I’m going to stick my neck out and say that the biggest tectonic shift in online commerce over the last decade has been its simplification. In removing complexity and friction from the online commerce process, companies have achieved more success by virtue of the seamless ease of doing business with them. These companies have seen strong revenue growth, high levels of customer satisfaction, improved brand reputations, and stronger valuations — all as a direct result of simplifying customer transactions.
In many cases, it’s the “digital era” companies that have taken full advantage of the digital savviness of their customer base and combined that with sleek, engaging, online processes to set their business apart. They have built ground-up, digital-centric businesses with no legacy commerce baggage weighing them down.
All of which is in sharp contrast to the world of telecom services billing.
The Power Shift of the Telco Consumer
Inaccurate and complex bills, discrepancies between online portals, invoices leading to bill shock, proration confusion, the inability to holistically transact with consumers with different bills for different services, and inflexible payment terms are just some of the areas where telecom service billing falls short. Unfortunately, this process is neither frictionless, seamless, nor simple, and is the primary driver of the customer dissatisfaction and low Net Promoter Scores (NPS) that plague the telecommunications industry.
If ecommerce companies saw the opportunity to capitalize on market trends in their favor, why have telcos — which have been in commerce relationships with customers for many years — struggled to follow suit? After all, telecom operators have run massive-scale transactional businesses for years, often with millions of customers.
Is the Issue One of Mindset or Technology?
Fundamentally, the problem has its roots in both. From a mindset perspective, it has to be said that the telco industry employs some of the brightest, most innovative, and most progressive thought leaders in the world. Their challenge is cultural. Telco operators that have existed for many years are still struggling to reinvent themselves as modern digital businesses. These organizations continue to view their customers as their “subscribers,” failing to recognize the power shift to the consumer that has taken place over the last decade.
Today, the consumer is at the steering wheel of the digital-era value chain; a fact that many digital-era companies capitalized on and mobilized around quickly.
Discovering the Revenue in Revenue Collection
The good news for the telco industry is that a number of digital pioneers in their space have made great strides in cultural and organizational re-invention and broken through the digital glass ceiling.
Their next hurdle is technological.
If given a chance to start afresh, telco executives would probably not choose the same billing systems and processes that they have used historically. Their reasons would be costliness, complexity, lack of agility, inflexibility, and future-proofing themselves. Despite the emotional appeal of throwing out their legacy implementations, cooler heads might prevail initially as they consider the financial aspects of such an overhaul, but an answer does need to be found quickly if telcos wish to compete and align their business around the new, consumer-driven value chain.
To find that answer, let’s start at the beginning and ask ourselves, What is the purpose of billing? Is it to collect revenue or generate revenue? A legacy mindset might think that answer is obvious: revenue collection. But a digital-era mindset would answer that every single touch point with a customer is an opportunity to generate revenue and, if they can collect revenue in such a way as to delight the customer, it’s a win-win.
A Simple but Defining Difference
The goal for telco operators is simple. Make it simple for customers to buy your products and services on their terms and whenever it suits them. Make it simple for them to settle balances with you—again, on their terms.
Force-fitting customers into the tyranny of the billing cycle with its operator-defined payment models, inability to view current spend, usage, and balance in real-time, and little if any choice of flexible payment option is anathema to placing customers at the steering wheel of the value chain.
If most telco executives would toss out these legacy shackles when starting afresh, then why persist with them? It’s true that telco customers purchasing high-speed broadband or 5G smartphones benefit from spreading the cost of these purchases over an extended period. But those same customers will also potentially be making one-off purchases, subscribing to online services, and weighing other contextual offers. These contextual opportunities might occur hundreds of times per month and need to be acted on instantaneously — small opportunities that, collectively, can turn an unprofitable customer into a profitable one.
The challenge for telcos lies in closing the gap between the flexible style of engagement that customers want and the legacy billing systems and processes they have today. To put this challenge into historical context, think back to when Blockbuster video stores disappeared, when Kodak went bankrupt in 2012, or when Nokia’s dominance of the mobile phone market evaporated. Each of these seismic market shifts was precipitated by simpler, better, and more engaging alternatives. There was no Kodak 2.0 or Blockbuster 2.0 strategy. Likewise, legacy telco billing systems cannot and will not evolve to meet the increasingly dynamic needs of the market. A new approach is needed.
Ushering in the Age of the “Digital Unbilled” Consumer
The rise of the digital-first consumer demographic is accelerating the demise of legacy billing processes and systems and the sometimes-antagonistic relationship they foster between telco service providers and consumers. In their place will appear modern, flexible, digital-era commerce and monetization technology, fit for the decade ahead.
This technology will allow consumers to have immediate, real-time access to a completely accurate and transparent view of their current balance, usage, and spend, independent of whether they are consuming one-off purchases, recurring charge items, subscriptions, or third-party products. This isn’t the same as prepaid or postpaid; these are charges that consumers can pay down whenever they like, via whichever means they like. Think of this new service model as a flexible subscription with all activity recorded in a digital ledger or receipt that captures online transactions, ongoing usage, and balance, and is always available and — crucially — accurate in real-time.
The new mantra for telcos should be “Make it as simple as possible but no simpler.” Remove the unnecessary complexity, friction, and bureaucracy from the monetization process, but don’t lose the fundamentals of differentiated value.
A progressive, digital-era relationship built on transparency and trust isn’t such a radical idea. After all, it’s what the digital-era companies have already achieved, so why should telcos settle for anything less when their customers certainly won’t?
NOTE: This post was adapted from an article that appeared in The Fast Mode, June 1, 2023.