The Dirty Secrets Behind Bill Shock

Written by on February 8, 2013 in BillingViews, Opinion with 0 Comments

Why don’t operators make use of the systems available to detect and prevent excesses that lead to Bill Shock?

This is a question that Telco Professionals contributor and MDS director of market development Rob Smith posed in this recent post. I can provide a clear answer: operators do not feel they would benefit from doing so.

I recently posted this piece which addressed the fact that operators love people who pay bills late and in full because they willingly pay late fees. Paying a late fee is like subscribing to emptiness – you’re basically paying for a service you don’t actually receive. Bill Shock charges, or any kind of excess charges that if disputed are likely to be credited back to the customer, are similar. Many people just pay them. Why would operators want to stop their customers from giving them more money?

There’s an awful lot of advice flung at operators about treating customers better by putting a stop to things like late payment fees and erroneous, excess charges. But think about it – do you really think operators are unaware of the idea that treating people extremely well might lead to greater loyalty? You have to flip the equation around and ask how much it actually costs to do that, and whether that cost is justified. What’s the downside? In the U.S., the largest mobile operators are incredibly profitable. So, is letting a few overloaded bills slip by really hurting their businesses? No. Are customers leaving because the operators allow them to stumble into late payment fees? Absolutely not.

There’s a certain logic to the idea that you can only trim customer churn so far. There’s absolutely nothing you can do about the fact that a certain percentage of the populace is ticked off every month and makes emotional decisions. They get angry at their phones for some reason and move on to some other operator. If I’m the operator, I figure – please leave quickly, just don’t tie up my care reps for 30 minutes whining about how your iPhone died because you dropped it into the commode. The same thing just happened to some other operator’s customer and I sold him a new iPhone 10 seconds ago.

The real meat of Smith’s article addresses operators’ SME opportunity, and this bears mention as well. The thing about the SME market (or SMB market) is that it is very poorly defined. How small does a business have to be to be considered an SME/SMB? Frankly, if it’s a business with less than 10,000 lines, a large operator isn’t going to spend a whole lot of time on it. And even the 10,000 line guys don’t get as much attention as you’d think.

From an operator’s point of view, the 10, 20 or 100 line SME customer isn’t all that valuable. I mean, sure, you want as many of those guys as you can get. And if an operator can find a cost effective way to serve them as SMBs that’s just as profitable as what they do today, they might try it. But those guys are going to buy mobile services from someone. Given the big operators’ market dominance, they’re going to win most of that business just by way of brand recognition and presence. A little extra love isn’t likely to make much of a difference.

Where some love can make a difference is with really large enterprises – you know, the guys who can send over an extra 5,000 or 10,000 subscribers in one shot if an operator can offer more love than its main competitors. And even then…there’s only so much an operator will invest in that.

This perspective comes from first hand experience. I’ve worked in wireless bill auditing and contract management. We saved millions for huge enterprises and massive state governments by automating their monthly bill audits, and even more by re-negotiating their contracts. We also did this as a white glove service, on behalf of major operators, for their largest customers. On the accounts where we brought the love, the operator always won thousands of lines away from their competitors. And even then the operator didn’t want to go enterprise-wide and license the service. What we provided made a huge difference to the folks who owned, and were paid commissions on, the accounts we serviced. But for the finance guys on the top floor who deal in billions, the millions in extra revenue we won for them were either a rounding error or just one of many metrics relating to sales. Why some teams were increasing sales never entered their minds as they slid a few more beads across the abacus.

So, that’s the dirty little secret behind Bill Shock. It makes for some decent storytelling in the mainstream media because we can all relate to it. But from a large operator’s perspective, it’s a little mosquito on the Brontosaurus’ back. Operators are perfectly aware of the phenomenon and what could be done to minimize it. It’s just not painful enough for the fellas upstairs with the green visors to pay much attention to it.

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About the Author

About the Author: Ed Finegold is CSO for Validas, a company that specializes in personalized user experiences that leverage analytics-as-a-service to simplify mobile buying, selling, pricing & billing. Ed has been a regular contributor to BillingViews. .

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