What ISV and SaaS Operators Can Learn from Telecom Billing
SaaS operators are evaluating new ways to create multiple revenue streams from each customer by blending limits and usage (usage being the “activities” in which end-users engage in consuming or interacting with goods and services). They also know that the more touch points with each customer, the deeper the loyalty and the less likely it is the customer will churn.
The drive for multiple revenue streams comes from the realization that customer relationships drive profitability and loyalty, as well as longer-term sustainability in your business model. Relationships are cultivated by customizing product value to the end-user subscriptions, bundles, value-adds, promotions and pricing options that dynamically change as customer usage and activity changes.
Reality Check: ERP and GL Do Not Offer Activity-To-Cash Processes
Unfortunately, the nirvana of personalization and activity-based billing is often thwarted by limits on the flexibility and number of variables and parameters that can be manipulated for new marketing schemes and creative pricing and charging.
The problem is really one of process. Most GL and ERP systems can accommodate only three simplified price ‘levers:’
1) Quantity based pricing
2) Duration of a subscription and
3) The product mix of the subscription.
These price levers are a default with any off-the-shelf ERP or G/L application. Yet, over time, being limited by those three levers leads to lower ARPU (average revenue per user) and disenchantment of profitable customers.
To truly cultivate activity-based relationships with customers, the initiation and cultivation of the relationship depends on two critical processes: Order-To-Cash™ and Activity-To-Cash™.
Order-to-Cash begins with the first activity in which a customer engages: placing an order or a request for a good or service. This process includes Order Handling, Fulfillment, Billing & Invoicing, Payment Processing, and Collections. Order-to-cash does not have a recurring or an activity-based element.
That’s where the Activity-To-Cash™ cycle starts. Activity to Cash involves the critical processes that deepen a relationship with a customer and monetize the many ways in which they use your product or service. Those activities can include many things, such as:
- use of bandwidth
- number of downloads past a defined limit
- the access to additional premium help content
- the creation of an object in a SaaS application, e.g. a new project in a program;
- output from the applicaton such as an expense report or a time-sheet;
- the scan of a bar-code or QR code;
- redemption of a coupon
Regardless of the ISV’s product features, to properly capture activities and transactions, there is a requirement for real-time Rating, Charging, Analytics, and Entitlements to charge for different levels of usage and activities. In essence, ISVs have a new opportunity to convert just about any customer activity into an opportunity if they understand how to combine subscriptions, promotions, coupons, discounts, bundles, add-ons, and incentives.
In doing so, ISVs insulate themselves from the variability of customers lives, and in fact, can profit from it. And, the business becomes more sustainable in the face of change.
With that in mind, ISVs should not only think about appealing to the ‘greater whole,’ but perhaps to niches where people are willing to pay premiums for content, services or goods that resonate with their lifestyles, wants and needs.
“ISVs have to accept the concept that a single market no longer exists,” says Chris Couch, Chief Operations Officer, for Transverse, makers of TRACT - the all-in-one activity, rating and subscription billing platform that can bill for anything.
“What matter is how quickly you can support the launch of new pricing models. While super-segmented markets create new opportunities, the speed by which you capitalize on those opportunities matters more than anything,” said Couch.
“You need open-ended flexibility in creating new parameters and attaching a price to the value-adds that are appealing and enticing to different types of customers – whether segmented by age group, geography, usage patters or any other characteristic,” adds Couch, noting rating and charging engines should accommodate virtually anything marketing can dream up, thus moving companies toward the concept of “dynamic revenue management,” where you can say “if it can be measured, we can charge for it.”
With a more dynamic approach to rating and charging, it becomes possible to stimulate customer consumption with offerings and price plans that combine relationships (via subscriptions) and dynamic sources of revenue (via consumption or usage).
“In the same way mobile service providers learned, other industries can learn that they can engage people with base offerings available for predictable rates, and then deepen the loyalty with add-ons that are appealing enough that people pay extra for the access to the value adds as they build over time,” said Couch.
In other words, companies can start out with ‘all-you-can-eat’ charging and pricing, but strive to introduce usage and caps and then personalization that carries them toward true personalization of services in the same way mobile carriers have since the days of ‘friends-and-family.’
Competition and commoditization of services will necessitate this evolution in all industries. The ones who survive will be the ones who heed the lessons learned in telecom by building in flexibility into billing and charging capabilities sooner rather than later. The consistent goal should be the endless creation of not only predictable revenue streams that first entice customers, but to further engage those customers in more personal ways.
