We realize that sometimes wireless expense management can seem rather confusing. Here are 3 of the most asked about terms/acronyms in our industry:
Wireless Expense Management – An expertly managed solution with software which outsources the management of wireless devices resulting in cost avoidance. To get optimal results, WEM mandates:
- Optimizing rate plans to fit business needs while auditing to baseline (baseline management)
- Proactively suggesting and changing rate plans (customer management)
- Full RFP process with complete contract negotiations (carrier management)
The Bill Police are experts in WEM, a special niche of TEM (telecom expense management which largely refers to the landline side of the business with a one-time contract renegotiation). We have 2 patents and can claim this definition because of our patents. When we say “WEM: we invented it” we mean it and the patent office supports it (twice).
Other Industry Definitions
ARPU (Average Revenue Per User) – measurement by the carriers to understand the value of their subscriber base and compare to other carriers as a metric. It is the measurement of the average dollars spent per month by each subscriber across their subscriber base. It is calculated by taking the total revenue (what we at Bill Police call “all in”. This number includes taxes, fees, assessments, etc and is the total amount the user pays, not just the access fees as are so often quoted to customers by carrier reps) and dividing it by the number of total users. For example, if carrier X has 100,000 subscribers and the revenue for these subscribers is $5,000,000, then the ARPU is $50.
How to use ARPU?
Carriers like users with higher ARPUs (from data plans or feature charges and sometimes from overage charges, but usually not in the case of Bill Police customers) and you can use that as a bargaining tool. You can use ARPU as a comparison between companies and as a gauge for how your company stacks up to the rest of the industry in average subscriber spend.
CPGA (Cost per Gross Add) – What it costs the wireless carrier to add you as a customer recorded in per subscriber terms. Average CPGA across all carriers is $350-400: this is the cost to acquire a new subscriber. This number covers ALL costs (yes, including the subsidized price of the device!) which includes commissions paid to agents/employees, (we’ll say it again) phone subsidies and marketing costs. So this means that if you get a free device, on average, the carrier is down $350 (per subscriber) when you sign up with them and they need to earn this back to become profitable.
Additionally the carriers want you to stay awhile to recoup more of these dollars (albeit without a new subsidized phone upgrade) but the longer you stay, the more they can make up on their CPGA.
How to use CPGA?
Use CPGA in conjunction with ARPU to help negotiate the carrier agreement. When you have an idea of both of these numbers, you have bargaining power.