Portals

New Net for Catching, Retaining Customers

If the first few years of competitive telecommunications have taught us anything, it's that catching customers is not that hard. Hanging onto customers is another matter altogether.

The Internet and the World Wide Web have given all kinds of businesses another way to keep in touch with their customers, to sell them more services and products and to conduct various kinds of business. Consider these possibilities built around the mundane, but necessary, act of submitting a bill and getting paid.

If you can deliver a bill online, why not allow customers to pay online? If you can get paid online, why not sell new services to your customers online while they're making their payments? If you can do that, why not offer to consolidate customers' bills with other monthly headaches and get customers used to coming back to your site each month? Finally, if you can do that, why not construct an online portal and rent space on that portal to other enterprises so they can establish a relationship with your customers?

Learning to Fly

In the United States, where many companies are developing the technology and products to make portals possible, telecommunications companies do not seem to be early adopters. With a few exceptions, they seem to view portals as something on the periphery of their businesses, or as something worth doing in the future. Getting networks built, and getting customers on those networks, are more important priorities.

However, many carriers have traveled at least a little way down this road. Several competitive local exchange carriers (CLECs) have at least made it possible for their customers to view their bills online and even to pay them. However, none seems to have seized the bull by the virtual horns and built a software portal around that capability as a way to catch customers and keep them.

BellSouth Corp., Atlanta, claims to have gone further down this road than anyone. The company's aim is to encourage people eventually to pay their bills online.

MCI WorldCom Inc., the nation's second largest long distance carrier and the largest CLEC (with local operations in 89 markets), is preparing to offer bundled services on a single bill online.

For now, both companies' electronic bill presentment and payment abilities are found on other company's portals--First Union Corp., Charlotte, N.C., for instance. First Union, which makes a living partly by making it easy for its customers to pay and get paid, permits its customers to consolidate their bills on its portal.

Checkfree Corp., Norcross, Ga., is the bill-paying engine behind that arrangement, and behind similar arrangements at Qwest Communications International Inc., Denver, and GTE Corp., Dallas. E-bill, the software system that makes it all possible, allows a biller or portal owner to put whatever face on the operation it wants. On the First Union portal, consumers can aggregate several bills. "Pretty much anybody who sends you a monthly bill," says Shaun O'Reilly, Checkfree's E-Bill relationship manager. "Also, if [the consumers] want to pay a bill, there's a little icon that looks like it's part of the bill, but is really resident at Checkfree."

Beth Barling, senior electronic commerce analyst at Ovum Ltd., London, says carriers outside the United States have gone much further toward the use of portals to build relationships with their customers. These carriers, she says, are implementing the pieces of a portal strategy one at a time--not merely to save money by eliminating paper bills, but to build a long-term, personalized relationship with each customer.

"Telstra [Ltd., Melbourne] in Australia, has set up its bill payment online, but you can only pay the bill, not receive it," she says. "You can only use a credit card, and you still get a bill in the post. [Telstra's] way forward is to become a consolidator, and they've already set up some arrangements with local billers in Tasmania. They're also evaluating Checkfree and Transpoint [LLC, Engelwood, Colo., Checkfree's principal competitor]."

Telstra's payment option is part of its online shopping mall, Barling says, where the bill paying service, essentially, is just another merchant on the mall.

British Telecommunications plc (BT), London, has an option on its site called View My Bill, which allows customers to do just that, "not the detail, just the amount," Barling says. Customers must still pay their bills the old-fashioned way, by mail, but BT will make it possible to pay online in the near future. France Telecom, Paris, already offers online bill pre-sentment and payment for its business customers, and has for years, Barling says.

Barling and other observers say there are cultural and economic differences between the United States and the rest of the world that may contribute to the relatively slow adoption of electronic billing and payment, and the relative absence of portal-based strategies from telecom carriers' radar screens.

"You guys [in the United States] tend to pay a lot of bills by check still," she says. "That's not true in Europe and Asia, where people are much more used to paying for things electronically."

