• September 11, 2009
  • By Drew Rockwell, president & CEO, Martin Dawes Analytics

Mobile Content Is Risky Material

Wireless data, or mobile content, is growing rapidly and taking an increasing share of the average revenue per user (ARPU) in nearly every region of the world. This growth underscores the value customers place on mobile content, whether it's text messaging, Web browsing, news alerts, song downloads, social networking, or other content services. It also signals that mobile content has become a critical contributor to customer experience.

Managing mobile content is complicated enough, but managing mobile content in a difficult financial climate with minimal usage precedence is an extraordinary challenge. Ensuring timely mobile content and accuracy of the order-to-cash process will not only maximize financial performance, but enhance the customer experience.

Mobile Content Is Different

Revenue from mobile content is significantly different from traditional voice revenue, which is still 80 percent of ARPU today. Mobile content includes both recurring and transaction-based revenue streams that vary in many ways:

  • price;
  • incentives;
  • content type;
  • whether new incentives are executed internally or through content partners; and
  • delivery type (i.e., on-deck content that is programmed into provider price packages or off-deck content that the subscriber transacts with on his own).

Mobile content also depends on an extended order-to-cash environment and an associated content settlement environment, which includes a complex supply chain of content creators, aggregators, providers, and resellers.

Managing the order-to-cash performance of mobile content is also starkly different. For example, providers must accurately enable, bill, and in some cases, support rapidly changing third-party programs and pricing incentives that may occur multiple times a day. Another example is the dynamic between volume and revenue. Our analysis shows that mobile content volume was relatively inelastic in the economic downturn. In fact, on some occasions, previous growth rates were completely unaffected by affordability pressures for nearly all customer segments. This can be attributed to a variety of factors including:

  • incentive programs;
  • savvy customers who can engineer their usage with usage caps; or
  • growing bad debt.

Whatever the cause, revenue performance has not tracked volume growth, which means providers are paying more and more to support growing volumes.

Understanding Customer Risks and Remedies

The resultant strains on the order-to-cash process can drive errors or service delays that in turn increase customer risks. The challenge is that the analytics and controls that detect and mitigate these risks are designed and optimized for voice services, not for the complexities and realities of mobile content. Without the right analytics and controls, providers are realizing unnecessary and increasing customer risk, such as:

  • Process inaccuracies: Order, provision, and bill inaccuracies that cause revenue delays and leakage. They also frustrate customers and cause downstream increases in customer support volumes.
  • Poor customer service: In many cases, customer service representatives (CSRs) are not fully trained on mobile content and are possibly unaware of third-party or off-deck offerings. Along with increasing order errors, CSRs also become less effective in rapidly resolving customer issues that inevitably cause increases in call center volumes, subsequent callers, and customer credits.
  • Volumes and revenue discrepancies: Customers are trained to believe that there are constant waves of discounts on caps, transactions, and services designed to keep them happy and spending. But increasing volumes without the corresponding revenues is causing providers to reevaluate the effectiveness of current price plans and marketing programs. The necessary recalibration of plans and programs is likely to frustrate customers and either slow volumes or stimulate churn.
  • Credit and poor debt management: Providers are facing increased credit and bad debt risk in post-paid services. Also, providers may not be able to prevent pre-paid users from transacting content when they exceed their contract. Either way, providers will place greater controls on credit and possibly alienate customers who spend at the margin of affordability in this economic climate.

The remedy involves implementing analytics and controls designed for mobile content. Providers may wish to consider the following points:

  • Gain visibility into data and logic at the atomic level in order to design the right controls.
  • Use an agile methodology that enables an iterative discovery and analytic process that overcomes the need to get a correct set of requirements on the front end and drives early working capital.
  • Focus on early, high-value targets to create working capital. Then, convert high-value analytics to create persistent controls.
  • Enrich all analytics with customer data. Then, execute customer engagement analytics that identify how customers flow through -- and interact with -- the order-to-cash process including marketing, ordering, provisioning, billing, and care.

Act Now

The baseline reality for most providers is that in these challenging economic times, there are competing initiatives that cannot all be fully funded or resourced. So why fund mobile content analytics and controls and why fund them now? The first rationale is that risk may have been acceptable when mobile content was 5 percent or 10 percent of ARPU, but there is simply too much financial exposure when mobile content is at 20 percent of ARPU and expected to soon reach 40 percent. The second rationale is that mobile content is a primary point of reference for the customer experience. Providers cannot afford to have avoidable errors degrade the experience and risk either, or both, wireless or triple-play churn.

The need is clear, the payback is clear, and the solutions are available. Now is the time to take the leadership position and significantly reduce the risk to your critical growth engine and avoid customer defection.

About theAuthor

Drew Rockwell (drockwell@mda-data.com) is president and chief executive officer of Martin Dawes Analytics, a leading global data analytics software provider.

Please note that the Viewpoints listed in CRM magazine and appearing on destinationCRM.com represent the perspective of the authors, and not necessarily those of the magazine or its editors. You may leave a public comment regarding this article by clicking on "Comments" at the top.

To contact the editors, please email editor@destinationCRM.com

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