Building Customer Loyalty

Turning more attention to prepaid and hybrid offerings is an effective loyalty building strategy for communications service providers. "Providing more service and payment choices and increasing customer loyalty are driving service providers' move toward hybrid service offerings," wrote Amdocs in a research announcement. The latest data from PriceWaterhouseCoopers suggests that loyalty trends are changing, and prepaid is becoming more sticky, while postpaid is becoming less sticky. The report found that, "customers are becoming less loyal and the average length of postpaid customer relationships has declined to 48 months in the 2011 survey, from 59 months in the 2010 survey. " At the same time, prepaid customer relationships are lasting longer. And while postpaid still enjoys a significantly lower churn rate (no doubt due, in part, to steep termination fees), as a whole, postpaid churn is rising and  prepaid churn is rapidly falling.

The OSS/BSS Blues

If prepaid is so desirable, a long-term profit generator and a loyalty builder, why isn't everyone doing it? Quite simply, it requires significant changes to operational and business support systems (OSS and BSS) to operate both prepaid and postpaid in parallel. Prepaid OSS/BSS systems must be capable of launching new services at a much faster rate than traditional postpaid, and they also must be more flexible in how they provision, charge and bill for service use. Among global service providers, 47 percent surveyed by Ovum said their prepaid strategy would require moderate to large changes to their OSS/BSS systems. There are also significant concerns among CSPs with regard to legacy integration. This has given rise to the growing popularity of convergent billing systems. Whether they integrate prepaid and postpaid silos or implement a new, converged communications IT (ComIT) platform, CSPs will have to make changes to stay relevant in a world where prepaid is wildly popular. "To remain competitive, service providers must go to market quickly with new prepaid and hybrid services...[they] need a charging environment that can provide this required agility and flexibility," said Rebecca Pruhomme of Amdocs.