Posted: 04/1998
By Robert J. Marino
As the Telecommunications Act of 1996 celebrates its second anniversary, competition and convergence are gaining momentum. Due to dramatic change expected over the next 24 to 36 months, providers of local and long distance telephone service, cable, wireless and Internet access will compete for market share within an increasingly integrated market. The implications for bundling services are dramatic as carriers rethink marketing and operational structures, and consumers brace for the avalanche of new services and competitive offers.
In a hypercompetitive market, the case for bundling is compelling for both carriers and consumers. For carriers, bundling offers the opportunity to compete effectively, attract and retain high-value customers, uncover new revenue potential and diversify into other services. Consumers relying on one communications provider should experience reliable services, discounted rates and high levels of customer support. One provider also translates into one bill and one point of customer contact--the major value proposition for consumers and a significant operational challenge for carriers.
Delivering on Promises
The ability to deliver on the promise of a bundled service offering has critical implications. According to Kate S. Bergin, a retention marketing expert and professor at Northwestern University, there are significant switching costs involved with a bundling proposition. Depending on the service offering and customer trust level, bundling can either raise or lower switching costs. In other words, if a customer sees value in the offering, retention rates can be very high. However if the customer does not see the value or questions the ability of the carrier to deliver on the service, then attempting to bundle services can drive customers away. Hence the importance of putting in place an effective bundled service strategy, including appropriate approaches to convergent billing and customer services.
Convergent customer support and billing solutions are an essential component for effectively delivering multiple services to the market. Customer support and billing solutions can result in operational savings. When transitioning from a single-service to multiple-service environment, business and technical trade-offs must be considered. Current service features and functionality may be traded for multiple services flexibility. Time-to-market may be traded against the level of cross-service integration. And levels of customer support may need to be traded against the effect on carrier business processes.
Ultimately, convergent solutions must support multiple service integration and client-centric business operations, but not at the expense of current levels of functionality and transaction throughput. To meet these challenges, a carrier should look at a convergent customer support and billing strategy that focuses on two approaches: a consolidation approach and an integration approach.
Consolidation Approach
Because any updates to systems involve the migration of the customer database, moving and cleaning the data without error can be a challenging process. Therefore, service providers with a large embedded base within existing platforms should consider a consolidated approach to convergence. The consolidation approach couples a provider's existing, single-service billing solution with other comprehensive billing solutions, and front-ends these with an integrated customer management program.
By linking existing solutions in this manner, several benefits are realized. First, customer demands for the convenience of a single invoice for all telecommunication services are met. Second, by deploying the integrated customer management program across multiple, service-specific billing solutions, customer queries regarding any service can be provided with a single point of contact at the service provider. Finally, service providers can offer cross promotional discounts to customers, increasing customer satisfaction and retention.
The consolidated approach, in enabling service providers to leverage prior investments, improves convergent services' time-to-market and reduces the risk of migrating customers from an existing system en masse while delivering to customers the promised benefits of convergent telecommunication services.
Integrated Approach
As technologies converge, a time will come when the upgrading of existing systems will become either too expensive or inefficient. When that time comes, some service providers will want to invest in a single, integrated solution.
Whether it's a service provider upgrading to a single solution or a new player making an initial investment, an integrated solutions approach is the choice for the future. An integrated approach offers service providers a more flexible alternative to compete in a dynamic, integrated environment. A multiservice, fully integrated solution is designed to manage all aspects of the operator's business including the provision of all telephony, interactive and entertainment services. An integrated solution may feature a single relational database that supports service negotiation, customer service and trouble reporting for customers. In addition, integrated solutions can offer highly flexible implementation options through user-defined controls, full integration of customer accounts, call processing and cycle billing.
The installation of an integrated billing solution brings significant operational benefits. The integrated approach enables carriers to readily implement and maintain a single, streamlined customer support and billing solution while providing the ability to grow across markets as their subscriber bases grow. Fully integrated information technology (IT) and customer support platforms also provide efficiencies.
Customer Support Issues
Once competition and convergence fully arrive, carriers will alter their focus from market penetration to differentiation with customer support and billing as their primary weapons. Integrated customer support and billing solutions provide an extensive amount of information about a carrier's prospective and current customer base.
Integrated customer support and billing applications enable a carrier to target specific market segments by matching customer demographics to service procedures and investments. Service management is important to provision and monitor requested services as well as migrate users to a rate plan that is the best match for their usage patterns. In addition, the ability to collect information, turn it into valuable intelligence and provide customer service representatives with easy access to the data becomes an important service differentiator, ultimately enabling the carrier to use that knowledge to increase customer satisfaction, loyalty and revenue opportunity.
When implementing an end-to-end solution, the customer support and billing infrastructure can translate into a highly powerful marketing tool in an integrated environment. Service providers can provide better customer management if marketing and sales, customer service, and problem resolution organizations have a single view of the customer. Call histories generated from billing data, combined with customer service records and demographics, allow for very specific customer segmentation, which can lead to personalized programs and more effective cross-sell and upsell campaigns.
Conclusion
Bundling services and possessing the supporting systems and interface structure is driven by the need to differentiate offerings and improve customer service in competitive markets. An integrated customer support and billing solution allows operators to address specific customer needs, react quickly to market conditions, and create a variety of special discounts and promotions. Customer support and billing not only require the enhancement or replacement of existing systems, but also the critical involvement of the people interfacing with the systems and end users. Deploying an end-to-end solution will help define who wins the war for customers in the time to come.
Robert J. Marino is president and CEO of CBIS. CBIS provides provision and management of customer care and billing solutions for the communications industry. For more information, visit the CBIS web site at www.cbis.com.