O'Reilly of Checkfree adds that, while carriers in the United States may want to encourage their customers to view and pay their bills online, and may even want to lead their customers gently in that direction, they don't see the value in turning their websites into portals and their portals into virtual malls.

"There is what's known as the trusted agent concept," he says. "The research we've seen is that customers would prefer to see their bill and make their payment at a bank site, because banks are trusted agents for that sort of thing."

Banking and Online Billing

In many European countries, incumbent carriers, often recently severed from the local postal service and keenly interested in keeping their customers away from new competitors, often claim the trusted agent role. Barling says electronic transfer and receipt of money is much more common in Europe, where customers may have a choice of only a few banks. "In the States, you have thousands of  banks," she says.

Even among banks in the U.S., however, the progress has been slow and steady.

First Union has formed an alliance with two other banks, Wells Fargo & Co., San Francisco, and Chase Manhattan Corp., New York, to offer a consolidated online billing system, called Spectrum. They have formed this alliance, analysts say, to compete with such Internet bill-paying services as those offered by Check-free. The full rollout is scheduled for next year. There is considerable potential here. Wells Fargo alone is the nation's largest handler of student loans and processes 2.4 million mortgages every year.

That carriers and other billers have been slow to build portals and make the most of them does not mean there are no tools available to do the job. Barling says U.S. suppliers of portal software and expertise are in a good position to get business overseas--even small suppliers, if they team up with a larger distributor.

"A lot of companies in Europe that have started doing this [building portals around electronic billing] did it in-house or used an integrator," Barling says. "Now, they are starting to evaluate commercial solutions. The opportunity for U.S. suppliers is huge."

Barling believes U.S. carriers are simply too busy building their networks, entering new markets and dealing with competition to focus on the possibilities of portals right now. What's more surprising, she says, is billing systems suppliers have been similarly inactive.

Brian Valente isn't surprised by any of this. As senior director of marketing at Just In Time Solutions Inc., San Francisco, he believes it makes more sense for banks and portal companies like Yahoo! Inc., Santa Clara, Calif., to provide portals while his company, which makes interactive billing software, enables billers to use those portals. New software standards--such as the open financial exchange OFX standard of the National Automated Clearing House Association (NACHA)--enable billers, such as telecom carriers, to implement a single system that will connect them with several portals. So why build one's own?

This is how Just In Time's software, called BillCast, works. Billers send an electronic envelope, basically a bill summary, to their customers, who have accounts at a given portal. The summary consists of the date the bill is due, the amount, the biller's name and a location where more detail can be found, usually the biller's website. The customer sees the summary on a list of all the bill summaries received at a portal. When the consumer wants to review a bill, they click the link and are connected to the biller's website, where the biller then presents the bill detail directly back to the customer.

"There is an authorization token that's passed along that allows the customer to show up authenticated, as a known user," Valente explains. "So that means you can truly provide personalized customer service and marketing to that customer. So this enables our vision of the bill as a platform for customer self care and marketing."

Rod Butters takes a more expansive view of the possibilities of portals, and he suggests even aggressive carriers are thinking too small. A portal, he says, is the entire system for welcoming customers into your business, handling their requests, manipulating their desires, making them pay you and making them like it. At the most basic level, a portal is what it originally was--a door through which a customer enters a store.

Butters is vice president of product strategy and marketing at Aspect Telecommunications Inc., San Jose, Calif. When Butters talks about his portal, he's not talking about a website and software linked to billing and order systems.

"Our portal is different because it's not exclusively focused on the web," Butters says. "It's all the different media that come into the business. It's the 800 numbers, local service numbers, a company's e-mail addresses, their IVR (interactive voice response) systems. With most companies the site is just a site, that doesn't really identify opportunities to interact with and market to the customer base."

Go With the Flow

However, customers come in contact with a biller, Butters says, they should be handled by the same rules. Aspect Architect, Aspect's flagship product, is an architecture that makes those rules flow across technologies, Butters says.