But that requires that billing and charging become truly automated and intelligent.
Finding new dollars with Dynamic Revenue
Customers are dynamic. Their needs change.
A new set of connected products and services intimately tuned to the needs of dynamic customers is emerging. New relationship-based content, applications and data services are being launched every day by established and emerging companies.
More than just subscriptions, companies such as Google, NetFlix and others are launching new services to existing customers to deepen loyalty and reduce churn. Companies agile enough to re-configure and personalize pricing on the fly are the ones that will retain the customer relationship.
As companies move beyond simple pricing models such as “unlimited” or “all you can eat,” there is an emerging requirement for rapid implementation of activity-based pricing that customizes a consumer’s utilization of a service to an optimum price level.
Companies thinking about launching activity based billing models are embracing concepts such as lean, agile development and perpetual betas as they adapt to the fast incremental cycles necessary to launch new services. Product launch time frames must compress and new services should be launched in weeks instead of months or years.
While product launch cycles are being compressed, developing billing infrastructure to support these activity-based pricing launches has proven to be a problem for some companies because of limitations in ERP and G/L platforms. These platforms are built for selling product in single transactions; they are not designed for monetizing relationship-based, connected services. These platforms lack the ability to manage the Activity-To-Cash cycle – the ability to establish a relationship and capture revenue generated by that relationship.
For those launching new services, it means billing systems, order to cash processes and more importantly a new set of processes called Activity to Cash(TM) must be customized and implemented for each new billing or business model.
My client, Transverse, makers of www.tractbilling.com, has done a great job explaining the Activity to Cash process.
The Activity-To-Cash cycle layers on top of ERP and GL platforms. it nurtures and expands the relationship businesses establish with their customers at the inception of processing an order and then activating, provisioning, assuring, billing and collecting payment for a service. The Activity-To-Cash cycle leverages the capabilities of real-time rating & charging, analytics, and entitlements to monitor how people engage with a service and then allow on-the-fly changes to product and service configurations to further entice consumption and usage by customers.
For example, with entitlements, advice-of-charge can prompt a customer to top up an account and a follow up with a coupon or promotion might entice that person to further engage and consume.
Whether connected products/services digital store fronts or brick and mortar subscriptions, for companies seeking new revenue, the ability to adapt billing to rapidly evolving business models is critical.
Finding new sources of Dynamic Revenue
As a marketer, I’ve never given much thought to the idea of billing for SaaS companies. However, my recent engagement with www.tractbilling.com has convinced me that marketing should pay way more attention to the invoices that are generated every single month – they are the most consistent touch point we have with our customers.
Customers are dynamic. Their needs are constantly changing. Companies that evolve quickly and adapt their business models to suit the changing needs of their customers are the ones that will thrive.
A new set of services is emerging. Content, applications, data and cloud-attached brick and mortar services such as Netflix and Car2Go are disruption traditional markets and reaching new types of customers and realized new sources of dynamic revenues and new profits.
Companies thinking about launching these types of services are embracing concepts such as lean, agile development and perpetual beta as they adapt to the fast incremental cycles necessary to launch new services. Product launch time frames must compress and new services should be launched in weeks.
Simple pricing models such as “unlimited” or “all you can eat” are being replaced by activity based pricing that customizes a consumer’s utilization of a service to an optimum price level.
That means the financial and technical infrastructure required to support these new product launches must also undergo transformation.
Finally, it means billing systems, order to cash processes and more importantly the set of processes called Activity to Cash must be customized and implemented in unique ways for every product launch.
How is billing transforming your business? How are pricing and promotional bundles changing the way you engage with customers?
Scripted corporate social media and social media gurus are starting to bug me
Back in April, Sir Martin Sorrell, head of WPP, the world’s largest marketing and communications group, voiced doubts about corporations using social networks…“…social media sites are less commercial phenomena, they are more personal phenomena, more similar to writing letters to our mothers than watching television. Invading these media with commercial messages might not be the right thing.”
A ZDNet article (that also quotes Sorrell) says that corporate social media use is not social at all because it is all about sales. As a real life example, the author describes the dinner party dynamic where “people will avoid that person that is selling something. Friends that invite their friends to tupperware parties, or multi-level marketing, are tolerated for a while, but not for long. Similarly, companies that use social media as sales media must understand there is a time and place for it, or they risk harming their brand.”
Separating sales from social media is a good idea. But in B2B, the line in the sand isn’t always clear because all media, including direct B2B selling, is social.
