Price Migration

Price Migration

15. May 2019 Use Cases 0

Introduction

The management of product life cycles and the resulting adjustment of the product portfolio can be accomplished in anonymous markets almost on a daily basis and relatively silently.

However, in the telecommunication industry, with a direct contractual connection to the customer, the situation is often a lot more complicated or at least perceived as such. Many points have to be taken under consideration. For example:

  • “does the customer have a special right of termination if we terminate a legacy plan, option or service?”
  • “how should we deal with existing contracts with third parties?”
  • “what impact does this have on my (billing) systems?”
  • “does a customer “wake up” and get cross if he maybe gets more content/ data volume in the future, compared to his old product, for the same price?”

and in the center of concern certainly stands the question “how will the turnover develop”, if a customer is being migrated into a new product world (for him) – will a cannibalisation of turnover in the inventory take place in the end?”

Having these considerations in mind, leads to the question:

“Can a Price-Migration-Strategy ultimately even have a negative emotional and monetary impact on the valuable customer relationship that has been cultivated over the years?”

To be fair, the question must generally be answered with “YES”, in particular if you miss the right moment because companies are reluctant, due to the mentioned reasons, to take on this supposed Hercules task or are only implementing it half-heartedly.

The positive answer is that Clintworld developed a Price-Migration – Strategy which has already been implemented successfully for several clients  (link zur  Referenz Telefónica), supporting them with the pricing analytics and  simulation platform “Clintview”, going forward to ensure the portfolio of Service Plans and Offers are optimized for their basic goals and target segments, including a precise prediction of future basic charge and ARPU for each contract.

Reasons for a Price Migration

The reasons for undertaking a price migration can be versatile. On the one hand, there are market-driven reasons that make it necessary to adapt one’s own product portfolio to changed market conditions and therefore to innovations, new technical possibilities and the resulting usage behaviour of customers. Simply said: “When you recognize, that the network, devices and content have changed the usage patterns for your market – have you optimized new service plans accordingly?”

Examples include: convergence products, household solutions, requirements such as data sharing in the B2B area or product innovations such as E-SIM.

Often, however, the current product portfolio is simply no longer up to date, profitable or can hardly be managed due to the variety of tariffs, options, discounts and services -no matter whether it is in the billing area or marketing, product and sales management.

In billing in particular, this can lead to an enormous amount of data maintenance but also to incorrect invoicing if the high number of old tariffs and services or discounts, which were only granted on a temporary or promotional basis, are not correctly invoiced and lead to problems in the area of revenue assurance. In these cases, it is necessary to transfer customers to a simpler and clearer portfolio and through this, simplify all business processes.

A further and increasingly frequent reason for Price migration arises through Mergers & Acquisitions. Here it is necessary to consolidate the existing customers of a company under one roof and to transfer them into a uniform product and system world, which requires a high degree of sensitivity and precision, since legal and regulatory requirements must be fulfilled.

In the last-mentioned case, a price migration is almost always (also) connected to a consolidation or migration of the billing systems. This major consolidation and migration is going to require time in advance of the actual billing system migration to set up and analyse iterative marketing campaigns. This is part of correcting the data, before migrating it to the new billing system. Learn more about Billing Migration (link zu white paper).

But for whatever of the named reasons a price migration is initiated, take your time to install the system, analyse the data, simulate expected usage and future ARPU against the legacy ones, run test campaigns with friendly users then migrate specific segments of subscribers, remove the legacy plans with no active subscribers and finally, run Quality Assurance by comparing it to the legacy portfolio. Or in one sentence:

“get the pricing right BEFORE migration”

Challenges

A project for the realisation of a price migration in the Telecoms industry is always connected to a high degree of complexity and criticality for the company, as well as a need for project management know-how, since generally large parts of the company, as well as external service providers are involved.

A product portfolio that sometimes has grown over a period of more than 20 years, is characterised by an enormous amount of product variants as a combination of tariffs, options, services and discounts.

Analysing, unravelling and simplifying this, requires a great deal of cross-departmental expertise, starting from product marketing, moving on to finance and IT, and going as far as the sales sector, which has to implement the planned measures e.g. via inbound and outbound channels.

In addition to the analysis of the existing product portfolio, with a view to the future marketability and profitability, defining the target portfolio, outlooking future sales etc., the definition of rules and regulations for migration plays a decisive role. These can be designed as heterogeneously as the motivation to carry out a price migration as well as the customer segment, which has to be brought into focus.

As part of M&E projects, it is usually necessary to transfer the entire customer base into a new product world, in which the set of rules to be applied is usually determined by regulatory and / or legal requirements. After migration, the customer must not be in a worse position than before, regarding the price and content of his product. Rule in this case: Same or more content for less or equal price.

A product clean-up often only focuses on certain old tariffs, e.g. if these are not compatible for new marketing opportunities due to technical or content related restrictions or if the migration effort and future administrative expenses are to be reduced in the course of changing to a new billing system. In this case, only part of the customer base must be transferred to a new product world, so that completely different sets of rules shall be defined for up-selling or winback campaigns, depending on the customer life cycle or -value. Rule in this case: More content for more (upsell) or even less price (winback).

„You do not want to add another complexity in pricing before reducing the current situation…”

The complexity of price migration can hence be enormously high, so that it makes sense to get an experienced partner on board who has already successfully accompanied various migration projects.

Clintworld Price Migration Services – Optimized and Guaranteed Results for Cleaning Up Product Legacy

Clintworld offers to support your price migration process and can help you lead your subscribers from a bloated legacy product portfolio into a lean and mean one, that prepares your company for the digital future.  

Clintworld offers two approaches in order to have end to end support, as part of a price migration project. A “Fast Migration” support, for a period of 7 months, and a so-called “Cascade Migration” support, which is scheduled for 24 months and also delivers the first tested migration proposals at individual contract level after 7 months.

Clintworld’s scope of work can primarily be described as follows:

  • Analysis and preparation of customer data and legacy product components
  • Definition and iterative determination of target portfolio and migration rules together with the client
  • Providing migration proposals, precise revenue predictions for each customer
  • Supervision of physical migration process
Additional services included in the Cascade migration service:
  • Commercial post implementation review and analysis of migrations
  • Delivery of additional recomputed migration proposals over a time span of up to 18 months
and optional for this approach:
  • Modelling of price adaptability on usage
  • Call center interface for outbound and inbound contacts
  • Simulation of competitor products that are impacting proposals

Latter by applying the so called “ClintKPIs” which determines the amount of potential savings that induces price-dependent churn on each individual contract.

If the time frame for a price migration allows it, we suggest running test campaigns on a small sample population within each segment of each service plan of the target portfolio. During this phase, it is necessary to analyse how each target service plan is performing for the segment and if it is serving well, in order to ensure that the target portfolio, the migration rules and last of all, the migration offers are meeting the acceptance goals, and once accepted, are producing ARPU within an acceptable range of the simulations.

Summarizing the related activities of an end-to-end support of migration