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November 2010

Making the Strategic Leap From Billing to Merchandising

Making the Strategic Leap From Billing to Merchandising

Success in the telecom business — or in any creative pursuit — is a cyclical process of taking action, evaluating results, and making adjustments.

Take the process of writing this blog opener.  Hopefully, what you’re reading right now reads smoothly and hangs together well.  But realize: you can’t plan a piece like this because the mind takes unpredictable turns.  The article grew (and is growing) organically.

The unconscious mind first produces a stream of ideas.  Then the critic in the brain looks at it all, makes changes, moves things around, and deletes a ton of stuff that misses the mark or makes no sense.

So for me, writing a column is a real-time, closed feedback process that’s repeated sentence by sentence, paragraph by paragraph till you’re either satisfied or your eyes glaze over.

Now they say that the great newspaper pundit H.  L.  Mencken (1880-1956) could pump out a masterpiece column in one pass on his typewriter.  Well, that’s amazing if true.  But for the rest of us mere mortals, the word processor is an invaluable crutch for evaluating, modifying, and perfecting thoughts on the fly.

OK, so what’s this got to do with telecom?

Well, a closed feedback system is what telecom services has been missing for decades.  In years past, getting feedback and understanding the customer’s reaction to services took way to long.  And billing was not so much a conversation with the customer as a series of hand written letters you exchanged with a long lost uncle in Siberia.  It takes you 30 days just to get a letter back.  That’s how old the data warehouse data was by the time you got a chance to analyze it.

But all that’s changed.  Today, billing/charging technology has progressed to the point where the usage intelligence, the charges, the user behaviors, and the analytics can all come together in near real-time.  And a platform like that can truly revolutionize a telecom business.  It allows you to experiment and accelerate the marketing changes driven by customer behaviors at a much faster rate than you could ever achieve before.

Humera Malik, head of Global Marketing for Redknee Systems, knows a great deal about these new-fangled, real-time billing systems.  Her company has been quite successful selling them around the world.  And in this interview, she shares insights and perspective on marketing’s expanded role in new service design and the power of a billing platform that drives promotions and service innovation.

Dan Baker: Humera, you managed marketing at a wireless operator in the years before you joined Redknee.  Tell us a bit about the challenges you faced back then, and how the environment has changed.

Humera Malik: Dan, the battlegrounds have changed considerably in the past few years.  When I ran marketing, we created our own portal and generated our own content and it was mostly an on-net activity.

But if you look at how it’s evolved, the over-the-top players like Apple and Google with their own app stores and services have created a very competitive environment for the operator.

As voice revenues fade, the only way a telecom can remain profitable and retain subscribers is to give marketing what I call a merchandising platform.

A merchandising platform takes billing to the next level.  It manages prepaid and postpaid revenue transactions, but it adds a strong analytic component that gets marketing engaged in creating tailored services and all sorts of up-sell and cross-sell offers based on real-time intelligence.

I don’t want to downplay the role of the senior network team who’s obviously critical to an operator’s success, but marketing needs to lead the way and define what services should be created, how they should be created, and where to push those services out into the marketplace at the right times.

In short, it’s about proactively monetizing your network investment.  Instead of sitting back and hoping subscribers will come to buy your plain-vanilla commoditized services, you’re leveraging a real-time analytic and marketing engine to create highly personalized and time-sensitive offers that push people’s unique buttons.  When that happens, your business truly becomes a merchandising machine.

I like the sound of “merchandising platform“.  When you hear the term “billing”, it’s hard to shake the notion of sending out invoices or simply charging the customer something.  We know that billing is more conversational and flexible today, so the word “merchandising“ conveys that concept very well.

At Redknee we try to work with the strategic side of the operator business and help them grow revenues, mature their services portfolio, or gain more subscribers depending on what their particular strategy is.

But in every market, we’ve found that it really matters where you focus your attention.  If you treat all customers as the same, you’ll be only marginally effective, because you’re not serving customers’ unique needs.

The problem with legacy billing and charging platforms is that they provided a very one-sided interaction.  It was almost like you were spamming the customer because millions of people who signed up for a particular service got the identical promotion.  This has changed.  Now we can get very personalized.

