As a reseller, the service you provide and, therefore, your reputation and ability to keep your customers will depend on the service provided by your wholesaler. Sometimes even the financial viability of your company hinges on the performance of the wholesaler. Therefore, it is vital that the reseller establish some incentive for the wholesaler to provide adequate service. As well, it is critical to have a comprehensive approach to auditing and monitoring the performance of your wholesalers.
A well-developed plan that monitors wholesaler performance can provide a guideline toward establishing new business relationships and negotiating contracts. The services obtained from wholesalers inevitably depend on the markets chosen and investments made. For this article, assume a "worse case" scenario—that the wholesaler has provided all operations, systems and facilities. The guidelines can be tailored to eliminate the functions your firm currently provides, and can be used to monitor your organization's internal performance.
It is imperative that resellers' auditing and monitoring plans address the following issues:
• How is the organization doing with respect to the marketplace?
• How is the organization doing as a business?
• Is the wholesaler providing adequate and satisfactory service?
• Is the wholesaler's billing information accurate?
How are we doing in the marketplace?
• Our primary concerns are customer acceptance, product use on the whole and the broad-based effectiveness of our approach.
• Are we securing the number of customers we expected?
• Are we retaining our customers for the time frame we expected?
• Do these customers fall within our solicited target audience or are we attracting other people as well?
• Is there a need to address differences between the customers we targeted and those we are attracting?
• Which products are our customers using?
• Is the usage in accordance with our expectations?
• Do the results present any surprises?
How are we doing as a business?
Our products and services may be favorable in the marketplace, but unless we can meet our financial projections, we cannot remain in business. We are concerned with meeting our goals and objectives in revenue, expense, margins and profits. What are the trends? Are they positively or negatively based?
Where do we need improvement?
What level of service is our wholesaler providing?
We are concerned with the level of service being provided to the business and our customers. Is the service level we provide consistent with what our service agreements specify?
What is the feedback regarding customer satisfaction?
How well is the wholesaler doing in overall performance?
Is the wholesaler bill valid?
We are monitoring not only the mathematics (units times price), but also the timing and reflection of penalties/adjustments (based on performance). Our concerns are that the wholesaler invoices can be directly related to our customer invoices. That is, charges for processing service orders and phone call volume for which we are billed should be reflected in the number of calls we invoice for and collect from our customers. Generally, we want to be assured that our wholesaler charges reflect the benefits received by our business.
How Do We Solve this Problem?
The solution to this predicament is the establishment of a system designed to collect and analyze performance data and bi-level metrics to monitor the situation. Each level should be categorized as either Key Performance Indicators (KPIs) or Operational Performance Indicators (OPIs). KPIs are results visible at a glance that, at the enterprise level, answer the four major questions listed earlier. KPI results can occur daily, weekly or monthly, contingent with the specific areas being measured and the availability of necessary data. (See Figure 1 for a listing of the major KPIs.)
Besides specific performance numbers and comparisons to previous periods, objectives and trends are required to fully represent implications of these results. The objective of KPIs is to tell whether things that are important to the business as a whole are proceeding according to, ahead or behind plan. The objective of OPIs is to identify wholesaler efficiency and effectiveness, ensuring that the task work associated with operating the business is being properly done. Sufficient detail is required to identify, develop and make changes in operations, staffing and other executable activities. (Figure 2 on page 43 is an itemized checklist of areas that should be monitored by operational performance metrics.) The results should be secured to the exact operational unit involved in performing each task. Specific directions to locations where precise changes need to be made is also necessary.
Quantitative revenue results will show if we are successful with our projections and, if not, how far we are deviating from the plan. We also need measures to learn the quality of our revenue stream. Metrics on unbillables and uncollectables can quickly show wholesaler operational problems. Certainly, the wholesaler will attempt to bill the reseller for calls recorded by the network. As resellers, we should ensure that providers not benefit from poor execution the same way they do from good performance. These metrics will ensure that the data necessary to pursue adjustments to these charges is available. Similarly, we would recommend tracking adjustments. If a customer receives credit for a network failure, the reseller should receive compensation as well. Adjustment tracking is not only important from a revenue standpoint, but it also shows poor network performance, which, if not corrected, may lead to customer dissatisfaction.
Expense, margin and net income are traditional metrics. Separating the components into ongoing versus customer acquisition campaigns would show not only our planning effectiveness but also wholesaler execution effectiveness. Network and operational performance cannot be overemphasized, as these items make up almost 70% of the total expense and provide critical sources of information regarding customer satisfaction.
Total minutes of use could feasibly give early warning indication in regard to customer satisfaction and retention. It is a useful measure when providing comparisons to wholesaler charges for network usage and as a check against unbillables.