"What we have is a visual development with Aspect Architect that allows people to graphically define their business rules or workflows to qualify customers, take them through the initial process, and decide how to interact with the customers," he says, adding the company discourages customers from trying to do everything all at once. "If you have an environment where you have to build everything from scratch ... you don't have the latitude to make minor tweaks. With visual tools, you can start with something simple, get in some basic rules and then start looking at what the opportunities are."

Butters says Aspect will work with any kind of a biller, with whatever billing system that biller uses. But his list of U.S. telecom customers is light, and many of them, he says, haven't taken full advantage of what Aspect Architect allows them to do. He has hope for startup CLECs, however. He urges new CLECs to think about their customer service strategies early and in detail. "It isn't enough to throw DSL (digital subscriber line) over the transom and start sending bills," he says.

Greg Rable, CEO of Derivion Corp., Atlanta, would like a new CLEC to see him first. Derivion is a billing outsource company, and Rable says Derivion will design a portal around electronic bill presentment and payment such that each biller looks and feels different from the others. He aims at billers who bill between $50,000 and $1 million per month. Anybody bigger than that, he says, may be able to do the job in-house. Derivion offers an end-to-end solution from parsing to payment, from enrollment to cross selling. Again, Rable is eager to work with telecom carriers, but has worked mostly with Internet service providers (ISPs) thus far.

"What we need is the file in whatever native format that they would send to a hardcopy bill printer, or what they do internally today," Rable says. "We don't build an interface. We take a print stream or flat file, parse it and get it into our solution. The goal here is to really be able to help these companies leverage EBPP (electronic bill presentment and payment) sooner, rather than later."

The parsing--rendering meaning for each piece of information in a file--is the key, Rable says. Whatever the billing system, Rable claims Derivion can work with it. "We can parse anything," he says.

Mark Fisher, senior vice president of network services, Concentric Networks Corp., San Jose, Calif., says Concentric already uses a narrowband portal to interact with its dial-up ISP customers. This portal is the Concentric page that pops up when dial-up customers log on, and it includes icons from other companies that reach Concentric's customers through the web.

Dial-up service is not Concentric's main business, and the challenge for Fisher and his colleagues will be to move the narrowband portal to the targeted businesses--small and medium-sized businesses who get online at 384 kilobits per second (kbps) over DSL. "We have an opportunity to create a broadband portal," he says. "That's one of the reasons Microsoft [Corp., Redmond, Wash.] invested in us."

In June, Microsoft and Concentric announced they would develop a co-branded version of Microsoft's MSN portal. Concentric committed itself to a $7.5 million effort to market the portal; Microsoft invested $50 million in Concentric. The jointly-developed portal may not look exactly like other versions of the MSN portal, but analysts believe there will be little doubt to anyone who views it about the senior partner.

However, the penny appears to have dropped in Burlington, Mass., where John Duffy and his colleagues at Essential.com Inc. have decided to build a portal around the online purchase of and payment for basic monthly services. Duffy, the vice president of business development, says Essential.com is a facilities-free reseller and proud of it.

"[The margins] would be slim if we were just offering local phone service," Duffy says. "But we offer several services, and that makes it attractive. A convenience store might make 25 cents on a pack of cigarettes, but when they sell candy bars and lottery tickets, it all adds up, which is why stores like that are successful."

Essential.Com bills itself as "your energy and communications super store," and, indeed, it might be if you think of its' portal site (www.essential.com) as the online equivalent of Wal-Mart. Essential.Com provides service in Massachusetts, where it's certified as a CLEC and resells local phone service from Bell Atlantic Corp., New York. The company is applying for certification in 12 other Bell Atlantic states, Duffy says. The company also offers long distance service (various carriers), Internet access, electricity, natural gas, heating oil and other basic services. In the future, Duffy hopes to offer household cleaning, water delivery and dry cleaning services to his subscribers. He won't say how many subscribers Essential.com has, but "we plan on having several thousand subscribers by the end of the year."

Duffy says he looks forward to reselling CLEC services, too, but he hasn't had much luck with CLECs. "The newer CLECs either don't have their systems built out, or they turn us down," he says. "They want to hold on to the product and not go through the reseller channel. That'll change once they see what we're capable of."

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