Billing Bureau's David Werdiger at CommsDay Summit 2014

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  • 1. • Wake everyone up! • The Own-Lease-Rent-Subscribe Continuum • Understanding the Subscription & Sharing Economy • Why Telcos are Best Positioned to be Significant Players • Key Challenges • Take Outs
  • 2. • Owning • The “great Australian dream” – owning a home • The traditional/historical way to access an asset • Finance often plays an important role • Leasing • Gives the lessor almost all of the benefits of ownership but without tying up capital • Finance is an essential part • Sometimes indistinguishable from owning with finance (e.g. car lease vs hire-purchase)
  • 3. • Renting • An agreement where a payment is made for the temporary use of a good, service or property owned by another • Further down the continuum from leasing • Subscribing • Getting access to a resource, or regular supply of a product on a regular basis
  • 4. Property Own Lease Rent Subscribe
  • 5. Cars Own Lease Rent Subscribe
  • 6. • A new way of looking at how people ‘buy’ ‘things’. • Utility trumps ownership. • Shift in consumers spending habits. • Goods are repackaged as services. • It can be anything: cloud-based software & services, media/content, groceries, consumables. • Just another XaaS?
  • 7. • Infrastructure is expensive and ties up capital. • Companies want to shift fixed costs to variable costs. • Consumers want capital to be used for assets, not liabilities (cf. Rich Dad, Poor Dad) • Ownership shifts up the supply chain and is replaced with subscription. • For a telco, does this sound familiar?
  • 8. • Tradition Business Model: • Value of the sale is the value of items sold. • Each sale is a one-off transaction • Customer is only your customer for one single transaction • Customers might be anonymous, so CRM is a big challenge • Loyalty is a bolt-on system
  • 9. • Subscription Economy Business Model: • Value of the sale is the ‘Customer Lifetime Value’ • A sale results in multiple transactions and a revenue stream over time • Customers cannot be anonymous • You can/must communicate with them regularly • Loyalty is a key part of the business model
  • 10. • Revenue = Customers x ARPU • Customers (month N) = Customers (N – 1) + New Customers – Churn • Key metrics of performance are customer acquisition cost, acquisition rate, cost to serve, churn rate
  • 11. • Instead of repeat purchase, you subscribe once and continue until you cancel. • Inertia works for the vendor rather than against it • Dramatic impact on the marketing process – consider Dollar Shave
  • 12. What motivates customers to participate: • Value – cheaper access to a resource • Sharing – better use of resources • Trust – will you be there next month? • Simplifying the purchase decision/cycle • Tapping into the power of communities
  • 13. • The original sellers of subscription services • Experience in pricing services, cross- subsidisation, ‘freemium’ • Already have billing relationships with customers • Telco ‘hard’ services converging to cloud services, e.g. Virtual PBX
  • 14. • Billing – much more complex with multiple products and bundles • Pricing – understanding margins, true cost, value of marginal increase in ARPU • Selling & supporting multiple products • Mixed regulatory environment • TCP Code impact • Lack of control of the supply chain
  • 15. • The ‘Subscription Economy’ is here • It has been here for a long time, just known by other names • Telcos are in the best position to take advantage of it • Position now for the next (NBN?) wave
  • 16. • Billing Bureau have been doing this for nearly 20 years; started in telco and now expanded to subscription and services. • We live and breathe it. • Experts in convergent billing and automation and scalability of billing & related processes. • Cloud billing will only become more complex; we have already done it all.
  • 17. • Any questions?? All clear as mud? • For more information, contact • Lesley Kelly; Sales and Marketing 03 8611 1111; • David Werdiger; Chairman 0412 389 389;