Challenges Facing the Telecom Sector

The telecoms industry has changed drastically in the last 20 years, especially following the pandemic that showed the increased need for connectivity. The industry is in constant flux and businesses operating within it are facing many challenges which are significantly impacting revenue.

What challenges is the telecoms sector facing?

Billing errors and revenue leakage

Accurately maintaining current customer data poses a significant challenge for telecom companies, often leading to billing errors and low collection rates. These issues not only reduce business profitability but also impede operational efficiency and customer satisfaction.

One of the main causes of telecom billing errors is human error which can occur at any stage of the billing cycle, from data entry, to rate calculation, to invoice generation, and even at the stage of payment processing.

Whilst this creates poor data quality, the impacts of it are most felt on the bottom line; revenues leak and profitability suffers. Control frameworks are required to ensure that every process, system and person hand-off is analysed for leakage (potential). Validation is required to determine whether leakage occurs and if so, quantifying the financial damage it is causing to the business. Following this, new controls are required to ensure leakage is prevented or minimised and the root cause is addressed. A full control framework of supplier and customer charging protects the financial integrity of the business.

See our case study on how we helped a telecoms client reduce customer credit and discount errors which saved them £228k annually.

Reduced data quality

Organisations are facing a surge in both the quantity and diversity of data they need to collect and store. These sources include transactional data, data generated by emerging "smart" technologies like machine learning algorithms and IoT networks, information exchanged within extensive partner networks and ecosystems, content produced through customer interactions on social media platforms, and more.

This increase in data is impacting data quality with incorrect and incomplete data infiltrating telecom operator databases. Poor data quality makes it difficult to analyse and trust any insights taken from data as it has the potential to be inaccurate. Basing key business decisions on low quality data can result in the wrong decisions being made.

Poor data quality driven by inaccurate data can result in customers being overcharged or undercharged, with the latter potentially causing significant losses depending on the scale. Revenue leakage can be very damaging to a telecoms provider.

To address data challenges, our data quality solutions ensure data accuracy, enabling accurate billing for every customer. This helps you avoid billing errors, late payments, and revenue loss, fostering improved customer relationships.[HA2] Combining this with our data management solutions for analytics for ensuring data storage, access and end-to-end governance, allows organisations to benefit from sound data infrastructure managed by ongoing data quality assessment/improvement.

Data security concerns

With the increase in customer data, concerns regarding data security and privacy grow. Security stands as a top priority for telecom companies amassing substantial amounts of customer data. Customers are more vigilant than ever and are increasingly mindful of data breaches, identity theft, cybercrime, and unauthorised data usage.

To address these concerns while ensuring data accessibility, data management teams must navigate a delicate balance between data sharing and security and should have a robust data governance strategy. They must uphold stringent data protection standards whilst making sure data is available to be used by those who require access. This task becomes increasingly more challenging as data volumes increase.

Our Data Management Solutions service ensures your data is secure and allows you to set access to specific areas on a user basis allowing you to keep certain data confidential.

The proliferation of data collected by telecommunications firms presents a formidable management challenge. Many organisations may lack clarity on data storage locations or the adequacy of security measures. Amidst the constant evolution of data—growing in complexity, diversity, and dispersion across numerous devices—telecom entities require a robust data management strategy to safeguard data integrity, accuracy, and accessibility.

Maintaining regulatory compliance

Adhering to General Data Protection Regulation (GDPR) is a legal requirement that everyone in the telecom sector must follow. The data management team shoulders the responsibility that compliance is maintained and are responsible for preserving data lineage, ensuring data quality, upholding data security and setting data access for individual users.

As data volumes soar and regulations grow more intricate, data management teams must seek out tools that are not just scalable but also adaptable to evolving compliance requirements. Flexibility is crucial in this landscape, enabling teams to meet compliance mandates efficiently amidst this complex environment.

Our GDPR Compliance capabilities helps telecom operators comply with GDPR so you have peace of mind that everything is above board, so you avoid any costly penalties. Ignoring data compliance is not an option for telecom companies. They must be prepared to furnish data promptly for audits and inquiries related to data breaches and security lapses.

