The apparel company creates a new sales channel and new customer information
- The service provider gets double income during the Marketing Campaign
Here I am referring to sports, concerts and trade shows for example. Again, similar to marketing campaigns we are talking about a short period of time, a week let's say. The offer here will be targeted to the consumers consumers sharing these interests - and by doing so, a service provider will receive additional insights into consumer values and behavior.
An example is a concert with a major band.
Fans of that band will be searching for tickets well before the event, and the record company will share a QR code on their home page to receive VIP treatment.
By clicking on the QR Code you become a subscriber to the band for a short period of time (three weeks for example). During that period, you will get access to premium tickets, and new songs streamed to your smartphone.
The result is:
- The consumer gets a great customer experience
- The event provider gets a new sales channel for add-on sales and customer information
- The service provider doubles income during the marketing campaign
eSIM benefits, Summary
These are just a sample of the explored use cases and it is important that all involved parties can benefit from each case.
In the coming blog posts, we will highlight the result from our consumer study performed in 5 countries (blog post 2 and 3) as well as provide tools for you to calculate financial benefits (blog post 4) from these use cases.
Take a closer look at 2 of the use cases!Download
Look out for our coming blog posts on eSIM, where we will discuss the findings from a consumer survey on eSIM that we performed recently!
Learn more about Ericsson’s eSIM solution