Can Telcos Increase Telco App Engagement?

Welcome to our Beyond Connectivity series that focuses on telco innovation to better engage audiences and to explore new diversified non-telco revenue models. 

This article focuses on the business potential that comes from telco apps and focusing on improving users’ telco app engagement. Our earlier article covers successfully going beyond connectivity could look like which you can find here.

Executive Summary

Telco apps are one of the most underutilized assets in the industry. Despite being installed on every smartphone, most remain limited to managing telco accounts like tracking service usage, paying bills, managing add-ons, and maybe some loyalty features. 

This means that many telco users’ journeys just involve installing the SIM, installing the app, and only using the app when they need to look at their bill or if something is wrong with their plan. This lack of engagement means fewer brand touchpoints, weaker brand recall, and missed upselling opportunities in an industry where churn rates are higher than Software-as-a-Service.¹

One solution lies in transforming telco apps from utility tools into engagement hubs. Based on data from app engagement tests, Circles’ experiments have shown that certain telco app features can successfully get 20% of app users to habitually engage with the app. 

These engaged app users spend between 47 to 174% more time in-app with some of these engaged users being correlated with higher average revenue per user (ARPU). Studies have also shown that digital app engagement can be a leading indicator of loyalty, churn rate and customer lifetime value.^2,3

While increasing app engagement does not directly improve ARPU, optimizing for time-in-app allows telcos to find and target profitable, highly engaged user segments. This opens pathways for targeted upselling, non-telco lifestyle services, and AI-driven premium offerings which can potentially boost revenue.

Telcos should indeed focus on optimizing app engagement thanks to the benefits it provides, but they shouldn’t stop there. Low-cost, low-risk innovation engines can help telcos unlock more of their potential on their journey to becoming industry-leading techcos. 

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The Telco App Monetization Opportunity and Why Engagement Matters

Most telco apps today are underutilized. Many are purely functional, being limited to billing, plan checking, and troubleshooting. Other telcos have tried expanding this to include promotions, loyalty reward features and even eCommerce stores for the products that the telco sells. But for many users, the app is only visited when they need to pay their bills or see if there’s something wrong with their telco plans. 

Yet, these telco apps sit on the same devices as OTT services that have become part of daily digital routines from Netflix to fitness apps like Strong. This means that many telcos already have an app distribution advantage over non-telcos as every smartphone already has a telco app installed. 

In a study involving 31 countries, 81% of users use their provider’s mobile app, and 52% of customers use it on a weekly basis.⁴ Leveraging this base could help telcos reposition their apps as a core part of customers’ digital lives.

Jackie Tan, Xplore Lead at Circles explains:

“In the context of where we are, we ask ‘Can there be more?’ The reason for that is when you have more users who are engaged with a telco via the telco app, two things happen:

The first is in regard to the perceived value the telco is bringing to the user. This results in higher engagement which translates to higher top of mind which also translates to hopefully less churn or longer lifetime value (LTV). This is the thinking that goes into increasing engagement with telco users.

And as we go into techco, the implication is that we introduce more tech enabled services and value added content, whatever the content could be for the user.”

Transforming telco apps into digital lifestyle service hubs can build new revenue streams and brand stickiness which is critical in an industry where churn rates are higher than SaaS.⁵ According to GSMA Intelligence, roughly one in seven mobile users changed providers in the past 12 months across 12 major markets.⁶ Unless telcos expand their role in consumers’ digital lives, they risk being relegated to commodity “pipes.”

To get there, telcos first need to cultivate a base of users who habitually engage with their app. When it comes to engagement, telcos so far have focused on building loyalty and rewards apps to engage their customers, leaving app engagement as fairly new grounds for exploration.

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Telcos Have Been Primarily Focusing on Loyalty and Rewards to Increase Engagement

Telcos have traditionally used loyalty and rewards to build brand engagement and improve customer lifetime value, with many of them attaching these to dedicated loyalty apps. In recent reports, telcos have expressed confidence with this approach:

While not strictly causative, these examples show a strong link between telco engagement and revenue. 

However, this doesn’t explore what focusing on improving app engagement for the main telco app could do. Recent experiments are now showing that it is indeed possible to optimize app engagement on telco apps.

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Micro-apps Like Bite-sized-News and Horoscopes Encourage People to Engage With Telco Apps

With the right set of micro-app services, also known as applets, users can become habitual users of their telco apps, as recent tests by Circles have uncovered.

