What are Value-added Services?
By definition, Value-added Services (VAS) are additional benefits consumers can receive when they engage a service or purchase a product. As a matter of fact, they are “add-ons” that can go a long way towards building business goodwill.
For instance, if given freely or even at a discounted price, they can significantly increase revenue and leads conversion.
Important to realize, knowing some common value-added services can help you improve the benefits you offer customers. And also get you better deals when you purchase for your business.
In general, value-added services are non-core. Whereas they have features that are beyond the standard voice calls.
This term is very popular in the telecommunications industry. Though the term can also be used in almost any service providing industry. Essentially, in reference to services and solutions support provided free of charge, or rather at a reduced cost.
Why are Value-added Services useful?
Firstly, the core business operatives include; general products, basic services, solutions support, hospitality and complimentary help.
In the contemporary world, telecommunication companies market VAS (Value-added Services) as premium features. Or even as add-ons to their core functions.
For example, Safaricom “Jitambulishe” is one of the various basic value-added services it provides to its customers.
Mobile VAS services can be categorized into:
- Consumer behavior VAS
- Network VAS
- Enterprise VAS
This is actually the case despite the fact that these services can function on a stand-alone basis. Typically, these services are not intended to just diversify product package functionality.
Secondly, they are used to provide administrative and/or operational synergy among the vast array of services. And, they are beneficial to both service providers and customers.
Of course, because they add end user’s functionality. While at the same time, sourcing enhanced analytics and data for use in businesses.
Where do you apply Value-added Services?
There have been dramatic changes in the business environment over the last decade.
As an example, market liberalization and globalization have altered how companies compete and interact with suppliers and consumers.
To respond to progressively turbulent environments and dynamic developments, business executives must confront the need to achieve organizational innovation capabilities by considering different strategic options.
As such, companies are investing effort and time in the development of VASs that work for them. They are also adopting management tools that address the challenge of enhancing service quality, competitive advantage, and increasing productivity.
Value addition is one of the contemporary management tools that service-oriented companies have adopted. Value addition is based on its effect on sustaining competitiveness in the marketplace by improving the existing services or products.
VAS is one of the strategic initiatives that telecom providers are investing in that enables them to cross-sell additional services. While at the same time, enlarging share-of-wallet with their consumers.
This way, telecom companies create better lock-in while improving revenue generation from customers.
The Main Distinctive Characteristics of VAS
A distinction may also be made between standard (peer-to-peer) content and premium-charged content. These are called mobile value-added services (MVAS), which are often simply referred to as VAS.
Value-added services are supplied either in-house by the mobile network operator themselves or by a third-party value-added service provider (VASP). Also known as a content provider (CP) such as All Headline News or Reuters.
Another important point, VAS service is provided through various online and mainstream content providers. As an example, if you are familiar with YouTube Network, as the content creator, you are provided with a free option to choose your suitable VAS Network.
To enumerate, if based within East Africa, one of the main YouTube VAS Network is the Ngomma VAS.
Value-added Services (VAS) share the following characteristics:
- Adds value to the core services and solutions
- Are not the main basic services and solutions
- Stand alone in terms of their profitability
- Can stimulate increased demand for standard service(s)
- Sometimes, they stand alone operationally
- They are add-ons to the basic service(s)
- May provide administrative and/or operational synergy among or between other services
- Not merely used for diversification purposes
Generally, these services go a long way in establishing goodwill when offered free of charge.
In addition, they also increase revenue significantly when provided alongside discounted services or products.
Moreover, enough knowledge of these services enables you to provide more benefits to customers or get a better deal when purchasing a product or hiring a service.
Mobile Industry Value-added Services (MVAS)
The mobile communications market is evolving rapidly.
One thing that is apparent, however, is the fact that average revenue per user that telecommunication companies generate from voice services is declining due to commoditization, plummeting voice service tariffs, and saturation.
Thus, telecom companies are under immense pressure to provide quality services that are beyond the basic voice to remain competitive.
Consequently, a majority of these firms are packaging mobile VASs in their standard service offerings to drive data usage and improve revenues.
Changing customer loyalties and intensifying competition are also shifting focus on mobile VAS as a major service differentiator. With a vast selection, customers choose service providers on the basis of their VASs.
Many countries are also making mobile phone number portability mandatory. This has increased pressure on telecom companies to provide quality services as a means to curb customer churn.
Subsequently, our mobile Value Added Services provide an excellent way for telecom companies to attract subscribers and maximize customer retention. In this competitive era, Telcos have enhanced their array of VAS campaign.
In the telecommunication industry, Value-added Services include:
- SMS voting
- Top up
- Ringback tone
- SMS lotteries
- SMS voting
- Balance checks
- M-commerce and mobile money based services
- Online gaming
- Mobile advertising
- Infotainment and sports services
- Dating and SMS chatting premium services
- OTT and Mobile TV services
- Location-based services
- Devotional applications
- WAP content downloads
- Recorded messages
- Dialing back to the caller to prevent lengthy service waits
It’s important to note that operators update these services frequently depending on the latest trends and needs of their customers.
What is the Importance of Value-added Services?
On one hand, in today’s competitive markets, these services have significant importance. For instance, in terms of revenue, these services provide a significant amount of money to telecom companies by enabling them to upturn average revenue per user.
On the other hand, they enable operators to establish customers’ loyalty. These services also make customers happy. And, customers are more likely to continue using the services of the company that makes them happy. Thus, these services play a significant role in ensuring customer satisfaction and retention.
Essentially, telecom companies face competition from other established operators and new frenemies. Such as over-the-top services like Hulu and Netflix, VoIP providers that include Skype and digital content gardens. That includes music streaming services and application stores.
Telecom companies, therefore, face flat growth because of market saturation and maturity as well as commoditization of mobile devices and connectivity services.
Conceptually, telecommunication companies use Value Added Services to improve the value of their standard service offerings and to spur subscribers to use their primary services more and drive up the average revenue per user.
However, modern telecommunication services include the majority of these functions in their standard offerings. As such, the term has now evolved and taken a different meaning.
To counteract such business challenges, telecom companies use VAS as a means to attract more customers, differentiate themselves, as well as boost margins and average revenue per user.
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