With smartphone growth in the US dropping to single digits as we enter 2017, and with North America and Western Europe combined now comprising only 20% of the global market, businesses are increasingly looking to regions like India, Africa and South America to drive future growth.
This shift in strategy makes a lot of sense, but the approaches that have delivered success in established markets can’t simply be replicated in new markets – local dynamics differ significantly. There are a very different set of constraints in operation, most of which stem from cost and infrastructure. If businesses want to deliver successful mobile services to emerging markets, they need to understand local nuances and design a business model that fits.
What’s the context?
The first significant difference between western nations and high growth markets is the relative cost of cell service. If you look at data on wages and the costs of cellular data across different countries, the differences are stark. In countries like the U.S. and U.K., the average worker needs to work for less than an hour to earn enough to pay for 2GB of data. In countries like Brazil, Argentina and South Africa, that number jumps to over half a day of work for the same amount of data, and rises to over a day of work in countries like India or Kenya. What is worse, there is good reason to believe that, as in India, prices in developing markets are going to get higher rather than lower in the near future.
Pricing isn’t the only difference. In high growth markets, many workers are paid weekly, or even daily, and many don’t have access to any form of credit or debit card. This leads to users purchasing smaller blocks of data for shorter time periods using cash.
Both of these factors mean that in high growth markets, cell users jealously guard their cellular data and, it’s much more common for cellphone users in those markets to consume mobile services at public Wi-Fi connections or at work, rather than on home broadband or mobile networks. As a result, companies that currently do business via data-intense products and apps need to adapt their offering for high growth markets.
Practical steps to meet the challenge
Our experiences across high growth markets led us to develop a number of guidelines that you can use to drive impact for your own services in high growth regions:
- Shrink it down. If an app takes up more than 30MB amount of storage that is probably too much. In a more developed market with prevalent fast Wi-Fi and unlimited data plans, application size has become almost irrelevant. In earlier stage markets, that is certainly not the case! Aim to get your app down to 15MB or less. Consider removing items like heavy analytics calls, high resolution imagery and pre-loaded sample content from your app, as these can often be the least important, but heftiest, features.
- Provide control. Enable users to control whether content can be downloaded over cellular data or is restricted to Wi-Fi only. Even if a user indicates interest and deepens their relationship with your product, meaning they want more content, control is key.
- Test away. If you want to see what might be impacting your usage numbers, try splitting test changes, particularly where they involve data heavy features or content. We do this to see how well an app performs, as well as how popular it is among our target user group. If we see that something impacts our download or usage numbers, then we take it seriously and look at how to make changes or revert in order to keep our usage numbers ever increasing.
- Be flexible. Up-front costs can severely limit downloads, so if app revenue is important, look to utilize freemium models with fine-grained tiers that allow users to develop a relationship with your service and control their spending.
- Go local. Many users in high growth markets utilize carrier payments and carrier app stores, so it can pay dividends to develop relationships and distribution with local carriers rather than relying on the Apple App Store or Google Play store as you might in Western markets.
- Keep it short. If you operate a subscription service, provide the option for subscriptions shorter than the month-long subs prevalent in developed markets. These fit better with how users manage their money.
- Get creative. Services where people will exchange something (their time, for example, or agreeing to watch a certain number of adverts) for data or content show signs of real promise. They are not that different from the trend in gaming where time can be exchanged for virtual goods or virtual currency, but in this case, the reward has real value.
There is a huge market for content services in high growth regions, but businesses need to come up with creative solutions if they are to tap into it. Those that succeed in doing this will enjoy first mover advantage and build strong customer loyalty as the markets develop.