With the advent of competition in the wireless marketplace, many carriers are focusing on building networks or protecting and acquiring their customer bases. A white paper released by Arthur Anderson L.L.P. indicates carriers need to focus on establishing strong business processes in order to realize long-term revenues.
The mentality of carriers always has been that revenue assurance is an accounting issue or a billing function, states the paper. But revenue assurance must be incorporated throughout the entire business process within an organization.
“When cellular companies built out with one competitor, the key was getting in systems, getting the network up, getting the billing system up and handling new customers,” said Tom Schramm, a partner in the company’s Global Communications & Entertainment Group. Now, “companies need to understand all points of the revenue process.”
Loss of revenues not only is affected by the obvious problems such as customer churn and fraud, but the not so obvious “revenue leaks” associated with the way carriers operate, said the paper. These revenue leaks trickle down from various operating functions that usually are separated into individual areas in the organization without any interaction with other departments.
The paper outlined some vital areas carriers need to consider in order to maximize revenues and avoid the leakage problem. One key step is pricing strategy, which determines the affordability of wireless service by customer segment.
“A company needs to understand its pricing strategy to meet profitability targets,” said Schramm. “It’s going to be different for a new PCS (personal communications services) company than an established company. There is a delicate balance between getting customers on the system and how profitable they are. At some point, customers need to be profitable. It won’t matter if you’ve met your customer growth but are not making money over the long term.”
Customer care is an area carriers are beginning to put more effort into as more and more competitors come online. It’s important for customer retention as well as a key to improving operations by linking information back to the benefiting divisions in the company, said the paper.
Rating and billing traditionally has been cellular carriers’ critical areas for revenue assurance because it is the central link of most revenue processes, said the paper.
“You need to make sure you calculate customers’ bills accurately based on what you signed them up for. You don’t want a lot of questions on the first bill or to surprise the customer with the first bill,” said Schramm.
The successfulness of the sales and marketing function directly determines revenue and growth, said the firm. The sales and marketing team creates demand for wireless services, educates consumers about the technology and shapes customer loyalty.
“If sales and marketing are effective in the initial delivery of service, fewer problems will surface for customers throughout their relationship in the business cycle and customer satisfaction will be higher,” indicated the paper.
Carriers must make service activation a relatively timely and simple process, said Schramm. Also important is gathering correct customer information during the activation process. This information is used to program switches and the billing system that certifies caller identity, approves usage and rates calls for billing.