The first metric that Circles’ Xplore innovation team sought to optimize is telco app engagement. These tests are being carried out using an innovation sandbox that can test various combinations of applets targeted at different cohorts of users. 

From experiments in Singapore, Japan, Mongolia, and Pakistan starting from 2024, the following results emerged:

Some of the users who frequently engage with Xplore also show higher ARPU, enabling telcos to identify and target high-value segments. (Note: results are from closed-group testing and remain under validation.) The result of these experiments lend credence to studies that have also shown that digital app engagement can be a leading indicator of loyalty, churn rate and customer lifetime value.^{10, 11} 

These tests were powered by the Xplore innovation engine which was built to be a low-cost and low-risk way to test telco innovations. To start innovating as fast as possible, the engine is built as a standalone webview-based tab that can be integrated within a month. The array of pre–built features allows the team to start optimizing for app engagement as soon as integrations are finished. New apps that can be tested are being added, suggesting that there is even greater potential telco app engagement. 

While increasing app engagement doesn’t directly cause higher ARPU, the opportunity lies in identifying the profitable and highly engaged app users for upselling and cross-selling. More detailed and complex offers can be tested to further improve telco app engagement while opening new monetization pathways and revenue models.

Monetization Pathways From Higher Engagement

Personalized Upselling and Cross-selling to High-ARPU Segments

After identifying highly engaged and high ARPU segments, telcos can dive further into their behaviour and interests using 360° customer data to uncover various profitable microsegments. 

By building detailed customer profiles, telcos can enhance their personalized marketing campaigns using information such as which telco services they frequently use, the apps they use data for, and even finding the best times to send campaign messages.

For example, Circles was able to identify users who listened to Spotify at 1AM after returning from a long day of work, and used this information to send upsell data packages to them at this time, garnering increased engagement. To read more about how this works, you can check out our post on telco personalization at scale.

Introducing Non-Telco Services

Telcos can expand beyond pure connectivity by offering non-telco digital lifestyle services. With a wide range of digital lifestyle services available, telcos can experiment with what their market demands ranging from entertainment and education to niche services like mental health. 

There are currently two approaches to offer non-telco services on telco apps. The first approach is to offer a wide variety of services similar to a super app. The second approach involves identifying fewer, but more specialized services that the target market demands. You can check out more details about how a telco that has gone beyond connectivity could look like in this blog post.

AI Monetization Such as AI Assistants

Telco apps can also offer AI assistants as premium services. Powered by leading LLMs, AI assistants like Circles AI and povo AI can be offered as premium features, opening the door to a new wave of AI monetization opportunities. 

The release of povo AI caused a big splash in Japan,¹² with competitors launching their own AI offerings shortly after. With how customizable AI chatbot services could be, chatbots with different deep specializations could be experimented with and offered as premium services to customers.

These monetization pathways are just the beginning. By identifying profitable microsegments and matching them with the right service offerings, telcos can go beyond connectivity and cement their techco status in the digital lives of their customers.

The Next Step in the Techco Journey: App Engagement is Just the Start. 

Telco apps can open new monetization opportunities and unlock profitable customer segments, but telcos need to focus on building app engagement first. By first building a loyal base of highly engaged users, telcos can then learn their wants and needs and build new revenue streams around the services that fit them best.

Optimizing app engagement is just the start of what innovation sandboxes can do for telcos. As digital behaviors evolve, telco apps have the potential to deliver specialized services that transform operators into industry-leading techcos, and these sandboxes can help to uncover the ones worth pursuing.

However, not all telcos have the resources or the technical bandwidth to build these innovation sandboxes and innovation teams quickly. To accelerate progress, telcos could opt to partner with experienced telco service providers such as Circles who can manage the process for them.

Xplore’s innovation engine uses a standalone webview-based tab that can be embedded in a telco app within 4 weeks, saving you months of resources. Using pre-built games and onboarding non-telco services, telcos can use this innovation engine to optimize key metrics like app engagement and test new revenue models straight within the telco app.

Circles Xplore is usually bundled with Circles’ full-stack telco software suite but can be integrated into any telco app. Our experienced team will handle integration, run the experiments, and provide client dashboards with results, insights, and recommendations.

Want to find out more about the other results that Circles Xplore uncovered, or want to see these innovations for yourself?

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Reach out to us below to find out more!