What we say is: Treat the customer as the core asset of your business, then everything that you do is revolving around them -- the services you design, the rates plan that are designed, the packages you put together, the promotions, the targeted services and targeted offers.  And you realize that one size doesn‘t fit all.

And real time is being able to offer what the customer demands at the time they want it rather than wait for the legacy system to respond a month later, which is way too late in the game.

You need to enable impulse-buy opportunities which means you need highly-targeted offers for customers.

And to do this effectively, you also need to converge the services across the various telecom protocols: GSM, CDMA, 3G broadband, and WiMax so you create a unified customer experience.

Up to now, you’ve talked about mobile operators, but can merchandising principles be applied at other operators.

Dan, all of this certainly started with mobile operators, but multi-service operators are looking to provide that unified customer experience too.

We have a set of customers around the globe who are multi-service operators and initially launched their mobile services with our real time converged platform.  Over the course of time, they have replaced their legacy billing systems and migrated over to our converged billing platform to reduce the operational costs and leverage the real time capabilities to better serve their customers.

This kind of initiative requires a major cultural change.  The banter at the leadership level is less about network build outs and IT timelines, it’s more about things like customer loyalty, increasing ARPU, profitability, and enhancing the brand.

And part of what’s spelled the difference for making a transition to a consolidated and real time system is the fact that marketing is now armed with a tool for designing tailored services.  And it allows them to launch things like a Christmas season promotion program that can tie mobile voice — either prepaid of postpaid — with broadband services and fixed line.

So marketing is one of the key drivers for this change although they partner with network and IT side to share the benefits of cost reductions and consolidation of the billing systems.

Humera, at one point does the marketing enter the picture?  And at what stage do they actually use the merchandising platform?

Let me walk you through the process.  First, our Converged Billing Solution offers the end-to-end converged billing from the point when the subscriber enters the store and you offer them the rate plans available and the device they choose.  Then you provision them on to your network, activate it, so they start using the services.

Well, from that point on, the marketing teams now knows what subscribers have registered for.  Then, on an on-going basis, the marketing teams gather intelligence from these systems and design the services.

Now back in the days when I worked for a telecom, marketing meant looking at the churn and ARPU factor only.  Today you also look at the uptake of services to determine where to go next and that information is readily available so you can act on right away.

Let’s say, for a particular multimedia service, we saw the youth market picked up on it more than the rest of the market.  Well, the next set of services or the tariff plans that we design around that kind of service will be targeted towards the youth market.

Merchandizing is also about bundling services together and creating a seamless experience for the subscribers.  It is about optimizing the network investment and cross selling and upselling services to your subscribers with promotions that lead to subscriber loyalty and reduce churn.

How does a carrier merchandise to different subscriber profiles or demographic groups with your system?

Basically you need to manage the treatment of subscribers throughout their full life cycle with you.

As a simple example, the marketing team use its intelligence in the system to define three sets of subscribers by their value: low-end, medium, and high-end customers.

Now the strategy for a low-end subscriber is quite different from the one you use for medium- to high-value customers.  At the low end you basically want to reduce the cost of delivering services.

At the medium and high tier, however, you would define a set of merchandising strategies for them.  And this will involve creating some cross sell and up sell services, targeted services because these are the customers you want to convert to become high value customers.

Finally, for the very high-value subscribers, you look at the usage patterns and behaviors, and offer them incentives to buy additional high-value services.

Now to do it right, you need pull as well as push promotions.  And you do this by having them provide you their preferences and the sorts of communication they want to receive.  And in this way, they also feel they have control and you’re not choking them with offers they have no interest in.

So it’s all about working at various levels, defining a strategy around the various subscriber segments, understanding their payment methods, and treating them based on their value.  And what makes this all possible is the merchandising platform.

This article first appeared in Billing and OSS World.

Copyright 2010 Black Swan Telecom Journal

 
Humera Malik

Humera Malik

Humera Malik a consultant with the Quexor Group,a strategic marketing agency focused on the communications sector.  She helps clients with business planning, product and marketing strategy and go to market plans.  Humera is the former director of Global Marketing at Redknee.

She has been in the telecom industry for the more than a decade working for Bell Canada and AT&T Wireless, where she defined innovative mobile & wireless productized solutions targeting several key industries — Financial Services, Health Care, Retail and High Tech.   Contact Humera via

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