What to Do About Dipping revenue and Profits?

Peter : On Rad's Radar?
Peter
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

What to Do About Dipping revenue and Profits?

These headlines are worrisome.

Weaker-Than-Expected Channel Sales Impact CenturyLink

tw telecom Revenue Grows, Profit Dips

Windstream Profit Falls 22%, Business-Service Revenue Up

Revenue is up, profit is down. But for others revenue is down.

AT&T revenue is down 1.4 percent from the 2Q2012. Wireline business fell 10% from last year.

"EarthLink's total company revenue in the second quarter of 2013 was $313.4 million, as compared to $316.8 million in the first quarter of 2013 and $334.5 million in the second quarter of 2012. Business Services revenue, which accounted for 78% of EarthLink's total revenue in the second quarter of 2013, declined just 0.5% versus the prior quarter." [source]

Cbeyond's "Second quarter 2013 total revenue of $118.2 million compared with $123.8 million in the second quarter of 2012 and $119.9 million in the first quarter of 2013."

Part of the reason is that transit and transport (Internet bandwidth and private line) revenue is facing pricing pressure almost every where. That means new customers are paying less and renewals want to reduce their bills. Less revenue all around - even if the number of customers remains the same or increases a little. ARPU is down resulting in profits being down.

The ILECs are betting on Global 5000 business and cellular. CLEC's are betting on the cloud, IT services and MPLS. EarthLink saw a 22% increase year over year in these business segments. This means that it is all about the User Experience (UX baby!)

Here's the dilemma: with revenue dipping, companies cut costs. Sure automation has helped reduce head count over the last 7 years, but automation doesn't means UX! (In fact, in my experience, it is the exact opposite!) So how do you balance head count and costs with dipping revenue and increasing UX?

Isn't this kind of the same problem other industries face like book retailers, newspapers, etc.? You can't replace customer experience.

XO's CMO discussed customer experience (CX or UX), metrics and customer intimacy in this interview. (I have no idea what customer intimacy is.)

BTW, 2 studies show that the MSP model is working. Managed Services but that means UX.



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