Magazine article CRM Magazine

Prepaid Profitability: Companies Are Moving to Converged Prepaid and Postpaid Billing Systems to Support All Customer Payment Preferences

Magazine article CRM Magazine

Prepaid Profitability: Companies Are Moving to Converged Prepaid and Postpaid Billing Systems to Support All Customer Payment Preferences

Article excerpt

PREPAID PHONE CARDS have been in gas stations, grocery stores, and in bulk discount stores for years, but only now are prepaid services starting to take on new meaning for consumers and new significance for the companies that offer these services.

Typically, telecom service providers offered prepaid cards as a means to manage credit risk, or to reach out to anonymous customers on vacation. Now that IP and advanced network rollouts are a reality, the prepaid subscriber stereotype is rapidly changing. With many content services available (ring tones, video messaging, downloaded music, etc.), a new pay-as-you-go preference has emerged. This phenomenon has opened up the prepaid market, from credit risk to mainstream consumers. However, supporting prepaid customers is a huge hurdle for many legacy systems today. This prepaid consumer activity will ultimately trigger the need for billing and customer care platforms on which customers are supported based on the products and services they use, and not based on how they pay.

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To truly leverage the new prepaid consumers, service providers will need to take strong heed of three factors.

1. A Transaction-Based Focus on Customers Is Paramount A new focus on the customer--and not the method of payment--opens up new choices for consumers and new benefits for the service provider. For example, a consumer's ability to select prepaid and postpaid balances based on the kind of transaction gives operators valuable insight into which services have stickiness and which are just draining the marketing budget.

When a provider elects to support its customers with a convergent system (any service combined with any payment method) that can handle every type of transaction, the provider can convert valuable data gained from the way every consumer selects services into campaigns targeted at the provider's entire customer base. This is the next logical step in the evolution of a predominantly prepaid market. As the operator builds a tighter financial relationship with its customers, they will churn less and approach the profitability of postpaid customers.

2. …

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