In a world where convergence is king, long-neglected back-office functions are coming to the fore. They are being recognised as critical business enablers, allowing operators to support and, above all, charge for new services.
Billing may not yet be a handsome swan, but is certainly no longer the ugly duckling.Businesses recognise its strategic importance both because it provides the revenue and can deliver competitive advantage in customer service and satisfaction.
Convergence is the single-biggest driver in this transformation. Offering services such as mobile TV, quad play, interactive gaming and Web 2.0-style social networking increases the pressure on billing, customer care and other back-office functions. Billing systems need to be able to charge for any type of service and in a way that is acceptable and understandable to the customer, for instance.
Traditionally, service providers have tended to set up dedicated systems for each new service: subscriber and service data have been held in disparate, closed systems.
This ‘silo’ approach is no longer viable as differentiating triple- or quad-play services demands the ability to bundle services and offer cross-service discounts.
Already there is a trend for operators to move to convergent billing and charging systems capable of handling this increasing complexity. In Europe, NTL/VirginMedia and BT have both consolidated their billing systems across a range of services. Similarly, Qtel in Qatar has moved to quad-play billing – TV, phone, cable and mobile – using a single billing system.
So what does this mean in practical terms?
Billing and other back-office systems must be flexible, that much is obvious. For a start, operators need to be able to apply discounts across products and services to incentivise subscribers and reward particular usage patterns – especially when supporting promotions, packages and targeted offers.
The system must also accommodate different pricing and billing structures – for example, flat rates, pay per view and subscription services – and any mix of these, often involving the same customers. Individual customers may well pay for different features in different ways, choosing post-pay subscriptions for some and pre-pay for others.
Real-time charging will be critical in managing this, minimising risk as well as ensuring that usage is billed correctly. As operators offer a greater range of third-party services, their debt exposure increases. It is important that subscribers should be warned in advance when their credit is running low. But equally, access to services should be barred as soon as credit runs out, rather than allowing an unsupported debt to build up.
Real-time capabilities are also vital in other areas, such as authorising services as part of the service delivery process, handling online transactions and settling payments. This is a challenge for the scalability of systems as well as their ability to process ever-increasing data volumes at high speed.
There can be major issues in dealing with the volume of data generated by real-time and content-based transactions across a range of services. These demands will grow as convergent services proliferate. Therefore, the ability to scale up the systems to cope with present and future demand will be is essential.
There is similar pressure in the area of partner relationship management as a result of the growth in third-party content. Content providers need to be seen as true partners, not merely suppliers, and having efficient systems and processes is critical to a satisfactory working arrangement. This will require the automation of tasks such as partner settlement, which will become too complex for operators to handle manually.
Automation will help ensure that advertising, commerce and content partners get their fair share of payments as well as eliminating possible sources of revenue leakage. This ‘revenue assurance’ is an integral element in building the mutual confidence that is central to stable, profitable partnerships.
And if all of these factors are not already a tall enough order, business support systems should also make it easy for operators to try out new services among a group of customers without committing to a costly full-scale launch among the entire user base. If the test proves successful, the services can be rolled out and supported by the back office, quickly and easily.
Overcoming ‘silo’ architectures and processes – and tightly integrating all the business systems – will be critical to this, as will be well-trained call centre staff equipped with the right tools to manage complex issues.
Integrating the front and back office
Convergence not only affects billing and other back-office systems but also the associated customer service operations.
Call centres and their agents are critical to success in supporting an organisation looking for long-term success, offering a growing range of services.
All too often these agents are held back by a highly fragmented picture of both the operator’s business and its individual customers.
As a result of the ‘silo’ culture, customer and product data is often held in separate systems. Agents have to switch between systems when responding to customer calls, often manually noting down information from one and entering it into another system. These different systems are actually only connected by the skill of the agent; a slow laborious process that is unsatisfactory for customers and costly for the operator.
What’s needed is a complete view both of the services available and of the customers. In order to be effective, agents must be able to see into all systems at the same time and not have to ferret for information.
Creating this complete picture of the operator’s business not only involves making customer data accessible centrally but also incorporating information such as product data, lifecycle information and product business intelligence.
The key is knowledge – integrated, accessible information on customer history and services subscribed to, delivered in a clear and transparent manner. This in turn makes it possible to raise the bar in customer service and focus on strategic areas that can transform the business performance.
At the heart of this is Customer Lifecycle Management (CLM) – an approach developed by strategy consultants McKinsey. Part of this approach is to identify and develop those customers who represent the greatest long-term value to a business, also referred to as customer Lifetime Value Optimization (LTVO). It builds on the opportunities created by well-integrated back- and front-office systems and the relevant targeted information provided to call centre agents to increase customer value. Rather than just reacting to problems when they come up, automated systems based on LTVO are able to make agents more efficient and allow them to be more proactive when dealing with customer queries. As a result the cost of care can be reduced and revenues boosted. This unified approach also has the potential to improve the overall customer experience and so increase customer satisfaction and loyalty.
A lifetime of revenues
By implementing a lifetime value-led approach, businesses can respond proactively to their customer needs and problems. It can identify those with a particular buying pattern and make appropriate early offers. Equally, it can provide an early warning to potential problem areas.
LTVO exploits the successful integration of business support systems, drawing on a wide range of data sources, including real-time analytics, to identify the most profitable customers and target them more effectively. It helps to reduce churn, raise ARPU and adjust care levels based on their likely lifetime values.
For example, if a high-value subscriber stops using a service or a device, this might indicate technical problems, which a call or email might resolve. In another instance a low-value customer might be encouraged automatically to use online help rather than phoning in, or routed to a paid-for helpline. Here, the technology makes it easy to provide a good service while reducing the cost of care.
LTVO also enables operators to respond to issues as they occur, often heading off situations that might result in a lost customer. Rather than waiting for subscribers to call in, technologies such as real-time policy management can be used to detect and flag problems to the call centre. An agent can then contact the customer to resolve the matter before it becomes a bigger issue.
The emphasis on lifetime value enables the organisation to focus its best efforts on those that represent the greatest value potential.
This makes it possible to make the right offers to the right customers at the right time. These offers will consist of the services and offers that will mean most to them, personalised to their needs, habits and tastes. An example might be offering someone a movie package just at the moment when they are about to buy their third ‘pay-per-view’ movie in a week. This not only creates a warm selling opportunity it can generate goodwill by linking the sale to an offer, such as a free movie as a reward.
End of the ugly duckling
Convergence creates many business opportunities for operators. However, to get the most from these, it is vital to streamline and integrate the front and back office. Not only will this support the convergent business more effectively, it will also help put the operator ahead of its peers.
About author: Alastair Hanlon is Director, Innovation Strategy, Convergys