Getting service delivery right: giving users what they want

26 Sep 2008

This is the new creed according to Telcordia: introduce differentiated, premium services and rake in the profit for six months, by which time your rivals will have copied your idea and start offering it at a lower price; then launch another one, then another, then another, ad infinitum.

In all it will probably take as little as 12 months for the new, incremental service to go from being a cutting edge premium service to being offered as part of a bundle, according to Graham Cobb, director of service delivery marketing, service delivery solutions, Telcordia.

However, it's a great strategy because it cuts down churn dramatically and, even better, attracts users from other networks - and it generates profit, which in a world of flat rates is a winner.

If you're the fourth entrant into a highly competitive market, as Oi is in Brazil, this is a really important factor. (This isn't restricted to developing economies either - only yesterday France asked for tenders for the last outstanding 3G licence to be awarded.)

Oi was the first GSM operator to launch in Brazil five years ago and now has 15 million subscribers. Recently, it has started to offer fixed, broadband and mobile - but with lots of variations on the usual theme.

For instance, Oi offer prepay fixed line, which has proved immensely popular because people pay what they can afford when they want to, while the operator's limits its exposure to bad debt.

The most impressive wheeze though is that the operator offers an emergency credit facility for its prepay services - users simply send an SMS to apply for what is in effect a short term loan. When they top up their account, the loan is automatically paid, plus a 30% charge on the loan amount.

As Cobb says, "It isn't a sexy application, but it is used a great deal and highly profitable. Obviously not everyone is deemed eligible once the credit checking is done and Oi's competitors will all be offering this type of service within a few months at a lower rate, but that hybrid approach, offering prepay for fixed and mobile, no-one had thought of that before and up to 80% of Oi's new subscribers are opting for this."

Cobb accepts that this example wouldn't work in more developed economies, but it is right for Brazil where there are few credit cards in use and limited banking, so many, many millions of people haven't got a credit history. He says, "Customers get the services they want, Oi limits its exposure and keeps its cash flow healthy, and all the time it is building a database of information about its users that is very valuable to it."

Oi has extended the use of its money by phone facility further: you can use your mobile to pay a taxi fare or buy a newspaper. The beauty of using the SMS for authentication/payment validation is that there is no need to deploy expensive, specialist point of sale terminals or other equipment.

The downside of course is that this only works between Oi customers (so the cab driver and shop keeper have to have Oi handsets too), but the service is so popular, it's worth them becoming Oi customers.

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