Revenue Assurance XXI Century. Cost Monetization (Reduce Cost into Money)

Luke Taylor
Author: Luke Taylor CCO & Deputy CEO
Date: 21st May 2015
Categories: Technology

Where one person sees problems, others see opportunities; where someone sees costs we have seen a customer segmentation strategy to improve our earnings with those subscribers that who exceeded his their mobile data package during the billing cycle.

Since we have launched our MVNO service things have changed very quickly and also our costs have also changed. With millions mobile subscribers, our traditionally broadband operators have grown fast, doubling our mobile clients during the last year thanks to our convergent offer that combines our broadband and mobile service.

However, not all that glitters is gold and LTE 4G services, video on streaming platforms and apps like Whatsapp voice, meant that our data usage from mobile services has grown exponentially incurring huge costs for us.  As a MVNO, our margin on mobile services its too short  so watching our costs its are the most important thing to reduce.

Nowadays many CFO´s were worried about clients who exceeded their data package and continue using their services, so operators first strategy was to reduce the speed of navigation to those subscribers. This is a common strategy to reduce costs for many operators.

To complete accomplish this strategy, operators have launched additional data packages of 500 Mb or 1 Gb for those who want to buy it and continue navigating at high speed.  However, there are still continue a great number of clients who continue using their services with low speed instead of buying an additional 500 mb or 1 Gb package so costs continue to increase.

During last week the biggest Spanish operator announces to change this strategy of reduce speed when their data package were exceeded and they are starting to apply a tariff plan to every byte exceeded, this would help to reduce cost of data usage and monetize it, but surely subscribers wouldn’t be very satisfied and the strategy surely will be unpopular.

As an alternative that combine both strategies (additional data packages and cost monetization) operators could try to work on a customer segmentation strategy and a cost control support decision audit that could reduce their data usage cost and improve their selling of additional data packages of 500 Mb and 1Gb.

This control should manage the historical data usage of every subscriber’s debt and billing information and, in those cases where clients that exceeded his  bonus more than 500 Mb,  push them to buy and additional packages, with and especially 2×1 offer (offering always less free Mb than was exceeded during the last month).

The main objective  of this strategy is to reduce cost and indirectly increase earnings by selling new data products. This strategy its based on the success of additional packages sold during summer when subscribers double the selling of this product while they were on holidays and try to made it extensive for the rest of the year.

This support decision control  should be run periodically and classifies each client based on a probability method and rules defined.  Special focus would be on clients who exceeded  their bonus, and  have not bought additional data packages during the last month, their subscription products and debt information.  When those clients finish all their data package, they will receive an invitation with their special offer giving of two data packages and but only paying only for one.

As GRAPA standards says, Revenue Assurance must move from housekeeping and cleaning income leakage, into cost effective policies and improved strategies.  By designing a  customer segmentation control as proposed, their marketing teams, will improve their incomes by reducing this these kind of costs helping to improve sales.

Also,  they will accrue more benefits from their mobile clients and, the best of all, increase subscriber satisfaction  by allowing them the possibility of continuing to use  their services at maximum speed  which will improve  not only company incomes but also will improve their  corporative image for subscriber satisfaction.

Do you think that this mixed strategy should be successful?

Do you think it would be a good alternative to speed reduction or applying a tariff plan for each byte exceeded?

Which alternative do you suggest to solve exceeded data usage cost?

Anon – Telecoms Revenue Assurance Specialist – Spain