Monday, June 2, 2003		Guest Speak

Take prepaid customers more seriously
Sherie Ng

Traditionally, consumers who paid for phone services under pre-paid calling plans were often credit-challenged consumers who didn’t offer reliable, long-term revenue for the telecommunications service provider. Today, pre-paid subscribers could be using voice or data services and could be using the service simply for the convenience and the flexibility to pay only for what they use, reducing fear of using too many services, resulting in a big bill at the end of the month. With this change in customer dynamics comes an opportunity to reassess the value of the pre-paid subscriber base.

Following are some third-party statistics that illustrate the need for convergent pre-paid and post-paid (CPP) billing systems:

• As the number of pre-paid subscribers increases worldwide, industry leaders predict that service providers will need billing system to provide a unified view of their customer base.

• Pre-paid is a segment that carriers can no longer place on the backburner. (IDC. August 2001 Wireless Pre-paid: Ready for Blastoff)

• Operators need to find strategies to increase the value of pre-paid subscribers. (Pyramid. June 2001 Extracting Value from Pre-paid Mobile Subscribers)

Pre-paid versus post-paid is a means of payment, not a class of service. There is a wealth of knowledge about a carrier’s customer base inherent in the way consumers use pre-paid services. Since they pay as they go and could be anyone from a carrier’s best post-paid subscriber to a one-time service user, they offer a unique look into how and why consumers use a carrier’s services. However, if that usage data is trapped in a silo of information solely about pre-paid customers in a way that can’t be applied to the post-paid install base, a carrier can’t maximise revenue per user. To get past this stumbling block, carriers must shift the focus away from the type of bill as the centre of the pre-paid/post-paid billing system, to the type of transaction the customer is completing.

When consumers use pre-paid services, it includes the pre-authorisation of transactions, followed by the same post-event processing that occurs in post-paid transactions. Fundamentally, billing is transaction processing and by thinking of pre-and post-paid activity in a transaction-based model, carriers can boost revenues as well as potentially decrease customer churn.

The ability to move funds between pre- and post-paid accounts based on the kind of transaction, be it a phone call or the Internet download, gives valuable insight into which services have stickiness and which are just draining the marketing budget.

When a carrier elects to support its customers with a convergent pre- and post-paid system that can handle any type of transaction, it allows them to leverage knowledge gained from the way pre-paid consumers use services into campaigns targeted at the entire customer base. For example, carriers could offer automatic time or account credit extensions for all services under one balance including voice, SMS and MMS. In addition, multiple balances become possible for post-paid voice, pre-paid GPRS and SMS or any combination thereof for one subscriber. Carriers also gain the flexibility to package offerings across balances, offer vanity numbers, friends and family plans and business applications, including multiple balances per employee.

Churn reduction mechanisms and customer loyalty plans can be applied to all consumer types and more segmentation tools can be used across the entire customer base, enabling campaign efficiency. In addition, since new offers and plans can be rolled out quickly, it gives the carrier the opportunity to target business pre-paid users, a volume-based customer that can’t churn easily.

Convergent pre- and post-paid billing systems also lower contact centre costs because the CSR has one-touch access to customer information, with all information in one place, regardless of payment method. This enables CSRs to spend less time on billing-related calls and focus on more value-add tasks such as outbound calls.

Carriers using legacy pre-paid billing applications must be aware of the limitations and risks of those systems. For example, there is a high cost of ownership associated with data residing in two silos based on the way a customer chooses to pay. This means if a carrier wants to launch the same services for pre-paid and post-paid consumers, it needs to be configured twice and two systems must be run, maintained and upgraded. In addition, it can take anywhere from six to 12 months to launch a new pre-paid service through a legacy system. This length of delay presents a wide-open door for the competition to get to market faster and steal market share. Another inhibitor to a carrier’s ability to compete is the reliance on proprietary interface standards, rather than open systems. If a carrier must wait for upgrades or other support as standards change, it will delay their ability to launch new services.