Revenue assurance is a challenging balancing act

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Dion Price, Trustonic CEO, examines best practice for operators when it comes to revenue assurance.

Smartphones have never been more important for keeping people and businesses connected and have helped many of us navigate the difficult days of lockdown. They have also been integral to our efforts to control the virus through contact tracing apps. With the current economic environment leaving customers and operators with tighter budgets than ever, revenue assurance has become more important and even more of a challenge. Flagship smartphones have tripled in value driving the need for subsidies and funding, the devices themselves are targets for theft and fraudulent activity.

A nuanced approach to revenue assurance

Mobile operators and retailers are facing pressure from all angles. Like many industries, the pandemic has had a serious effect on regular business operations, with physical stores and retail being curtailed during lockdown, and customer care teams distributed overnight.

An increased reliance on technology, in globally testing times puts added pressure on operators. For this reason, a balance must be found between supporting customers through tough financial difficulties and protecting revenues. In some cases, governments and regulators have prohibited the suspension of mobile services even if customers don’t pay bills.

In addition to mobile operators suffering reduced payments, which has shown a double digit jump in some markets, and losing existing customers, it is also increasingly difficult to secure new customer contracts.  The financial impact of the pandemic has stemmed consumer spending and customer acquisition is hampered by a reluctance to commit to payments in an uncertain period. New revenue streams remain slim for mobile operators and retailers, many countries are re-entering periods of localised lockdowns adding another potential barrier to high street income. A recent report by Gartner revealed that global smartphone sales have already declined 20% in the second quarter of 2020.

Furthermore, the prolonged period of lockdown has also reduced operator’s revenue and created other challenges. From the sales of prepaid data top ups in decline due to people spending more time at home connected to WiFi  to the  ever-present threat of fraud and phone hacking on the rise, operators have a complicated problem on their hands.

According to researchers at the Cambridge Cybercrime Centre, hackers and fraudsters may exploit anxiety around the pandemic to steal identities. As we move towards increasing economic uncertainty, individuals may look to harmful online activity as a means of generating income.

So how can mobile operators drive more revenue?

As organisations look to steady the ship despite ongoing uncertainty, the biggest challenge for mobile operators is to turn the revenue taps back on. While there is no silver bullet answer to this conundrum, device financing & management is a good place for mobile operators and retailers to start.

A sensitive approach to device management and revenue assurance is key in times of crisis. Regardless of government intervention, mobile operators can’t afford to be seen cutting services to struggling customers. Traditional approaches to encouraging customers into paying bills include texts and calls, however these have been ineffectual for nearly as long as they have been in operation, costing millions in customer care costs and achieving little apart from alienating customers.

Better device management can provide less fragmented, and more productive customer engagement to nudge behaviour. For example, mobile operators can control the screens of devices to show supportive messages and propose payment plans when bills go unpaid.

Times of crisis also call for a more nuanced approach to service restrictions on customers. The traditional ‘all or nothing’ approach is too heavy handed for fragile situations. Mobile operators can now modify device functionality remotely, disabling certain features and services whilst not removing a customer’s only mode of contact with work and loved ones. In cases where bills are consistently late, mobile operators and retailers can render smartphones as simple talk and text devices, encouraging repayment but without insensitively cutting customers off completely.

How to attract new customers?

Consumers rarely show loyalty towards a particular mobile network. The prevailing factor behind purchasing decisions is device related, and then price.  A mobile operator that can offer customers better deals on smartphones will often find themselves positioned favourably in the market. With continuing economic hardship on the horizon, this is unlikely to change with a reluctance to commit to new contract payments likely to remain.

Mobile operators that have relied on physical store trade could continue to lose out, with digitally native networks taking advantage of a general behavioural shift towards eCommerce. The importance of offering customers competitive deals could become even more important due to an increased reliance on shopping and comparing prices online.

Another big challenge of economic instability is consumer credit worthiness. Currently, between 30% and 70% of applications for new device linked postpay contracts in some markets are rejected based on credit ratings, which will only increase in times of financial crisis using the current algorithms. However, with prices acting as the battle ground for customer acquisition, the challenge now for mobile operators and retailers is to offer consumers contracts at better prices whilst reducing the risk of unpaid bills.

Fortunately, by increasing control over devices, mobile operators can open up a broader customer base by offering contracts to more people who would currently be deemed too risky. Additionally, by having more control, operators can also lower prices to compete for subscriptions without increasing commercial risks.

How to stop device fraud?

As is often the case with times of global uncertainty, criminals look to take advantage and quickly make money from the most vulnerable people. Additionally, the ongoing issue of organised crime related to device trafficking continues to cost the industry billions each year. The GSMA estimates that in the US alone, more than four million devices are trafficked annually, costing in excess of $900 million. Regulations such as IMEI blacklists have stemmed fraud within the countries in which they are active, but stolen devices can still find their way into countries where they have no jurisdiction.

Smartphones can now be managed throughout their lifecycles and irrespective of geography, protecting mobile operators against device trafficking. This acts as a deterrent to thieves, to whom the devices can be rendered useless and with no value if registered as missing or stolen. This not only protects customers from street crime, but also deters organised crime gangs from targeting smartphones directly from manufactures or in transit.

Operators can put themselves on the front foot

Device management benefits are no longer just about protecting assets, operators can balance the needs of internal stakeholders. Commercial trading teams want to sell more handsets to meet targets, while finance and fraud teams have the challenge to balance the risks. The confidence that is offered by granular control of devices helps everyone strike the right balance of customer care and revenue assurance without increasing risk.