Tech Scan

February 27, 2003
EBPP: Delivering critical customer link

Raghav Sahgal

INDIA -- Telecom service providers and operators are looking to differentiate themselves with one core initiative: high-quality customer service. As wireless penetration has surpassed 75 percent in a number of countries, operators are concentrating on building customer loyalty and subscriber value, rather than subscriptions. They have started looking within their own organisations to streamline processes, save costs and improve efficiencies. They have realised that customer loyalty has a direct impact on the bottom line.

Gartner Group has estimated that capturing a new customer is four to 10 times more expensive than providing good service to an existing one. It pointed out that over 68 percent of customers defect due to poor service. A survey conducted earlier this year by CSG echoes a similar trend. In a survey of consumers across Europe, over 66 percent of respondents said they would consider leaving an operator because of poor quality of service.

While solutions improving customer loyalty are gaining attention, industry experts predict these solutions will become increasingly important over the next few years. The combination of increased churn rates brought about by the expiration of long-term contracts, cut-throat competition and continued growth in the number of prepaid subscribers will make the adoption of these solutions even more compelling and urgent.

EBPP and self-care -- cost-cutting initiatives

Operators perceive Electronic Bill Presentment and Payment (EBPP) and customer self-care on the Web as essential strategies. EBPP refers to the process that allows a biller to create and present an electronic bill or monthly financial statement on its own Web site. It enables the customers to view and pay bills over the Internet. The addition of Web self-care tools -- where customers can make basic inquiries such as changing a billing address, checking minutes usage or adding new services -- enables operators to cut costs within customer service centers and allows the customer to control its relationship with the service provider. While adoption rates for these solutions were initially slow, they are growing in popularity.

A recent study conducted by Fujitsu Consulting revealed that over 50 percent of mobile users said that they would prefer to handle their inquiries online, rather than through a call center. Operators worldwide see EBPP and customer self-care as a way to cut costly call center operations as a target for major cost-cutting initiatives. It costs an operator on an average $5.50 each time a customer contacts a call center compared with just 24 cents for Web-based customer self-care.

Fujitsu’s survey further revealed that the telecom industry is ready to deliver customer service in new ways. It concluded that the average telecom provider plans to reduce call center interactions from 45 percent in 2001 to 31 percent in 2003, while increasing Web-based interactions from 6 percent at present to over 23 percent by next year.

A CSG study of a large North American cable and high-speed Internet operator found that 30 percent of the 5.5 million phone inquiries it received every year were related to billing. With an average cost of $7.36 per call, CSG found that this operator could save over $2.5mn in its call center operations every year by reducing the number of incoming calls by 21 percent. Outside of cable broadband, the mobile industry is ripe for using EBPP. Industry experts estimate that over 50 percent of the inquiries made by mobile customers into call centers are to check their balances and minutes used.

Simply diverting these customers in new and more convenient online alternatives for checking their balances will divert thousands if not millions of calls away from the contact center. In turn, customers using the service will see it as a convenient online alternative that builds loyalty and satisfaction.

While EBPP and self-care initiatives can bring true cost-savings within an operator’s call center, some operators may see additional efficiencies reducing the number of statements it mails to customers each month. Surely operators with large prepaid customer segments need not worry about mailed statements, but even a small reduction in the number of hard copy statements can create true cost savings for an operator. In the United States, for example, a CSG study found that one North American operator could save an additional $2mn in postage annually by offering online statements as an alternative to its customers.

Achieving faster RoI

In order to achieve faster return on investment (RoI) and increase the rate of using online bill paying methods, operators should ask themselves these questions when considering an EBPP vendor:

Is the solution pre-integrated with other key elements of my infrastructure, namely the billing system?

By purchasing an EBPP solution that already fits nicely within existing systems, an operator can implement the tools much faster. Integrating a third-party application that requires systems integration work will eat into an operator's RoI.

Is my EBPP solution evolutionary?

EBPP is often where operators start, but other tools such as Web-based customer self-care are just as important. An EBPP solution should be equipped to help an operator with all phases of online customer care, not just EBPP.

How will I market these new online customer care tools to my customer base?

According to CSG, once offered, customers will definitely use these tools. However, operators that aggressively market the availability of these new tools to their customers will see higher adoption rates.

Know your customer, keep your customer

While EBPP tools have demonstrated their ability to produce a real return on investment, the biggest driver for operators in launching this service is to reconnect with customers in meaningful ways. Customers want new ways of paying their bills, buying additional services and accessing important account information. They want to have better control over how and when they interact with their carrier. The tools that can help the operators make this dramatic shift — and distinguish themselves with better customer service — are here. With pre-integrated solutions that reduce integration costs and speed time to market, there has never been a better time to launch these important new initiatives.

(The author is the Vice President and Managing Director-- CSG System, Asia Pacific and China.)