BLOG: Billing – a driver of growth

Tremendous challenges are on the horizon for the mobile industry. Revenue growth is falling, with many predicting it will stand at zero percent in Western Europe before 2015. The traditional drivers of voice and text no longer generate the profits they used to and average revenues per user, the supposed benchmark of the industry's health, are falling.

To add to this situation, handset manufacturers and content providers are increasingly offering products and services direct to customers, rather than via the operators. These industry interlopers, with their bandwidth hungry offerings, are paying minimal, if any, compensation to operators for access to customer bases built up over decades, as well as use of networks that have cost billions to implement.

So what is to be done? Service providers rightly expect some return on their investment; thinking, as they did, it would safeguard revenues by offering customers superior experiences. However, the way in which they expect to go about it, by demanding taxes on bandwidth-hungry services, such as video streaming, is unlikely to go ahead, thanks in part to the issue of net neutrality.

Potential source

There is another way. Operators spend significant amounts on attracting new users, when their existing customers offer a potential source of renewed profitability. A recent survey we conducted in 2011 found that nearly two-thirds (61 per cent) of UK consumers would spend more with their service provider if operators gave them the flexibility to choose the options that fit their needs. In order to do this, operators need to develop customer intelligence and they have the means to do this. They interact with them on a daily basis, through a variety of channels, and can understand their preferences, their creditworthiness, and how they use their phones. Billing holds the key to saving the mobile operator by unlocking new revenue streams.

In a system where payment is made on a regular basis for services rendered, billing has always been crucial in collecting the correct amounts from customers. At first, where the services provided were relatively straightforward, such as voice and text, mobile billing mechanisms were not hugely complex, relatively speaking. As new services were introduced, such as mobile Internet, music and mobile TV, new software designed to capture payment for these offerings were added to existing billing infrastructures. As with anything that grows organically, the result is a highly information silo system, which holds huge amounts of data on customers, without providing any big picture understanding of what they are actually doing.

To hear this, one could understandably assume that billing is far from the silver bullet for the mobile industry's ills. However, it is in this mass of separate data banks that the potential lies to build a complete picture of a customer's behaviour, background, and habits. With this intelligence, operators could very quickly predict their needs, avoiding misdirected offers and provide a more rounded, positive customer experience. However, in order to do this, operators need to combine an efficient, connected billing infrastructure, with a highly tuned engine for revenue growth. This must quickly build offers and react to the fluctuating demands of the market place.

This fully joined up package should be able to extract raw data, build profiles, and feed into sales, marketing and inventory management, providing real-time actionable intelligence that can be used to rapidly turn out targeted offers and bundled services. A start to an intuitive customer relationship based on understanding needs without the customer needing to make contact. This could take the form of registering that a customer is close to their limit of texts, for instance, and being able to offer an add on for a nominal amount in a non-intrusive way.

Benefitting both parties

This use of billing as sales tool is not new in the industry, but it has rarely been used effectively. Boosting user revenues is not about the hard sell or aggressive persuasion. It is about profiting from established relationships, exploiting a position of trust in a way that benefits both parties. Operators secure revenues beyond the term of contracts and customers have their lives enhanced through superior communication services.

By showing a deeper empathy with their customers by respecting their personal situations, operators can foster a sense of loyalty that can help protect them against handset-driven churn - the changing of service providers based on exclusive handsets. On a more basic level, effective billing can also provide customers with accurate information about their own spending, developing trust in the service providers' operation, and avoiding the misguided estimated bill headlines commonly associated with utility companies.

We have seen increasing evidence service providers are in a position of becoming a consumer's technology partner. In an age of converged digital media, no other industry has this level of trust. PC manufacturers build products; customers buy them in one-off payments, and use them autonomously. Games console manufacturers have a similar role. Updates and upgrades can encourage a customer to buy, depending on the customer's experience of the technology, but no one other than the service provider has the consistent regular contact with consumers over a prolonged period of time. Billing is at the heart of this contact. As operators look to profit from existing relationships, they need to have the infrastructure in place that allows them to offer a meaningful customer experience based on real-time actionable intelligence. Without this, declining revenue growth will quickly turn into declining revenues.

Bob Lento is president of information management, Convergys.