Sales has always been social. Making authentic connections is hard work. Getting on the phone and talking to people every day is social. But the funny thing is, I’ve never heard a single sales guy refer to himself as a ‘social selling guru.’
In Sir Martin’s big media/big brand world, “sales” is something you do to a person…no matter how much it hurts. In big media, social media gurus script and sculpt social media into sales media. The problems happen when hypercritical consumers with highly developed BS filters quickly cry foul on the thinly disguised sales media.
In the B2B world, audiences are a bit different. Sales are social. Sales is the fruit of a relationship cultivated by people being useful (and being at least mildly social) to other people.
Successful sales people know that demonstrating character, integrity and trust is the only way to find new customers. A sales person is judged and rewarded with new business based on his or her product knowledge, honesty, integrity and whether or not he or she acts in the best interest of her customers. Trust is built and established by individuals with individuals through repeat interaction.
Sir Martin’s concern about the intrusive role of sales media lies in the fact that you can’t script unscripted social interaction. Really being useful requires that the entire organization be present for more unscripted moments of usefulness – moments when customers could use some guidance, information or focused attention. The best sales people and the best companies have known this for years.
So that’s my rant. I’m sick of scripted sales media disguised as social media and I’m sick of the social media gurus doing the scripting.
Ten Signs of Cyber Abuse
How to Tell When Your Child is Being Bullied Online
Schaumburg, IL (August 24, 2010) — Did you know that more than half of America’s teens are exposed to cyber bullying? Studies show this form of abuse is growing at a very fast pace. Cyber bullying includes rumors, threats, gossip and humiliation and happens through e-mail, websites, blogs, chat rooms, text and instant messaging, and videos. Cyber bullying statistics point to devastating effects on victims, such as bad grades, emotional stress, depression, poor self-esteem, sleep disorders, headaches, stomach pains and in some cases, suicide. As your kids get ready to go back to school, now is the time to think about Internet safety and how to recognize the signs of cyber abuse.
As you check off items on your child’s school supply list, you should also be thinking about how to protect your child from what can happen on the Internet. “As technology advances and new forms of online social networking emerge, child safety on the Internet is of critical importance,” said David Barker, for TrueCare LLC – makers of Truecare.net – a social media monitoring service for parents. “We want parents to know that cyber bullying is very real, sometimes very subtle, and there are things you can do to help prevent it.”
Knowing the signs of cyber abuse is the first step. Here are 10 signs that your child might be a victim:
1. Your child becomes secretive about what they are doing online
2. Uses computers outside of home, such as at homes of friends, Internet cafes, or libraries
3. Has a sudden decline in homework or grades
4. Doesn’t feel well, headaches, stomach aches, nervousness
5. Is restless, has difficulty sleeping
6. Shows changes in behavior or has mood swings
7. Becomes withdrawn or displays low self-esteem
8. Does not want to go to school or socialize
9. Avoids telling you who their online friends are
10. No longer wants to use the computer or cell phone
TrueCare.net recommends that parents get involved and monitor their child’s online relationships. That they set rules and limits for using the internet and social networking sites, while reminding children that they trust them, but don’t trust the other people out there.
About TrueCare.net
TrueCare’s unique social media monitoring product was designed by parents as a way to effectively monitor their child’s online social networking activity without invading their child’s privacy. It is not easy to be a parent these days. The majority of teens now communicate via social networking sites. It is difficult to keep up with who your child is interacting with on these sites. TrueCare automatically tracks your child’s social networking sites – MySpace, Facebook and Twitter – for inappropriate content and sends you an e-mail alert in real-time when it finds something concerning.
For more information, visit www.truecare.net.
Press Contact
Ben Bradley
630-430-7267
ben@maconraine.com
A good plan violently executed now is better than a perfect plan executed next week
General George S. Patton said it best, “A good plan violently executed now is better than a perfect plan executed next week.”
Paul McCord’s new book “Bust Your Slump” takes General Patton’s advice and applies it to getting your sales back on track fast. His ideas aren’t new but this call to action makes huge sense for sales people that are not hitting their numbers.
In this quick and valuable read, McCord combines positive thinking, smart tactical activities and a pre-disposition for action into a short, easily readable set of 12 strategies that will improve your sales pipeline. You probably won’t have time to implement all 12 strategies. McCord advises you pick one or two strategies that fit what you sell and then EXECUTE.
The critical thing is that you are in a sales slump, you need to ACT and Act NOW.
