Buzzwords such as “disruption” and “uberization” seem to be on the tip of every executive’s tongue these days, but these are more than just trendy concepts. The reality is that organizations across all industries and types of business are rewriting the rules of strategy.
Business transformation is no longer just about digitization of customer experience, work, and resources, but taking customers by surprise with innovative and highly personalized offers and experiences at every opportunity available. A recent study by Massachusetts Institute of Technology and Accenture reports that companies that reach a higher level of digital maturity are 26% more profitable, grow 9% faster, and achieve 12% higher market valuations than their industry peers.
Customers trying to innovate or reform their business models are mainly driven by two strategic motivations: growth and protection.
They want to grow by becoming an always-on service provider, opening new revenue streams with IoT and connected devices, providing payment flexibility, and moving to multi-sided business models such as transacting on behalf of third parties. They also want to protect their core by providing go-to market agility and cost savings as well as automation and scaling.
Figure 1: 5 key imperatives for your monetization journey
One thing for sure is that a transformation journey starts with aligning the three primary elements involved: people, process, and technology. Following that, the biggest challenge lies in spotting new growth opportunities and being ready—i.e., being agile enough to respond quickly and able to successfully scale in the process of monetizing them.
In this blog, I will explore the imperatives from end customer’s perspective. This is important as customers are co-creating their own journeys today; they demand instant engagement and personalization. Understanding customer expectations and mapping them to the organization’s capabilities is the first step towards truly monetizing the digital transformation and aiding sustainable growth by multiplying ARPUs (average revenue per users) while keeping the customer churn low. The rapid growth of all types of devices (wearables, smartphones, tablets, good old desktops, among others) and app culture has made it imperative for service providers to remain highly contextual and consistent across multiple channels.
Top five customer expectations and associated imperatives
Figure 2: Customer expectations and associated impact on organizations
1. Visibility, predictability, usage controls, accurate charging, and responsive customer service
With the advent of the prepaid economy, customers expect full predictability on their consumption. They want to pay exactly for what they have consumed and have complete flexibility in managing the services in which they are enrolled.
This means that the “always-on” service provider must be able to create targeted subscription offers that are instantly available for quotes and orders across all channels, and that they can meter and rate real-time subscription charges and usage-based fees. These critical abilities should be backed up by strong self-care options that capture customers in one moment and allow them to navigate seamlessly – understanding that although happiness drives loyalty, simplifying processes and reducing the amount of input required from customers has an even greater impact on churn.
2. Rich, single-source, seamless services
Today’s companies, brands, and manufacturers have multiple distribution partners as the result of geographic and organizational spread. The ability to manage both channel and marketplace partners in a highly automated manner is essential for smooth operations in a distributed supply chain. It is imperative that disseminating details of revenue-sharing, apportionment, commissions, and royalties along the entire value chain be easy to apply and manage flexibly. A second imperative is to bill consumers in a rich, single-sourced invoice for any combination of consolidated products and services they may consume across complex supply chains.
3. Payment flexibility
From Venmo to Uber to Snapchat, the payment landscape is undergoing massive shifts, all of which point toward one overarching outcome: the gradual decline of “transactional uniformity.” Offering the freedom to choose a preferred payment option is a clear mandate in order to retain customers. Standard payment options such as credit or debit and online payments are expectations of the past. What today’s customers demand is flexibility in payment cycles such as prepaid, postpaid, deferred payments, and invoices per different cycles.
Offering differentiated billing and payment services targeting individual customer segments while automating payment handling from any channel is crucial. In an Ernst & Young paper on billing transformation, authors David Connolly and Rick Raisinghani point out that as a service provider’s first and most frequent touch point with its customers, billing presents an opportunity to create a positive experience and to build longstanding relationships.
Additionally, with the underlying objective of cost-savings due to automation, these prerequisites are mandatory: thorough review of customer history to avoid late or missing payments, and having an effective credit and collection management system along with a receptive payment handling and receivable system to continuously evaluate credit risk and thus lower DSO (days sales outstanding).
4. Error-free transparent billing and consolidated invoices
Often, the inability of invoicing systems to integrate multiple services and third-party charges leads to time-consuming, manual processes. Receiving complicated and unclear invoices not only frustrates customers, but it can also be directly responsible for loss in revenue.
Customers appreciate a consolidated approach as it simplifies invoice management and payment processes. Rather than having to manage multiple invoices for all orders placed with your company over the past week, month, or other time period, customers can manage and pay a single bill.
Every invoice you generate introduces additional opportunities for error, misplaced documents, and payment delays. Invoice consolidation makes sense for companies with customers that routinely place multiple orders per billing period. Some of the financial and operational AR benefits that can be achieved with a consolidated invoicing approach include more efficient receivables processes, higher customer satisfaction levels, reduced billing errors, and improved compliance and audit trails.
5. Quick and easy issue resolution
Quick, hassle-free issue resolution an important imperative for loyal and happy customers. Often, lack of process coordination between sales, service, and collections, and lack of common data model causes delays in processing customer issues. We see this often as the financial landscape of many companies was built in a highly siloed fashion, making it very difficult to obtain a 360° view on the customer financial and historical data.
Having a back-end system that integrates credit, collections, and dispute management with service processes improves agent efficiency by providing of 360-degree customer view, including interaction history, fact sheets, and detailed financial views resulting in lower TCO. Improved interactions and efficiency that focuses on customer needs supports seamless dispute handling and increases customer satisfaction.
Today, many organizations understand that the impact of billing processes are not limited to the back office. Billing affects customer satisfaction and customer retention, and a customer-focused billing strategy can create real competitive differentiation. As a common denominator for the business processes introduced by marketing, finance and accounting, customer service, and IT, billing systems run in parallel to a customer journey.
From designing monetization policies to managing and mediating sales and orders, handling collections, commissions and royalties, and analyzing consumption data to improve future pricing, an efficient billing system ticks off the imperative checklist and is instrumental in providing a truly seamless customer journey for businesses— inside and out.
For more on this topic, see Why Digital Transformation Is Not Just About Technology.