Telecom lessons for all industries

Because of limitations in their charging and billing capabilities, companies outside of telecom tend to take a ‘one-size-fits-all’ approach to services and pricing. In order to stimulate customer consumption, deepen customer loyalty and drive recurring revenue streams, all industries can stand to learn from telecom’s fixed and mobile evolution – from simple subscription business models toward today’s increasingly personalized activity oriented approaches driven by real-time rating, charging and intelligence around customer usage, behaviors and preferences.

 

Naturally, all industries stand to benefit from building better customer relationships and creating recurring revenue streams that extend customer lifetime value. Whether in smart grids and utilities; cable, media and entertainment; defense; cable; retail; manufacturing; or automotive, TM Forum and its members recognize that all sectors have an opportunity to learn from the telecom industry and expedite their evolution from simple one-time transactions or subscription business models toward relationship-oriented business models built around customer activity, segmentation and personalization.

 

Whether bricks and mortar, virtual or digital, all companies have to think about how to drive longer-term relationships and stimulate more customer consumption if they are to survive and even thrive in increasingly deregulated, highly competitive commoditized markets. To engage customers and entice them to consume more, billing and charging capabilities have to evolve to accommodate people’s ever-changing usage patterns, circumstances, behaviors and preferences. Or, better yet, billing and charging should become strategic assets that actually drive people’s patterns and behaviors in new directions. As Google execs say, "to know what customers know," and perhaps to know it even before they do.

 

The problem is that most businesses are limited by charging engines and billing solutions that accommodate only three simplified price ‘levers’ – quantity based pricing, duration of a subscription and the product mix of the subscription.

 

Over time, being limited by those three levers leads to lower ARPU and disenchantment of profitable customers. “Companies have to accept that the concept of ‘cornering the market’ no longer exists; there’s no such thing as a single market. Just walk by the average store and see how many different styles of jeans there are - baggy, skinny, high-cut, low-cut; walk by an automobile dealership and notice the different styles of each model - sporty, minivan, hybrid, SUV. It’s all a microcosm of the personalization consumers are seeking in all facets of their lives,” says Kleavin Howatt, director of product management for TM Forum member, Transverse.

 

 

 

The reality is that the nirvana of personalization is often thwarted by limits on the flexibility and number of variables and parameters that can be manipulated for new marketing schemes and creative pricing and charging.

 

With that in mind, businesses outside of telecom should not only think about appealing to the ‘greater whole,’ but perhaps to niches where people are willing to pay premiums for content, services or goods that resonate with their lifestyles, wants and needs. “While the fracturing of all markets into niches opens up myriads of opportunities, businesses can capitalize on those opportunities only if there is open-ended flexibility in creating new parameters and attaching a price to the value-adds that are appealing and enticing to different types of customers – whether segmented by age group, geography, ethnicity or any other characteristics,” adds Howatt, noting rating and charging engines should accommodate virtually anything marketing can dream up, thus moving companies toward the concept of “dynamic revenue management,” where you can say “if it can be metered, we can rate it and charge for it.”

 

With a more dynamic approach to rating and charging, it becomes possible to stimulate customer consumption with offerings and price plans that combine relationships (via subscriptions) and dynamic sources of revenue (via consumption or usage). “In the same way mobile service providers learned, other industries can learn that they can engage people with base offerings available for predictable rates, and then deepen the loyalty with add-ons that are appealing enough that people pay extra for the access to the value adds as they build over time,” said Howatt.

 

In other words, companies can start out with ‘all-you-can-eat’ charging and pricing, but strive to introduce usage and caps and then personalization that carries them toward true personalization of services in the same way mobile carriers have since the days of 'friends-and-family.'

 

Deregulation, competition and commoditization of services will necessitate this evolution in all industries. The ones who survive will be the ones who heed the lessons learned in telecom by building in flexibility into billing and charging capabilities sooner rather than later. The consistent goal should be the endless creation of not only predictable revenue streams that first entice customers, but to further engage those customers in more personal ways. That requires that billing and charging become truly automated and intelligent, which is where TM Forum’s Revenue Management Initiative comes in.

 

 

 

TM Forum is focusing on how customer satisfaction in all industries can be driven by a revenue management strategy based on manufacturing’s lean-value-stream management.

 

“We are broadening our constituency beyond telecom, as we recognize that not only CTOs and CIOs, but actually CFOs, CMOs and COOs in many industries are interested in the work we are doing at TM Forum as they struggle in managing their enterprises with inefficient business management systems and processes. They want to avoid what we experienced in telecom--where we created almost as many problems as we resolved with transformations that affected everything from element management, to network management, service management and OSS/BSS,” says Steve Cotton, head of revenue management at TM Forum.

 

He contends that TM Forum’s Frameworx will provide a blueprint for implementation for all industries interested in attracting and maintaining the “modern, connected consumer,” which will push all customers to think about “billing” in the context of real-time charging and policy-driven approaches to service delivery. “You have to move to subscriptions embedded in personalized policies, which should be built around consumer preferences,” says Cotton, noting that ideally, self-care then becomes the next stage for optimizing the customer experience. “Today, you never hear about the customer satisfied with the last transaction; you hear only about those dissatisfied to your detriment, so if you can make sure your customers are always satisfied with their last interaction, then that is as good as it gets. Then you reduce the chance of churn, and better your chances you can retain them as your customers.”

 

He points out that all consumers will maintain multiple subscriptions, “but it’s the one they use most that matters; you want to become that one by offering real-time satisfaction over and over again,” adds Cotton.

 

To help the 7,000 members now engaged in the Revenue Management Initiative, TM Forum is building maturity models, best practices and implementation guidelines for critical areas, such as:

 

To get involved and learn more, visit TM Forum’s Revenue Management and Customer Experience Program or contact Steve Cotton. [email protected]