A different perspective on overage charges

Many CSPs view overage charges as a welcome additional source of revenue, but for their customers', unexpected additional costs can have long-term consequences and impact the customer relationship. Philipp Reischauer explains how you can boost revenues while creating stronger customer relationships.

One of the uncomfortable 'secrets' of the telecom business is that while CSPs take considerable time and effort to help customers select the right bundle at the contract start, customers actually require rapid change and quick support. Meaning, that they can inadvertently exceed their bundle and get bitten with hefty overage charges very quickly. Recent research in the UK, found that 71% of customers opt for far bigger rate plans than they actually need, due to their fear of overage charges – while another study in South Africa found that almost 40% are not aware that out-of-bundle usage leading to overage charges, that can be automatically stopped by a simple click in the self-service portal.

It's tempting to rely on overage charges when price points are static, but it's a tactic that CSPs should be wary of. Unexpected charges on the bill are the main driver for high call center volumes, reduce trust in your service and eventually increase churn if not stopped. On top of that – and maybe even more important – the feeling of ‘intransparency’ of cost reduces your customers' willingness to try out new products and services, undermining innovation and return on investment.

Hidden costs of overage charges

Increasing transparency is both mandated and strategic

By helping customers avoid overage charges, CSPs can build trust, reduce churn, and upsell and cross-sell offers to customers sustainably - increasing customer lifetime value (CLV) and transforming customer relationships. Greater transparency vis-à-vis charging to avoid the negative consequences of exceeding bundles is also being mandated throughout Europe due to provisions contained in the European Electronic Communications Code, which is targeted at supporting both consumers and small businesses, and which is now being enacted into telecommunications laws across the EU27 and the UK.

CSPs can utilize their bill and bill data to lessen the impact of overage charges on customers and their own operations by:

• Clearly explaining what is and isn't included on bills and the relevant Terms and Conditions.
• Alerting customers to overage charges before they're incurred and enabling them to set appropriate caps and alerts.
• Highlighting overage charges on the bill – with a clear explanation of what they were for, when they were incurred, and why they're there to help reduce confusion and decrease customer frustration.

Smart CSPs can go a step further and turn the negative impact of overage charges into an opportunity. Here, digital bills have a strategic role to play. Real-time usage data can be used to identify which customers are at risk of exceeding their bundle so that in the short-term, they can be offered supplementary products (e.g., bolt-ons) that help them avoid overage charges. Bill data can also be used to understand customer usage patterns so that individual customers can be moved to more appropriate bundles and offers in the longer term. It's also possible to identify customers whose bundles are far too big – meaning the customer is paying over and above without knowing it, putting the account at risk of being targeted by competitors promoting cheaper, more transparent - packages.

CSPs can use their digital bills to inform the customer of overage charges and the reasons why they've been charged, but also to prevent customers incurring costs and suggest a remedy - significantly reducing the negative impact on both the customer and customer support teams. For example, a customer exceeding their bundle could be offered a waive to the overage if they switch to a more appropriate plan – while a customer who currently has more than they need could be enabled with an offer whereby they can share exceeding data with their family to use. This has the potential to remove the toxicity of constantly disputed charges and replace them with proactive conversations that builds value add and ensures services remain aligned towards changing business needs.

How the bill can help transform overage charges from a negative trend to  a positive opportunity

How can Calvi help?

Segmentation-wise, B2B customers have higher expectations and look to CSPs to guide them towards the best deals and offers and ensure their telecoms spending is aligned to their evolving needs. This is where Calvi can help through our best-in-class bill presentment and communication solutions and services. For example, Calvi helped one of its customers improve the relationship with one of their biggest corporate customers, by providing them with indispensable tools to enable and amplify productive and proactive conversations around usage. 

Calvi Polaris, a Telecom Expense Management and Electronic Bill Presentment solution, gives B2B customers transparent insights into their telecoms spending. This includes bill notification features that highlight special events (such as overage charges) to avoid customer confusion and calls to Customer Care.

Taking a more customer-centric, personalized, and smarter approach, CSPs can stay aligned to changing customer needs, ensuring they experience value add throughout the lifecycle and avoid the negative effects of overage charges. The bill has a strategic role in enabling this by acting as a communications tool that helps keep the customer informed and reduces the cost of support. The result is a win-win for the CSP's business and customer support teams and the customer.

With Calvi's proven track record in helping CSPs to improve their relationship with their customers, we know how to tackle overage charges. Let us help you boost revenue and create stronger relationships by making the bill clearer and easy to handle.

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