Phone Plus Prepaid: Riddle Me This

Posted: 3/2004

Riddle
Me This
Uncovering the Enigma of Prepaid CRM
By Cara Polinski

Which came first the payment or the service? Some operators and service providers ask themselves this question and
they let the answer determine how they handle the customer.

In the world of prepaid, customer relationship management (CRM)
often is overlooked. The persistent view that prepaid customers are either
one-time buyers or customers with bad credit that companies arent interested in
courting leaves executives and CSRs focusing their attention on postpaid
customers.

However, customers of postpaid services have an ongoing account,
and sometimes a contract, that acts as sort of safety net ensuring further
service. Some would say this increased possibility of future service is
why postpaid customers weigh in heavier than do prepaid customers on the CRM
priority scale. Why should you enhance prepaid CRM if there is no guarantee they
will be repeat customers? To increase the chance they will become repeat
customers.

Executives at Boston Communications Group Inc. (bcgi), which
provides transaction-processing solutions to wireless operators, stand behind
the idea that proactive, real-time subscriber management is the key to customer
satisfaction in prepaid services. A big step toward reducing prepaid churn
though advanced CRM is enabling highly integrated payment capabilities and
distribution support meaning providing prepaid subscribers access to multiple,
real-time payment channels where they can recharge their wireless accounts,
says Tom Erskine, vice president of product development and marketing at bcgi.

Jason Blackhurst, vice president of operations for Vesta Corp.,
explains the key to reducing church with prepaid CRM is giving users flexibility
in the management of their accounts. Vestas clients make money when we help
their end-user/customers extend the utility of their prepaid products, says
Blackhurst. To that end, we provide multiple access points for replenishment to
ensure end-users have every opportunity to add value to their
accounts.

bcgis Erskine says there is a tangible inverse relationship
between payment options and churn, but says another way to analyze prepaid CRM
is to look at its relationship to average revenue per user (ARPU). He says, the
high costs of manual CRM can cut into ARPU and significantly reduce profit
margins. Therefore, Erskine says, carriers should rely on lower-cost, effective
self-service as opposed to high-cost customer service
representatives.

bcgi recently announced version 10 of Prepaid Wireless, which
allows carriers to provide services to their customers on a pay-inadvance basis,
monitors all customer activity, including preauthorization of service in real
time, and manages all customer payment profile information within a single
solution. These payment profiles are carrier- and subscriber-configurable to
provide the always available account balances using automated low-balance
payments or opt-in and anniversary-based fixed amount recharges to actively
control wireless spending. Erskine says such features are needed to protect any prepaid
profits from being cannibalized by the costs of poor subscriber experience,
such as repeated calls into customer care and churn.

Marquita Martin, director of product management for Convergys
Corp., adds both types of customers need to be handled from the same point, and
are deserving of the same level of quality service and attention because of
prepaid/postpaid convergence. Martin says, As convergence enables hybrid accounts with both
prepaid and postpaid elements, the lines between servicing a prepaid subscriber
and postpaid subscriber blur, Martin says.

Convergys offers Infinys software, with the Geneva rating and
billing application, as a foundation for a convergent prepaid or postpaid
billing and customer care solution. Infinys allows operators to deploy online and offline charging
simultaneously, which provides a common view of the customer, regardless of
payment method and extends an operators ability to differentiate through
capabilities such as flexible prepaid offerings, payment options at the service
level and loyalty or reward programs extended to the entire subscriber base,
says Martin. Therefore, as payment options converge, operators need to abandon
the segregated services paradigm to ensure equality in customer
service.

However, some industry officials contend customer value and not
payment method should be the determinant of customer account
bifurcation. Miriam Deasy, marketing manager for Amdocs, says identifying
which customers are profitable, or have the potential to be profitable,
irrespective of payment method, and then deciding on the appropriate type and
degree of CRM for each customer based on their rating on a profitability scale
the real issue when it comes to the quality of CRM. Amdocs billing product,
Enabler, allows flexible rating and billing for voice, data, content and
commerce while supporting prepaid-postpaid convergence over mobile and
wireline. The company also supplies Clarify CRM, a suite of analytical and
marketing support offerings.

Daniel Kenyon, in communications industry solutions at
PeopleSoft, says analysis of a customer base should include the segmentation of
customers based on risk factors affecting long-term value. He says PeopleSoft
CRM for Communications, an application supporting the complete
attract-toactivate process, is particularly well suited for this market. CRM plays
a significant role in maintaining a positive relationship with both prepaid and
postpaid customers the key is to have a CRM application with enough
flexibility to capture customer service and support issues before they become
problems that will eventually lead to higher churn, says Kenyon.

Upon analysis, many operators realize the 80/20 rule also
applies to their prepay customers, i.e. a small proportion of the base generates
a significant contribution margin for the company higher than some postpaid
customers, explains David Peters, CEO of Emagine International, which provides
closed-loop marketing solutions for telecommunications operators.

Peters says prepayment options certainly can attract new
segments of customers with specific needs, but can the service they experience
once aboard entice them to stick around? As Peters explains, the challenge is
the retention of the customers generating the highest profit. Therefore, he
proposes the strategic decision must be made to differentiate services offered
to the customer not on a product basis (prepaid vs. postpaid), but on the basis
of value.

Emagine has worked with Schlumberger/- Sema, a
telecommunications IT services partner with 85 operators and 60 million prepaid
subscribers, in the development of its P3 (Proactive Prepaid Customer
Profitability) targeted very specifically at the prepaid market. We have
developed a business-driven approach combining consultancy, business process
improvement and technology solutions focused on increasing the profitability of
the prepaid customer, says a report from Schlumberger/Sema. P3 consists of five
components: segmentation, including proactive churn analysis; customer self
care, which refers to Web-based customer care and provisioning; multichannel top-up, referring to the use of coupons, ATM,
e-vouchers, Web, etc.; enhanced rating, which is in real time and includes
loyaltypoint calculation; and a closed-loop marketing suite which focuses on
campaign, retention and loyalty management.

Prepaid is just a payment method, says Amdocs Deasy. The
fact that it is handled in a very different fashion to postpaid within the
business support systems of CSPs should not be so blatantly apparent to the end
customer. Whats more, its no longer necessary today given the
developments in business systems capabilities. Silos of any sort have no place
in a lean support environment.

Close analysis of the prepaid/postpaid convergence may lead
service providers and operators to new CRM solutions with invisible lines
between payment methods. The eventual result will likely be an increase in
overall customer satisfaction and a reduction in churn a punch line sure to
bring smiles to the faces of telecommunications executives. Prepaid or postpaid
theyre both paid. A customer is a customer, period. Mystery
solved.