“The bill is the physical representation of all the sins of the company,” so said management consultant and friend of BillingViews, Linda Gimnich. The brave thing, then, is to actually measure how good your billing process is.
When the Global Billing Association was in existence, it ‘hosted’ an annual Billing Benchmarking survey. It was one of the most useful things it did. Generally, anywhere between 20 and 35 telcos would take part, and most found the results to be good ammunition within their organisations. Benchmarking is obviously still important and the Billing survey was taken over by the TM Forum some years ago.
Benchmarking and resulting Key Performance Indicators are useful for two reasons.
First, hosting an industry-wide survey means that the definitions of ‘how’ you measure ‘what’ will be standardised. This means that discussion of the KPIs and (if required) measurement of the KPIs against other companies is predictable. It also means that companies’ internal KPIs can be based on ‘standard industry definitions.’ This provides gravitas when discussing them with the CFO.
Secondly, KPIs and the results of benchmarks are good ways of persuading others in an organisation of the need for change. If your time from event to CDR being ready for billing is noticeably longer than a group of potential competitors, you can make things happen.
KPIs must be used properly though. In looking through archives of surveys, results and the GBA’s ‘Top Ten KPIs’ (more of which in a day or two) we came across a couple of examples of how using KPIs can have exactly the wrong effect – and exactly the right effect.
Here they are:
‘Beware Management brandishing KPIs’ – a hypothetical example.
A communications company is moving out of the phase of massive growth into a phase of slower growth, consolidation and control of business processes. In recent months managers have been tasked with measuring the process for which they are responsible. Each month these are presented to the Board. Each month the cost of running the Call Centres stands out as high.
The CFO is tasked with reducing the cost of Call Centers. He collects data, commissions some research and attends a conference on Call Center productivity. The result of this research seems clear – efficient call handling and quicker turn around of calls will result in fewer Customer Service Representatives (CSRs) being able to handle more calls. This will enable the CFO to reduce the headcount in the Call Centres, and if the initiative is successful reduce the number of Call Centres.
The CFO imposes a target time of two minutes for completed customer calls on the CSRs. This target is enforced by the Call Center managers. The resulting ‘improvement’ in call handling times is that within two months 90 percent of customer calls are being completed within the two minute target time.
However, within three months the number of customer complaints and the number of customers ‘churning’ onto other companies’ products begins to increase dramatically. This is reported to the Board. This increase in churn is a far greater threat to the company’s viability than high Call Centre costs.
If the original problem was tackled in an holistic way and the root causes of the high cost of the Call Centers was examined other more effective solutions could have been implemented. The root cause could have been unclear bills, complex bills, inaccurate bills, or unclear instructions on how to use a product.
If the root causes are found and the emphasis placed on improving that part of the process, then the other parts of the process (in this example the high costs in the Call Centres) will naturally improve as the customer experience is enhanced.
A second example, this one real (on account of it having the right result).
‘Using three billing KPIs to achieve cost improvement in Call Centres’
A small service provider in Scandinavia decided that it must reduce the costs of its Call Centers. The project was taken on by the Chief Operations Officer. Instead of simply applying targets to the Call Center operation itself, he identified the three (GBA) KPIs that would give him the best high level view of overall improvement.
The most relevant KPI was number 7 – ‘Percentage of all customers’ queries related to billing’. That was the COO’s major measure of success. By reducing the number of calls he would reduce the cost. Having performed some root cause analysis it became clear that many of the calls were indeed about the bill, and bills themselves were obviously an issue.
The COO concluded that by investing in the quality of billing he could solve the problem. He also realized that he must recoup this investment. To do this, he calculated that if he could send his bills out one day earlier he would gain hundreds of thousands of Krone in increased cash flow.
A ‘dashboard’ for the project was created. Target numbers and ranges were calculated for the three KPIs which would provide a clear view of the overall improvement, not just an improvement in one specific area. He allowed the cost of billing to increase by 1 percent during the project. At the same time Billing’s target was to cut the number of days it took to distribute bills by one. In the meantime he would invest in the clarity and simplicity of the bill itself.
Thus, the three KPIs that were used in order to monitor the project were:
KPI 7: the percentage of all customer queries relating to billing
KPI 10: the cost of billing as a percentage of revenue
KPI 4: days from billing cut off to distribution of invoices
The outcome was positive. By investing in the billing process and by allowing the cost per bill to rise by 1 percent, Billing managed to improve the clarity and quality of the bills, as well as cut the number of days to distribute the bills by one – a positive return in its own right. Better, though, the number of calls about bills dropped dramatically and the net benefit to the company was extremely satisfactory.
It could have been very different – if that COO had decided to brandish one KPI – such as, ‘cutting the number of calls to Call Centers’. The result could very easily have been more unhappy customers, because it might have become more difficult and less satisfactory to make contact with the company.
More examples coming soon. But remember, “if Billing doesn’t get into the habit of measuring the billing process, someone else in the organization will, and that is never good.”