D3.3: Study on Mobile Identity Management

Study on Mobile Identity Management REVENUE MODELS FOR M-COMMERCE WITH MOBILE IDENTITY

Revenue Models for M-Commerce with Mobile Identity

Current mobile business models for mobile commerce do not seem promising with regard to substantial revenue streams for mobile network operators as well as mobile service providers. Today’s settings require customers to “invest” in data transmission (GRPS as well as UMTS and WLAN data) before being able to use a mobile service, i.e. they are forced to pay for all data transmitted regardless of whether this data is of valuable content or just unwanted marketing messages.  

Architecture

An approach for a new business model is to allow mobile service providers to apply information about the mobile identity of the customer as situation based profiling. It enables service providers to identify high value customers and to sponsor their data transmission costs. It can be shown, that by applying this approach revenue streams can be increased significantly for all parties involved, contributing to a more positive perspective for future developments in the mobile market. 

In order to apply a more complex form of interaction, the service provider has to be offered more and richer information about its customers. Only with a comprehensive, reliable and up-to-date-description of the customer the service provider is able to differentiate between relevant and non relevant customers and to determine, how much he is willing to invest into any customer. To put it in other words: The service provider has to have a clear idea of the customer’s business value in the current situation. The information describing the customer’s situation is generated by the mobile network operator and then transmitted to the service provider (Figge, 2001). The process in detail appears as follows: 

Figure 2-2: Portal process for a situation based business model (Figge, 2003) 

By entering the mobile portal (1), which is provided by the mobile network operator, the situation of the mobile customer is captured and portal categories relevant for that situation are displayed (2+3). E.g. if the current local time is near noon and if the customer is not familiar with his current location, the category “Restaurants & food” might be of interest. Whereas in the afternoon right within a business meeting that category does not seem to be appropriate. The customer selects one category (4) and his situation description is transferred to all service providers with services assigned to that category (5). Using the situation description, service providers can decide if the customer seems to be relevant for their business (6) in which case they cover the data transmission costs (7). After selecting the portal category, all service providers willing to do that get listed (8). The customer chooses one of the services (9) and the transmission costs are being billed to the respective service provider (10+11). 

The decision of a service provider, whether a customer is business relevant or not, typically follows an automated process. Ideally, a target customer profile is being compared to the current dynamic profile available. The issue of profile matching is not being discussed here in detail, but typically several criteria are the basis for customer selection. The following example is used to illustrate this process. 

A chain of department stores in Frankfurt and Berlin with regular opening hours offers its customers a mobile shopping assistant service. A target customer profile has been created to catch middle-aged customers within the reach of the branches. With the opening of the portal category ‘Shopping’ the situation description of the requesting customer is transferred to the company and then compared to the target customer profile. Figure 2-3 illustrates three sample cases to show potential results of the process: 

Figure 2-3: Matching situation description and target customer profile (Figge, 2003) 

Customer A’s situation description and its properties (1) do not match the properties of the service provider’s target customer profile. Neither age nor current location fit to the target properties. Sponsoring customer A does therefore not seem to be appropriate. In this case the service provider will deny paying the charges (of course, this does not prohibit the customer from still choosing the service). The situation is different for customer B (2), whose relevant properties are matching. In this case the investment is promising, as the chances of the customer visiting the department store and generating revenue are high. The situation is even more obvious for customer C (3) who participates in the company’s customer loyalty program and is therefore registered. In case the service provider holds information about the customer’s past purchasing patterns it is easy to decide if an investment in terms of offering a free mobile channel makes sense from an economic point of view 

Summary

With this new approach, current revenue models are enhanced by including the service provider. The mobile customer still remains an important source of revenue in terms of mobile voice telephony and mobile services targeting direct revenues, but the existence of a chargeable service provider reduces the pressure to search for revenue at the customer’s side only. By including the service provider, the usage of the mobile Internet gets more attractive as the choice of available services increases and becomes more cost efficient at the same time. 

The pricing models offered to service providers can differ from those used for private customers. Instead of millions of mobile customers only a few hundred or thousand of service providers are interacting with the mobile network operator. That enables the implementation of flexible and individual tariff models, cross trading, lump sum payment etc. and opens up a new flexibility for marketing strategies.  

The new business model therefore provides an adequate distribution of the revenue streams and allows the mobile customer to save money, too.