News From Telecom World

How can operators survive the credit crunch?

Posted on: October 23, 2008

Operators need to provide good services at lower costs so they do more than just weather the economic storm.

The credit crunch is hitting consumers hard, and telecoms operators are now under pressure to provide more for less or risk losing their customers. Margins are reducing and the cost of borrowing to deploy new services is increasing. All operators must ensure that they minimise their downside whilst also enhancing their product portfolios.

Upwards of 30 per cent of communications providers’ IT spend is attributable to billing and CRM related implementations. A significant proportion of this expenditure could be saved through systems unification and operational efficiency improvements.

Here are ten ways operators can relieve their financial pressures without compromising customer service:

1. Invest in your current customers: integrated CRM
The cost of acquiring new customers will always be greater than the cost of retaining the ones you already have. A quality customer database coupled with a user-friendly interface will enable staff to understand a customer history and resolve problems quickly and effectively.

Many customers prefer to have the option of self care or eCare. Operators are already seeing huge benefits from making it cheaper and easier for customers to do common activities online. But this does require investment, Websites have to be multi-functional, easy to navigate and reliable.

Targeted marketing, drawing on the knowledge gathered by CRM applications, is now mission-critical. Better targeting will improve opportunities for both advertising revenues and customer satisfaction. However, consumers are also more aware than ever of how their details are being used and issues around privacy and data protection must be addressed.

2. Automate: workflow and business process management
By automating your back office systems, you can reduce the risk of human error. This in turn means that the cost of rectifying mistakes is reduced. You should be looking to leverage workflow tools to standardize and automate your core processes, applying the 80-20 principle.

Applications that allow remote management and diagnostics are also a sound investment. Ideally, an agent should be able to analyse, recognise and, in many cases, fix a problem over the air.

3. Find ways to introduce new revenue streams:
Examine how you can achieve higher revenues from your existing customers by cross and up-selling. However, it is essential that you make sure that the potential revenues attained will be greater than the full costs of marketing, assuring and delivering the service – particularly for those services that you are also positioning to attract new customers.

Co-branding and white labelling new services can save on or share new expenditure and risk. For example, operators could work with a bank to develop and sell new financial services to two sets of customers cost-effectively: yours and the bank’s.

Don’t reject wholesale opportunities out of hand. Sometimes the ‘bit-pipe solution’ is the most robust way to make money, particularly from market segments that would be difficult or uneconomic for you to reach directly.

4. Don’t leak: adopt Revenue Assurance best practice
Increasingly complex telecoms networks leave more openings for revenue leakage from technical errors, process breakage and fraud. Without proper revenue assurance policies in place, losses will only get worse. A recent study conducted by Analysys found that overall average revenue leakage has already increased from 12.1% to 13.6% of turnover from the 2006 to 2007.

5. Be green
Reduce energy costs! Being seen as “Green” can also enhance your brand positioning. Market analysis has shown that in the near future the cost of running a data centre will become higher than the cost of buying one.

Offer your customers eBilling. Not only is this better for the environment but it means huge cost savings from paper and postage.

6. Control your relationships
As an operator, you must be fiscally responsible. On an end-to-end basis, check your contracts are aligned with third parties to ensure that you aren’t selling services for less than you are paying for them.

Assess ways to manage your bad debt and collections more effectively. Utilise and enhance existing compliance, governance and risk management activities to help keep better control of your business.

Keep a sharp eye out for new fraud opportunities that arise from changes to your service portfolio, particularly for new data services. Keep your ears open when talking to your peers in the industry.

7. Sweat Your Assets
Make sure you are getting the most from what you already have…

8. …but also Protect Your Assets
Keep up morale by any means possible! Investment in corporate activities might seem an unimportant outlay with no tangible benefit, but you cannot put a price on a happy, effective workforce.

9. Above All: Think!
Thought leadership in telecoms is passing from developed to high growth markets, where low blended ARPUs and fierce competition created by increasing urban saturation necessitate cost-effective innovation. Look at what works in other markets: creative ideas are always cheaper than new technology, and often deliver greater benefit more quickly.

Use your systems and processes more effectively by recognising the need for every means of customer touch to be exploited. Put yourself inside the minds of your current and prospective customers to see how the platforms, applications and services created for one group of customers might be modified to attract revenues from another.

10. And Finally…
All telcos have been hoping that to some extent they are ‘recession proof’. The expectation is that when times are hard consumers still make calls to friends to make themselves feel better, and corporate markets look towards video conferencing to cut travel costs. Unfortunately, the indications are that this may not be so, and competition has ensured that consumers have a much better opportunity to rationalise their overall communications spend.

However, convergence can also offer some comfort: Spend on home entertainment has been shown to be resilient in times of economic downturn. Could you, should you or have you developed the business mindset and technology capabilities to compete effectively in this arena?

By following the tips above, operators can really focus on providing a good service for a reduced cost and do more than just weather the recession.

Colin Orviss is senior vice president at Patni Telecoms Consulting.

Source: Total Telecom

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