If you have customers telling you what they want, how they want it and at a price they want it and you can supply it, what can get in the way of success?
Most people agree that when all those elements are in place and you can feasibly deliver the service you should make a sale.
QED, MBA successfully completed, cash the cheque, go home and start surfing the web for your dream sports car.
So if it’s so simple why don’t we all do this?
The answer I believe lies buried in two distinct factors:
• Institutionalised inertia
• Individual self-interest
These two factors have long since been institutionalised in the form of ARPU. It's high time we broke this connection forever and moved on. For as far back as I can remember, ARPU (Average Revenue Per User) has been the measure of currency for Mobile operators:
It was simple No. of subs * APRU = Total revenue
But we now live in a New World with:
• Several services
• Multiple devices
• Funky applications
So what’s wrong with Average Revenue Per User?
The issue with this is that ARPU is great for analysts but gives a sense of pseudo entitlement for a given revenue target without doing anything for it. It’s as if the customer owes us this amount of revenue. It hides what we're supposed to be doing, i.e. coming up with new services that customers actually want rathan wheeling out re-polished versions of the old chestnuts of Voice, SMS.
In a recent article that I read from Paul O'Dea and Emer O'Donnell , entitled "The investment paradox, why less is more", Paul & Emer describe how start-ups will little or no cash are more likely to be successful in fulfilling customer needs because it's their only source of finance.
I suggest that you give a read, it's short and makes a very good clear point:
http://archive.constantcontact.com/fs062/1102534231828/archive/1103383042599.html
What Paul and Emer describe needs to be in the life blood of any technology solutions providers. Whether you're a start-up selling into large operators or an established Tier-1 vendor the law hold true. We need an absolute obsession with coming up with products and services that customers validate as the bare minimum that's required to survive in the global market.
But all too often I come across people that are still looking for technologies that will be “all things to all people”. Folks that’s what the Access networks and IP networks and Google are for. These are top of their value chains and probably represent 0.001% of all companies. With those odds I suggest you buy a lottery ticket, it’s a lot less painful than building up teams of clever developers that end up building shelf-ware in the vain effort to rule the world.
By shifting the focus subtly to average revenue per service we start asking the necessary questions about what the customers really want. We re-align our systems to monitor, trend and report the individual services. This is now critical, but for proof to see this in action take a quick look at Vodafone's results to March 2010. Non-voice and Messaging revenues that are now powering the revenue growth in Europe.
See: http://www.vodafone.com/start/investor_relations.html
This means we start looking at what the end customers are really doing. This is also driving three fundamental changes:
• Each service now stands or falls on its own merits
• Thinking outside the box – it's all about building a complex value chain and we need to look at partners
• Co-operation – By breaking the old mould it’s forcing the simplicity and cross business co-operation that Vodafone talk about in their presentation.
Therefore it’s time to confine the ARPU measurement to history and look at the Average Revenue Per Service across distinct SFP's “Service Finger Prints”. Looking at the distinct service touch points allows operators utilise the potential of their large investment in carrier grade Access and IP transport networks to target specific services for small subscriber groups. It askes the question, how and where does our customer want to interact with this service? Then it builds services that actually match these requirements.
So let's replace the "long tale" with real life “long tail” fulfilment.
