Page 516 - Handbook of Modern Telecommunications

Network Organization and Governance 4-47

4.3.8.1 Average Revenue per User (ARPU) Boosting
Boosting ARPU provides operators with the capability to identify and deploy potential revenue-
increasing programs within the customer base. BI and BPM tools help operators in the improvement of
ARPU and revenue stream analysis, the ability to identify segments with the propensity to buy, market
penetration analysis, and campaign effectiveness analysis.
In most mature markets, communications service providers are experiencing a decline in fixed access
lines and are near saturation in terms of mobile customer penetration. Due to diminishing subscriber
growth, network operators focus on retaining profitable customers as well as driving incremental rev-
enue from the installed base.

4.3.8.2 Churn Prediction and Management
It is six times more costly to acquire a new customer than to retain a profitable customer. Churn predic-
tion and management provide communications service providers with the means to more effectively
retain their most valuable customers, segment their customer base, and focus marketing campaigns in
terms of Customer Lifetime Value (CLV).
Understanding customers can have a positive impact on business. BI and BPM tools can help create
transparency in your customer base by identifying potential churners, determining customer lifetime
value, evaluating effective retention programs, and identifying the most responsive targets.
4.3.8.3 Integrate Cost and Revenue
The cost of customer acquisition and customer profitability is pushing companies to look more closely
at profit margin analysis to reduce costs and increase revenue. The expansion into multiservice, multi-
network, and multipartner environments has made cost management complex, because many cus-
tomers don’t truly understand the accuracy of inventory and assets, customer profiles, and business
users’ needs.
While carriers struggle to compete by offering creative service bundles, they often fail to conduct
detailed margin analysis to understand the costs associated with these bundles, making it difficult to
implement profitable plans and eliminate unprofitable services and customers. For carriers to under-
stand their profit margins, there must be a clear view of both costs and revenues on a per-product and
per-customer basis. This requires that carriers change their mind set in treating Revenue Assurance
(RA) and Cost Management (CM) as two totally different departments within their business.
Ultimately, cost management departments will have to communicate and share data with the revenue
assurance department so that marketing can truly understand the impact of acquisition costs on profit-
ability. This will require using fine-grained revenue measures that exceed the capability of existing general
ledger and accounting systems. Service provider profitability will increase as a result of the RA group’s
focus on identifying revenue leaks, and the cost management group’s managing and reducing costs. For
synergies to be realized and control margins to improve, there need to be end-to-end revenue monitoring
systems that start with provisioning of services and continue all the way through to invoice verification in
cost management. In other words, if carriers look at only what they bill, without marrying information to
what they know of costs (i.e., what wholesale providers charge), then they have only half the picture.
Because most companies are not at the point of sophistication where they can truly integrate cost
and revenue management, some are managing to derive business intelligence directly from billing and
OSSs via rapid-query tools, analyses, and reporting capabilities. As BI and BPM platforms become more
prevalent in telecom, they will help carriers to establish integration among financial measures of profit-
ability and operational key performance indicators.
4.3.8.4 Improved Procurement
Most companies can have only a rough idea of the productivity gains that can be derived from SCM
(Supply Chain Management) as part of the entire setup. No manufacturing company can get a 360-degree