As communication service providers (CSPs) search for ways to differentiate themselves, delivering digital-first customer experiences continues to be a top priority. For the last decade, transformation has focused mostly on customer engagement layers and supporting omnichannel experiences such as discovery and purchasing.
Increasingly, however, CSPs are focusing on transforming systems and processes across the complete end-to-end customer lifecycle, particularly when it comes to billing and payments. The industry is evolving past connectivity and to digital services; in the same vein, customer relationship management has evolved to become digital engagement. The third wave of transformation is coming, and it’s from billing and revenue management to digital monetisation, writes Jennifer Kyriakakis, the founder and chief marketing officer of MATRIXX Software.
The drivers behind that third wave are painfully clear. Every unexpected charge, every billing error, every confusing invoice erodes customer trust and increases the risk of churn. For too long, legacy billing processes have acted as a drag on CSPs’ financial performance, limiting agility, driving up the cost of revenue management and becoming a major contributor to customer dissatisfaction. Billing consolidation projects, while giving the impression of positive change, simply address the symptoms, not the underlying causes of fundamentally broken billing processes.
The impact of those broken processes on customer satisfaction and the operational costs to CSPs cannot be underestimated. A recent report from STL Partners highlighted that close to 50% of calls to CSP call centres are billing-related, costing a typical telco approximately US$60m per annum.
“For a typical telco, at least 40% of customer calls are billing related – most of the time it’s the number one issue they complain about,” Principal Transformation Office, Tier-1 operator, EMEA
It also highlighted how some 60% of new go-to market offers are delayed by billing efficiencies, resulting in a 33% drop in profits for projects that are delayed by six months. Even worse, in a number of cases, excessive delays result in projects being cancelled before launch.
“It’s the complexity of doing operations from the whole number of systems we have – billing and rating platforms – that make it highly inefficient in how we operate,” Technology and Innovation Manager, Tier-1 operator, EMEA
Overall, the report highlighted some US$168m of annual savings, equivalent to a near 2% uplift in EBITDA for a typical CSP, from the implementation of a modern, streamlined monetisation approach.
“Before I wouldn’t be surprised if 50 60% of calls were billing related, but now everything is transparent, so we never have complaints about this. It’s a gamechanger,” Principal Transformation Office, Tier-1 operator, EMEA
A different operating model
Older, established industries, such as CSPs, are (in)famous for lagging behind in modernising both internal operations and customer-facing processes. Some have even met their potential demise (think taxis). There is no easy way to transform a business when confronted with decades of IT buildouts that have resulted in layers of complexity and Chinese walls around organisations and their associated data and processes.
The reality is, if a telco could design customer and business operations today, it would look very different than it did ten or 20 years ago. And with 5G, cloud and AI technologies, some greenfield players are getting to do just that. Whether they are serving mass market consumers, like Verizon Visible or AWS, offering private 5G as a service to businesses, newer entities are embracing a simpler, leaner approach to billing operations that will give them a competitive advantage. So how can the established service provider possibly compete?
Adopting a digital monetisation approach accelerates a CSP’s evolution to a modern digital business architecture, helping solve key challenges currently impacting both existing margins and new services/revenue. As CSPs evolve their go-to-market around cloud, data and 5G service offerings, this becomes the time to redesign the processes that directly impact how revenue will be generated from new services.
Digital monetisation 101
Digital monetisation provides real-time processing and visibility of all customer charges. Customers have full transparency into accounts, balances, services and usage, creating a more optimal customer experience. This is achieved through a unified set of monetisation services that are used across customer types, networks, payment methods and lines of business. For CSPs, the benefits are enormous, from the shedding of extraneous systems and processes to the ability to gain customer insights that are actionable in real-time. This evolution requires a rethink of how to transform passive utility-style billing and collections processes into active engagement that will drive more revenue while simplifying and improving how customers buy, use and pay for products and services.
How does digital monetisation work?
The traditional functional demarcation between billing, charging, ordering and care is changing. Charging is assuming more charge calculation functions, while billing (and invoicing specifically) provides bill-cycle-run functions, like billing quality assurance (QA), invoice generation and integration with other systems, including bill formatting and f inancial reporting.
The diagram above shows the shift of functions from the legacy, bill-cycle-driven billing system to the real-time charging system. There is a centralisation of all rating — usage, one-time and recurring. Taxes and discounts are now calculated in real-time, adding significant value to the information presented to customers during the billing cycle.
A key part of digital monetisation is real-time charge calculation, including taxes and discounts. Charges are calculated when incurred. For an existing plan, the monthly charge is calculated at the start of the bill cycle rather than the end, and this could be any charge, including for subscriptions, contracts or devices.
For one-time activities like a game boost or a new or changed plan, the charges are calculated when ordered. This is how service providers can achieve transparency and immediacy, giving the customer their up-to-date spend visibility at all times, and giving care staff the same visibility.
By calculating all charges in real-time, service providers are improving how fast the bill is generated and, therefore, cash is collected, with some validation and QA activities undertaken throughout the period, reducing the end-of-cycle load. Overall, the bill cycle process is simpler as it just needs to process charges already created and passed to it. The principle of immediate charge calculation versus the traditional, typically end-of-month, bill-cycle batch calculation is illustrated below:
How do we get there from here?
Change is uncomfortable, even sometimes painful. Do you remember going to the bank every time you had to deposit a cheque? Now, you take a picture of it through an app. Banks in North America spend upwards of US$80bn a year on technology upgrades, a staggering number. But would you use a bank that still forced you into a branch or to an ATM to make a deposit?
As CSPs continue to invest billions in 5G, edge, cloud and AI, breaking down the barriers that make it difficult and costly for consumers and businesses to sample, buy, change and pay for new services will be key to adoption and eventual return on investment. Existing billing processes and application architectures must change to enable simpler, more dynamic revenue generation processes.
Reusable processes that aren’t hard-wired for a specific type of customer or service, and instead can be easily adapted and scaled, are necessary to monetise evolving product and customer portfolios.
Now is the time to rethink revenue management. Ditch the silos. Lose the complexity. Innovate beyond the limits of traditional billing by actively driving monetisation processes that engage the customer. Existing billing systems remain rooted in the past and obstruct telco operations. Digital monetisation delivers a deeper level of customer engagement with real-time insights paired with a simplified operating model, streamlining costs, accelerating go-to-market agility and cash collection and, crucially, putting the customer at the centre of the relationship. In doing so, this lays the foundation for the services that will define CSPs’ futures.
MATRIXX Software is already undertaking this digital monetisation transformation journey with some of our customers around the world. If you’d like to explore more, visit: http://www.matrixx.com/customers/.
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