Analyses, Commentary, Perceptions

The impact of the recession has been felt among the majority of consumers and, as a result, customers today have very different requirements as compared to what they had six months before. As price sensitivity increases, customers are looking to reduce spend, and they have become more aware of any changes in cost. Financial Institutions (FI) face the increased risk of customers moving their businesses to a competitor and concentrating their banking relationships in order to reduce the amount of fees they would have to pay.

While operators are keen to jump on to the 3G bandwagon, they want to capitalize and churn revenues from these content services and also from emerging business models like SaaS and cloud computing. Interestingly, the capability of a BSS becomes the cornerstone for these services. No wonder that despite the sparks of recession, the billing market overall is predicted to grow at 4.4 per cent through 2013, according to Stratecast.

The economic downturn has increased the importance of customer loyalty for service providers across transaction-based industries. In fact, these troubled times carry several opportunities along with the difficulties they bring in. In order to sustain profitability, organizations are leveraging various strategic initiatives that help them increase and maintain customer base, apart from increasing the customer wallet share. Effective customer loyalty programs are prominent among the strategies devised by service providers to help them keep their feet firmly on the ground, without falling into the drain.

Customer profitability is not a new concept; it is indeed elementary. Nonetheless, efficient execution of the endeavors to offer superior benefits to customers based on their total relationship value is certainly not a standard yet in the services industry. We do know that institutions, which prevail and focus on the appropriate processes and translate the outputs into strategies and initiatives for their sales forces, achieve as much as a 30% improvement in average relationship value. But the irony is that the very cost of this 'strategy' formulation and execution could be not worth as much!

Financial Institutions (FIs) around the globe are accelerating their efforts to increase profitability, even as the global economy is trying to wriggle its way out of the clutches of recession. Nonetheless, this is easier said than done, due to various implications of the economic downturn. Customer purchase patterns and market dynamics have significantly changed. Competition is still hot and customer expectations are still high. Moreover, increasing costs and operational silos are creating operational issues. Under these conditions, FIs are looking for strategies to improve customer revenue, and reduce customer cost to improve profitability. Now, the BFSI players should start exploring other industries, and adopt their best practices to meet these objectives. In order to improve customer revenue, FIs need to find out ways to provide offerings and prices according to customer expectations, better revenue realization, reward high-value customers, manage products and services effectively, and offer smarter pricing mechanisms. Some of these best practices include: