CRMs New Focus is Profitability, Experts Say

Post-tech bust, communications providers understandably have been obsessed with revenue assurance. This discipline primarily has focused on accurate reconciliation of intercarrier billing and fraud prevention. It has progressed to include other strategies like network inventory assessment and least-cost routing. Now, its wriggled its way up from the OSS and network infrastructure departments to customer relations.

In fact, a July 2003 study by The Yankee Group puts customer profitability analyses as the most important business intelligence initiative for telcos in 2003-2004. To succeed in todays communications market, companies must know which customers are profitable and focus on the quality of customer revenue rather than the quantity, The Yankee Group report notes, identifying this new focus as customer profitability assurance.

The evolution of CRM to focus on profitability is the subject of a detailed article in the February issue of PHONE+ magazine available at Booth 128 and a concurrent session moderated by PHONE+ Editor Khali Henderson this afternoon.

Rob Daly, CEO, Bluespring Software, will kick off the session, discussing the importance of pre-sale activities in making sure the deals are done profitably and that contracts are managed profitably during the customer lifecycle. Bluespring Software is championing a solution for what it calls deal assurance, which automates the presale process — qualifying the opportunity, designing the solution, setting pricing and terms, obtaining approvals and generating contracts — with all the information from the network and billing departments required to ensure a profitable deal.

Following Daly, Sue Platner, co-founder of The Northridge Group, will explain the importance of customer intelligence as a profitability driver and the value of linking such intelligence among business practices within a company. Companies need to understand the benefits of particular geographies, the effects of usage levels on profitability and the identity of successful products as well as the effectiveness of various sales channels, she notes. Telco cost auditing is critical to tracking success. This intelligence can be linked into business practices among different business entities to drive profitability.

Daniel Kenyon, vice president of communications industry solutions, PeopleSoft, will discuss profitability at the individual customer level and how to use predictive analytics to determine a customers receptiveness to an offer or their likelihood of churning or failing to pay.

Kenyon and his colleagues at PeopleSoft last summer packaged this capability in its Customer Profitability Management for Communications, a solution combining CRM, financial management and business analytics to enable telcos to compare revenue and cost for each customer in real time. Products like PeopleSofts are moving financial accountability into the customer management process.

This new discipline goes beyond measurement of average revenue per user, net new customer additions and market-share acquisition to evaluation of the present value of the customer. Its getting an accurate picture of the profitability of a customer … to create a view of customer value, Kenyon says.

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