Drive Revenue by Putting Your Customers in Control

By Grant F. Lenahan
“Driving revenue by putting your customers in control” may seem a very threatening premise to many operators, but I aim to show that this is not the case. It may be better to say “give your customers choice, how to pay, when to pay, how to receive, what to receive and so on”. Either way, in today’s market: Choice = Control, and it ultimately leads to higher satisfaction, utilization and thus revenues for you.

It is important to understand the options available to service providers to counter the threats to their revenues, and to understand how they can change their business models to turn potential competitors into customers as well. This way, they can have customers, and revenues, at both ends of their value chain. Opening up network capabilities— to both types of customers (both partners and end-users) — is the key competitive weapon allowing the service provider to provide the most value, and hence receive the most revenues.

In order to provide value, service providers needs to be able to address “markets of one,” by allowing users to customize the experience of all their interactive services to meet their own particular unique circumstances, their lifestyles and their preferences.

Consider the evolution of the service provider’s business model, which is evolving continually in complexity and scope. Historically, the business model was based on post-pay, pre-pay and combinations of voice and some value added services. In almost all cases, the value chain was simple — operators provided service and subscribers consumed them.

The first generation data services business model was based on walled gardens — both onlandline (AOL (News - Alert), Compuserve) and on the mobile Internet. Soon, ISPs were totally bypassed by the open web where ISPs began to capture the “iInteractive” experience with end users and the market mindshare for innovation. The same is occurring, albeit more slowly, in mobile. Witness the Google android phone. Clearly there is a need for change.

If they wish to capture innovation — and thus service revenues— back from the “over the top” providers, CSPs and mobile operators will need to leverage their network assets with an interactive service delivery framework that can support individualized plans, personalized allowances, dynamic promotions, user policy, subscription and free (well, ad-supported and mighty profitable, really!) business models for these newly branded Open Networks, which can embrace partners and innovative social networking communities.

The traditional communications industry was characterized by “mass marketed” services, paid for almost entirely by traditional fees (monthly service, per minute fees, etc.). It was driven in part by latent consumer and enterprise needs, and, in part, by technological feasibility, the market now is changing in two radical ways:

1. Personalization of everything-from affinity groups to charging plans to targeted advertising with delivery options…

2. Fundamental changes in how services are paid for — the advertising/fees split is changing. Formerly ad-sponsored media (TV, radio) are more and more paid by fees, while traditional fee-based services (phones, IP access) are being subsidized by ads.

The ideal mix may be a personalization of these choices as new rules define business models, scope and opportunity. The future business world extends far beyond the simple bounds of monthly recurring bills.

There is no disagreement that the communications industry is fundamentally changing. Devices, services, and networks are becoming “interactive”. The interactive network supports new revenue sources — including partner services, digital commerce and advertising. The network has expanded from a technology focus on mobile, fixed, cable or satellite to encompass content, TV, media, advertising and other 3rd party partners. The services and devices running on these networks are the key drivers for the interactive experience for the customer.

The Interactive Experience

For service providers to capture the full value of their customer base, they need to build an interactive relationship with their customers. Enabling an interactive experience enables users to personalize their service for their lifestyle and allows service providers to build interactive relationships with their customers, going well beyond the concepts of eBilling or basic web self care. It also creates more opportunities for service providers to increase revenue via offers, upgrades or short term promotions and provide more services to the user like e-mail and voting on the web.

In the end, its worth focusing on three fundamental imperatives:

1. Give customers a personalized experience and they will be loyal and profitable.

2. Open your value chain to 3rd party content and services, to drive more revenues and provide your customers that variety they crave.

3. Don’t rely on last decade’s charging models for next decade services!

Happy innovating!

Grant F. Lenahan is Vice President and Strategist, IMS Service Delivery Solutions at Telcordia (News - Alert) Technologies, Inc. For more information, visit www.telcordia.com.

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