Lack of understanding around business value drivers

Many telecom providers don’t actually know what customer segments or products or packages generate the most revenue or cost for them. 80% of telecom providers use average revenue per user (ARPU) as the main way to measure profitability which is a poor way to measure this.

Creating package bundles and marketing content based on assumptions means you are failing to maximise profits and potentially generating losses as you are not basing it on accurate data.

A Value Based Management approach should be used. This can help you uncover your top customers so you can boost your revenue by focusing on individual subscribers. By tailoring your offers and marketing efforts towards those that generate value, you can find actionable insights to maximise your return on investment (ROI). It’s not about trying to acquire as many customers as you can, but instead about focusing on customers who actually provide value so you can focus your efforts accordingly.

Acquiring valuable new customers

Acquiring high quality customers who bring value to your business is a big challenge in the telecom sector. 1 in 5 newly acquired telecom customers are value-destroyers who forecast a negative lifetime value. As a result of this, there is a multi-million pound revenue leak in the telecom industry.

In order to combat this, a combination of our Value Based Management platform and our Prospect solution, that offers the most comprehensive, clean, accurate, and responsive consumer prospect data in the market, enable you to reach out to customer segments that offer value to your business, and monitor their value as they mature across the customer lifecycle. Taking a value-based approach to acquisition should be a top priority for every telecom provider.

See our case study on how we helped one of our telecom clients make a £1 million opex saving by identifying their high cost customers and improving their value.

High churn rates

Customer churn is a huge challenge telecom providers face. Customers will come and go, but having a high churn rate can significantly impact revenue so it’s important to keep this low. 

Acquiring new customers costs five to twenty-five times more compared to retaining existing ones. Because of this, reducing churn should be a key strategy to avoid significant revenue loss. Rather than focusing on the quantity of customers, telecom providers should be focusing on customer value instead, as retaining existing customers is likely to be far more cost-effective.

Identifying why customers are churning is very important. Understanding which groups of customers you are losing and reasons for this can allow you to come up with a strategy to address churn.

Our Value Based Management platform can help you predict a customer’s life cycle allowing you to estimate their value to your business based on their attributes and likelihood to churn.

Credit risk and overdue debt

In the telecom sector, managing credit risk is crucial. Telecom providers often extend credit services to customers which can include postpaid plans, device financing, and equipment leasing.

If a customer fails to keep up payments on time, this can cause significant losses for telecom providers who can have a difficult time trying to recoup losses.

Credit risk management is key to dealing with bad debt. Our Credit Risk solutions combine our leading data software and extensive experience to reduce debt and lower your exposure to risk.

How can Sagacity help the Telecoms Industry?

Trying to overcome operational challenges isn’t something you should try to tackle alone. We are experienced in helping the telecom sector improve operations.

Our Value Based Management platform can help you:

• Identify your most valuable customers
• Discover which telecoms products/packages you offer have the biggest ROI
• Reduce churn by predicting how long a customer will stay based on their attributes
• Predict in life cost management of customers

Our Revenue Assurance solutions can help you:

• Identify revenue leakage in your business
• Identify cost leakage in your business
• Deliver controls to improvement process efficiency, governance and automation

Our Data Management solutions can help you:

• Improve data quality
• Access data wherever you are at any time
• Manage who accesses what data

Our Prospect data solutions and marketing lists can help you:

• Help you understand what types of customer(s) most benefit your business
• Reach high quality prospects and customer segments that will generate value, not destroy it

Out data quality solutions can help you:

• Increase data accuracy as your telecom data grows
• Accurately bill each customer on time
• Improve relationships with customers as they are billed correctly and never overcharged

Conclusion

There are a number of operational challenges facing the telecom sector which can seriously impact revenue. It’s important that they are dealt with quickly and effectively to minimise the damage they can cause. Get in touch with you team to see how we can help you improve your operational efficiency.