2010 brought two interesting trends in the telecommunications market which cannot be overlooked. Firstly, the increasing penetration of smartphones, coupled with the fact that prepaid customers actually outnumbered post-paid customers in 2010.

According to IDC, prepaid services revenue concluded 2009 with $15.6billion, while post-paid services revenue reached $134 billion. The analyst house predicts that although both segments will continue to develop, by 2014 prepaid will get to $19.9 billion, or 11.3% of the overall market revenue.

Although these two trends seem completely unrelated, the combination of both trends may have a significant effect on service providers’ revenues and marketing strategies.

According to analyst house Gartner, by the end of 2012, over 75% of enterprise mobile users will have a smartphone, driven by low service costs offered by the mobile operators. Frost and Sullivan’s own ICT Practice team supports this statement and further claims that Asia Pacific will be driven by price decline and application richness, with Smartphones expected to be mass marketed by 2015 and account for at least 60% of the mobile sub base in Asia Pacific.

Add to this rapid growth the remarkable pace of technology adoption. Today’s coolest device might become old fashioned in about six months time as new devices are being introduced by manufacturers and operators alike. This makes the whole “exclusive” positioning of smartphones very short lived. If iPhones and various smartphone devices used to be perceived as luxurious items, today this socio-economical-mobile-device segmentation seems irrelevant. Welcome to the prepaid world.

2010 was also characterised by new prepaid customers which resulted in new post-paid customers being outnumbered. The global shift of contract-based customers becoming prepaid customers could reshape the marketing approach of service providers, and operators will need to invest extra efforts, provide improved service, and deliver more attractive offers in order to lure new customers and retain them.

These challenges can be overcome by offering prepaid customers Smartphone devices. While prepaid operators are increasingly altering their pricing strategies to include offers on voice, text and data, while remaining competitively low cost, data usage by customers will cause an increase in (data) ARPU, especially as new and affordable smartphones are introduced to the market.

However, gifts are not enough to build loyalty, particularly with prepaid customers who will not stick with a mobile carrier if not satisfied with the service received. Once a prepaid customer have been offered a Smartphone, providing the right price plans and offers will be key to the retention of that customer, but also profit generation. Getting to know individual customers’ usage and behaviour patterns, and then delivering offers in the right context and timing, is essential to success.

Contextual marketing generates a dialogue with each and every subscriber, and in turn helps understand what each customer is willing to spend on. Smartphones can expand the portfolio of services that can be offered to prepaid customers, and can significantly increase ARPU. Assuming, of course, that marketing is done in context.

But it is important to bear in mind that in order to remain competitive, CSPs will need to develop better marketing methodologies including analysis, planning, execution and monitoring services covering their entire customer base. This requires not only real time contextual marketing and selling technological solution, but also marketing know-how.