Unbillables and Uncollectables
Unbillable calls are calls that were completed but for various reasons cannot be posted to an account to be billed. Some more prevalent reasons are:
• equipment problems at the switch that result in unreadable recordings on the billing data tapes
• problems in the transmission of the call detail data from the Network switch to the billing data processing center
• inability of the billing systems to rate the message due to systems file errors or late updates to the rating tables
• inability to find the telephone number to be charged as active in a customer account due to late posting of service order records
• delays in message processing that cause the message to be to old (calls more than 90 days from the date of the call are not allowed to be billed to customers)
• calls to telephone numbers that are not assigned to customers, for example, pay phones that are incorrectly identified due to installation or maintenance errors.
Uncollectable calls are calls that were billed but are successfully challenged by the customer. Some more prevalent reasons are:
• poor transmission quality
• denies all knowledge (DAK), customer denies making the call
• customer denies accepting collect call
• credit card approval process for call payment (can be the result of fraud or operational error such as failure to check the credit card database because of network congestion)
• posting to incorrect account because of data error that misreads the telephone number.
It is unrealistic to expect to keep unbillable and uncollectable calls from existing, but the process can monitored to keep them at an acceptable level. Because there are many causes for unbillable and uncollectable calls, a schema must be established to identify the specific reasons for each error. This monitoring will allow for early identification of operational errors that need attention before the situation becomes catastrophic.
Customer churn metrics are an absolute must. Customer retention is the key to profitability and, therefore, needs to be monitored meticulously. To offset even normal customer churn, customer acquisition is vitally important to the continued growth of the business. These metrics can offer tremendous insight when evaluating the effectiveness of various marketing programs. Monitoring customer care metrics (answer time, order issuance, trouble repair, etc.) will help you decide why and where a problem is occurring. This can affect customer satisfaction, and ultimately, customer retention.
Customer satisfaction is an issue that should be arranged and measured independently of your wholesaler. However, input from the wholesaler concerning customer feedback can be useful, particularly for adjustment purposes.
Examining the Issues
Finding answers to the questions raised here have never been easy for telecommunications firms—and they pose even greater difficulty for the reseller. The resulting issues will depend on and be provoked by those relationships established with the wholesalers. The telephony business has always presented complicated challenges for its practitioners. It is important that timely access to data always be provided, from the time customer contact is initiated through the provisioning process, and during actual call processing, billing and collections. However, a hodgepodge of legacy systems, individual company standards and operating practices, regulatory mandates, confidentiality of customer information and privacy laws presents the greatest challenges and setbacks to attaining timely access to data. System interfaces need to be developed and agreements reached concerning the data to be shared and accessed to wholesaler systems. The complexity of service packages such as bundling, volume discounts, flat rate usage, etc., could make it virtually impossible to reconcile network usage (which represents a major expense to resellers) with customer-billed amounts (which represents the resellers' income source).
Complexity of Service
Reconciliation between network usage and customer billed amounts generally means comparing the number of minutes of usage billed by the wholesaler (representing network usage) and the minutes billed to the end user. However, many service offering include flat rate (unlimited calls) or volume type pricing (a fixed rate for up to a fixed volume of calls, such as $25 for 1,000 minutes of usage) and the end user bill does not contain the amount of actual minutes of usage. In such cases resellers must arrange to record and retain actual specific end user usage to reconcile the network usage charges from their wholesalers.
Reconstructing this information after the fact will be impossible—the necessary data simply will not exist.
Additionally, the very nature of the industry may dictate the routine use of wholesaler systems in the overall process of ordering and providing service, billing and resolving customer inquiries. Systems access and the data contained therein will be a delicate matter to resolve. The identification of data sources, verifiability of the information, frequency/availability of data and cost to obtain information are the major considerations regarding the final determination of these monitored metrics. Tradeoffs will have to be made among these items to arrive at a prudent balance of interests.
Resellers must take steps to assure that wholesalers deliver high quality service to customers. The steps required to institute effective auditing and monitoring of wholesaler performance are:
• Develop a target set of revenue, expense, performance and wholesaler management metrics.
• Categorize bi-level metrics into key performance and operational performance indicators.
• Negotiate a suitable agreement with the wholesaler.
• Identify data sources; negotiate for data and system access with the wholesaler.
• Identify internal data processing requirements.
• Establish and carry out a detailed work plan.
Use these steps to ensure that as resellers you have the greatest opportunity to achieve and maximize profitability.
The resale of other carriers' products and services will become a widespread practice as service providers continue to battle for market share. Complexity will dramatically increase as telecommunications providers develop integrated packages that include competitive carriers' products. Ongoing performance appraisals give resellers valuable information regarding specific activities and service quality. Such reports monitor the progress made toward established goals and identify actions needed to attain critical objectives.
John Tedescoe is Vice President of the Communications Services Division of Trecom Business Systems Inc. As a senior management advisor, John Tedescoe assists LECs, IXCs and Resellers with their planning as they enter other markets and develops auditing and monitoring capabilities of their wholesalers. He can be reached at 201-324-1200.
Auditing and Monitoring the Performance of Wholesalers
Posted in Articles, Network Monitoring, Network Optimization, Performance Monitoring, Data Services, Billing
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