How to build a solid business case for the enterprise market
Building a compelling business case for service launch based solely on airtime bundles is difficult and uncertain. It’s too subject to wholesale rigidity and retail price fluctuation. But by choosing an attractive market and presenting an offer that includes additional subscription services, such as Mobile UC and call recording, you can build a compelling business case with more certain returns for your investment.
It’s becoming increasingly difficult for MNOs and MVNOs to create a solid business case for addressing consumer and retail markets. Market conditions have led to intense competition, wholesale prices do not reflect consumer offers and, unless you can rapidly achieve significant scale and volumes, or have a specific target community, it’s hard to build a successful, sustainable business.
With that in mind, many MVNOs and MNOs are looking for alternative market opportunities. Some have identified B2B customers as representing a promising segment to address – but while the question of how to address B2B customers can readily be answered (e.g. by reading our case studies and blogs), the offer must be built on a solid business case. How then to build such a business case?
Well, you need to think about the offer you intend to deliver. If it’s just based on an airtime package, you may have some scope for maintaining reasonable prices, but perhaps not much. Business customers don’t necessarily want the cheapest bundles, but they do want something that offers value.
However, the real input to the business case shouldn’t really be the airtime bundle: MVNOs have less control over this element than almost anything else and even MNOs struggle to innovate here. No, what will drive your business case on the revenue side will be additional fees that you can charge for value added services.
It comes as a surprise to many that services such as Mobile UC or Mobile PBX can be sold for an incremental cost. They attract a fixed fee that is payable in addition to whatever the airtime bundle pricing happens to be. Moreover, these fees are repeatable, adding up to a significant monthly recurring revenue stream. If you have invested in a platform that can deliver these services, then you have more influence on the margins you can achieve – and are more likely to reap the benefits of your vision.
These service fees can range from €7 to more than €12 each month, which soon adds up into a generous and profitable revenue stream, less subject to market variation than airtime fees. In addition to the basic service, additional features and services can be added, each of which can attract their own revenue stream. Some of our customers, for example, charge fixed fees for a mobile IP service; others charge for mobile call recording or conferencing. Whichever way you look at it, these additional services can contribute significant incremental revenue to your income.
At this point, the revenue side of the business case will start to look a lot more promising. In addition to the monthly airtime package (and out of bundle usage), you have revenue for each subscription and each additional service that customers select – all of which have much better margins than can be achieved by simply offering airtime.
Now to the costs. Obviously, there will be start-up costs. These include network interconnection and integration fees (if you are an MVNO), plus acquisition costs for the solutions concerned. Most of these, including the Gintel solution that provides the UC capabilities you need, can be made available under OPEX terms – which means that, once integration has been taken care of, then everything else can be accounted for in monthly fees, enabling a comfortable pay-as-you grow model to be adopted. This helps keep your costs down and that you only pay for additional licenses and capacity to meet your sales success.
There’s a lot that can be written on the subject of business planning and it’s a topic to which we shall return. But the key lesson is that your business case for launching B2B services, such as Mobile UC, will be supported by more costs that are under your direct control, such as the service subscription packages that you offer. Airtime alone is interesting, but not sufficient to create a compelling business case. By adding attractive services, such as UC or call recording, your business case can be transformed. Why not talk to us to find out how?