ShareYou Have Earned It; Now Just Bill It!
Did you know that telecom operators, on an average, lose more than 20% of their revenues year on year due to avoidable leakage - seepage of revenue that occurs all along the entire order-to-cash process - and obscure leakage, which the industry pundits have now christened 'latent revenue leakage'. Though the role of the first factor is never inconspicuous, the latter contributes much more generously to the total revenue leakage.
Latent revenue, as you might have guessed by now, remains 'hidden' from perception of the operators. The operators are not able to realize this revenue as their existing systems are oblivious to its very existence. Latent revenue was 'discovered' following the 'new revenue stream' mantra, that operators swear by now, and has been the cynosure of their eyes ever since, with the advent of content service offerings like RBT, MMS, Internet access, Mobile banking, VOD, iTV, and PPV, to name a few.
The challenge is steep, fundamentally due to the high-valued nature of the transactions involved - be it wallpaper downloads, music/video listening/download, sports updates, banking or e-commerce. Let us try to gauge the dent caused by this loss in latent revenue, by examining one of its sources - incorrect or flat-rate pricing.
ITU reported that, in 2006, around 81% of the broadband pricing schemes in the world followed flat-rates. A recent study by Cisco on content billing projected that operators lose around $151.44 when flat-rates are applied for content billing services. This means that though the operator does not apparently perceive a loss here, they are in fact losing revenue since they are not able to charge their transactions accurately. For instance, an operator with a 1-million-strong subscriber base would lose approximately $151 million at this rate. Now, that is alarming, to say the least!
Believe it or not, the biggest challenge to have a system in place to arrest latent revenue leakage is the operator's existing 'silofied' (for the lack of a better word!) infrastructure itself. Operators, in their hurry to keep pace with the growing market, mostly end up with new independent billing systems for each of its services. This practice builds up service-specific system silos, which not only increase the probability of the operational costs through the loss of transaction records and integration expenses, but also augment the difficulty in retrieving customer information across them. Only when such specific customer information like charge, tenure or revenue is captured across these silos, can usage pattern be derived to construct strategic segments and formulate subsequent packages/loyalty/reward programs for these segments.
Though there are well-known revenue assurance systems in the market to help plug apparent revenue leakages, the 'new revenue streams' demand revenue management from a different perspective. The operators tend to lose big money in the bargain, if they fail to handle the high-valued transactions involved effectively and efficiently.
The ability to price based on transaction value, the facility to segment customers based on account history, which includes both tenure and revenue returns, the power to innovatively bundle services for each customer segments, devise profitable loyalty and redemption programs for each customer segment and test these price/bundle/loyalty/redemption schemes on model scenarios of customer segments, should be inherent in an ideal solution that can be the panacea to all the pains of the operators.
With such an ideal system in place to track revenue, the operator can lay to rest his concerns of revenue loss in rolling out new value-added services to the market quickly and in billing whatever services he has rendered, accurately. You have already earned it; now all you need to do is to bill it.