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The singular solution to bill shock: Think like the customer thinks(Connected Planet Via Acquire Media NewsEdge) By Alex Leslie There are many reasons why customers suffer from Bill Shock. In Europe it tends to be caused by roaming and it is developing into quite a fight between customers, telcos and regulators. In North America it has more to do with massive usage on mobile networks, triggered to a large extent by our friends at Apple inventing a mobile device that everyone wants to use. The announcement of their iCloud will likely fill mobile operators with mixed feelings, generally along the ‘great, more traffic, still not much revenue’ lines. The ultimate solution is obviously to have networks of such quality and capacity that every customer has a choice. Either they get a bill every month for $40 or choose to receive adverts on five topics (required fields). Job done, is it really cocktail hour already? Sadly, life is not that easy. On the one hand, customers want simplicity and clarity. On the other hand, telcos need to control what happens on their networks, without turning customers off. The “all you can eat” approach makes sense from the customer’s point of view. It is simple and it is clear. The telcos hate it (at the moment) because over-usage means that network quality is being compromised for the many by the few huge users who consume too much bandwidth The “all you can eat until we tell you to stop” approach, meanwhile, is hated by customers who feel they are being watched and they in turn have to watch what they eat. It is a workable solution for telcos but they quickly generated negative publicity. In Europe, the same problem is made worse by roaming between countries. Every telco can set its own prices for roaming customers and there are many stories of even experienced telecoms executives being caught. They fly to Estonia (for instance) on business, happy in the knowledge that they pay a flat rate for data at home. They arrive in Estonia (for instance) late at night, get to their hotel, fall asleep and wake up in the morning several hundred euros lighter. During the night Microsoft (for instance) has been busy downloading the latest upgrade to an application and feeling that it is a job well done. What neither the executive or Microsoft knew was that Estonia Telecom (for instance) charges 2 euros for every megabyte downloaded. This is a scary and uncertain situation for the customer, and highly profitable one for the operators – for the moment, at least. One day there will be no artificial barriers – the regulator will make sure of that – so the argument for artificial pricing between countries will disappear. For the past decade, there have been conversations about charging for the value of the purchase. Instead of buying bandwidth and then using it to buy stuff, why not just buy the stuff as you go along? A customer walks into a store and buys a pair of shoes. He does not walk into a store, buy a ticket and then take three pairs of shoes (in which case he has done well and the store has done badly) or find nothing he likes and takes nothing, in which case the store has done well and the customer feels cheated. Theoretically, billing for content like this sounds great and fair, sane and understandable. In practice it is a minefield. Many of the things that you do online are a mixture of things that do not lend themselves to pricing per event – email etc, -- and many are made of electrons – songs, games, apps - and the customer needs to be told how much he is about to spend because otherwise it is difficult to keep score of how much he has spent. In essence you have the same problem as capping usage. Advice of charge mechanisms go a long way to solving this, but they are no means fail safe options. The other problem with the “billing for content or value” type approach is the complexity of supporting it and therefore the cost of managing it. As one Billing Manager said some years ago – “so, you are saying we need things to bill for stuff?” He was not happy with the concept. In a recent survey telcos and vendors were asked which model they thought would win – flat rate or value based pricing? Not surprisingly the telcos all said ‘flat rate’ (with an occasional comment about premium pricing for certain things) and the vendors all said ‘value based pricing’. The vendors want to sell complex (expensive) systems. The billing guys who work for the telcos want to sleep at night. More: The Solution: Think Like the Customer ThinksIt is difficult to see a solution that works for everyone. The “all you can eat” approach is attractive if you have the network capacity (thanks, Apple, that won’t happen soon). Even given the capacity problem, it is attractive to the operator as well, because the cost of support is far less. No need to monitor usage (so carefully), no need to have the complex things that can bill for stuff or hire and train the people who maintain them – it is generally a less costly option. Several years ago, when the same conversations were taking place around voice, there was a presentation by a US carrier who said that they had done an experiment on usage. They charged all their customers a flat $50 a month however many calls they made. In the background they rated and billed the calls as usual. They then monitored how many of them went over the $50 value. The answer was virtually none. It is tempting when you hear this to think that the same should apply to data. It is true and well documented that it is a minority of users that cause the problems – thus the whole policy management debate – but data is like storage or speed; the more you have the more you need, and the temptation to treat data like voice should be avoided. One thing is for sure. Whatever the solution turns out to be, it must have the customer at its center. As usual the telecom industry is discussing all of this without really taking the time to understand the customer. The customer will put up with a lot but when it comes to the “capping” and “punishin”’ solution it will not work. Indeed the customer probably feels like the road runner beep beeping along at high speed not knowing that the wicked telco is waiting round a bend with an Acme anvil ready to drop on his head. The customer likes simplicity and clarity. In an ideal world this would certainly mean “all you can eat”. It is the approach to capping that is wrong at the moment. Instead of behaving like a bully and taking the customer’s toys away, telcos should behave like good friends. Imagine this scenario: “Listen, I am sorry about this but you are using a lot of bandwidth. We need to plan. You are five days from the end of this month’s bill cycle and based on your usage so far you are going to use another 15 petabytes of data. Does that sound right? OK, well as long as you stick within that we will charge you an extra $5 but if you go over that then we will have to charge you 50 cents a megabyte. Sound reasonable? OK. By the way if you are going to be using that much data every month there is an option that would keep your monthly bill the same but allow you to use that much. What it will mean is that the quality will not be guaranteed at the level it is now. Normally you will not even notice the difference, but we have to say that. Is that OK? Great. By the way we are recommending some cool games from a company that our Marketing Director’s kids found recently, would you like me to send you the link? It’s a pleasure. There is a whole slew of stuff like that on our Facebook page. Is there anything else I help you with today? OK, by the way my Skype address is reallygreatcustomerservice – feel free to chat me anytime. Have a fabulous day.” Is that clear enough? Simple enough? However telcos do it, they need to retain every transaction record anyway, but one thing is clear. Think like the customer; it’s easy enough to do – he looks like us. © 2011 Penton Media |