Marketing and Sales freaks unite
The Grateful Dead were light years ahead of the concept of lead nurturing. In one of their early albums, they inserted the following message: “DEAD FREAKS UNITE. Who are you? Where are you? How are you? Send us your name and address and we’ll keep you informed.” The street address of the band’s office in San Rafael, Calif. was included in the message.
In that spirit…MARKETING AND SALES FREAKS UNITE. What’s on your mind? How are you? Who are you? Where are you?
Can you take a few minutes to respond to our B-to-B Sales and Marketing Snapshot: 2010?
Take the survey here: http://www.surveymonkey.com/s/7NZMPVX
Macon Raine, in concert (no pun intended) with ZoomInfo, has created this survey to get a better handle on the alignment of sales and marketing.
We’re hopeful the responses will give us a sharper sense of the kind content we can provide that will help b-to-b sales and marketing pros perform their jobs better, grease the sales funnel, and, like, the Grateful Dead realized a long time ago, create life-time value with their customers. We’ll share the results in a few weeks.
To respond to the survey, please click http://www.surveymonkey.com/s/7NZMPVX
Work harder not smarter?
Go ahead and slap your forehead in disbelief when I tell you this – it is hard to sell to someone unless you know who they are. Yet most of the sales people I talk to cries about the ugly state of their data. Most complain that they don’t have time to clean it.
Data, like unrefrigerated milk, goes bad fast. In fact, some pundits estimate that 25% of the database will sour within a year. Add poor import practices and other minor mistakes and bad things quickly snowball. It isn’t until senior management realizes they are making strategic decisions on the back of sub-par data that heads begin to roll.
Blame is a complicated thing. Do you yell at the person responsible for cleaning the data in use, the person responsible for preventing low quality data from getting into the system, the sales people for not updating contact info or the marketing department for not scrubbing the unworkable email addresses? Or should the executive team look in the mirror because clean data was not a strategic priority?
Some organizations try to fix the problem by assigning an intern to scrubbing the data instead of committing to a permanent process change. Others will look longingly for new gadgets, tools, hosted software, widgets, mobile apps or various marketing automation tools to fix the problem. These things can provide a wonderful shiny distraction and maybe an incredible technology advantage…but they are no substitute for permanent process change.
Need to rationalize it to upper management? The ROI for clean data is simple. All things being equal, a company with a larger database of clean prospects will close more business than a company with a smaller database of clean prospects.
Data quality is not a one-time event. Cleaning your data will cost money and so will the process improvements needed to support ongoing data quality.
But in the end it is worth it. Although the option to continue working harder not smarter is always appealing, a fast way to improve sales and marketing success is to fix things that can be fixed. Data quality is one of those things that can be fixed fast.
Creative fund-raising in a down economy
Bake sales may work for raising funds for your local school … but imagine selling vegetables from your garden to help support a hospital. That was the case in 1880 for Alexian Brothers Hospital after it opened in Chicago.
In fact, $15.34 was the revenue raised from the Alexian Brothers vegetable garden, along with $70.00 from the Strawberry Festival and $1085.10 from the Fair. That’s a far cry from what nonprofit based hospitals like Alexian Brothers Hospital Network are charged with today in their philanthropic efforts. With healthcare facilities in Arlington Heights, Elk Grove Village, and Hoffman Estates, Alexian Brothers Hospital Network and its Foundation now have lofty fund raising goals in the millions of dollars. And you can guess it has to be accomplished with much more than vegetable and strawberry sales.
Yet in today’s ailing economy, nonprofits like Alexian Brothers Foundation need to be creative when it comes to fundraising. One fund-raising tactic involved a little bit of “cat herding.” Alexian combined the contributions from three local companies – Teleformix (www.teleformix.com), United Marketing Group (www.unitedmarket.com) and DataCo Solutions (www.datacosolutions.com)- to create one platinum event sponsorship package worth $50,000.
For Alan Portelli, CEO of United Marketing Group, stepping up to help Alexian, even in a down economy, was, in his own words “a no-brainer.”
Portelli and his team toured the Alexian Brothers Center in Arlington Heights and realized they were “truly doing amazing work.”
It’s an inspiring business story that can lend a lesson to companies, big and small, that they can stand behind a cause and make a difference … even in an economy of cutbacks. The Alexian Brothers may have had to “beg” for $626.28 back in 1880, but today they are letting their outstanding work in caring for those in need do the talking.
One page strategic plan
A strategic plan has a better chance of being successful when it’s easy to understand, easy to find, and easy to share.
Here’s a great example from http://www.churchofcustomer.com/2009/12/how-to-create-a-1page-strategic-plan.html
