How much do you lose when you underbill a customer? The difference between what you should have billed and what you did bill. How much do you lose when you overbill a customer? That is harder to answer - it depends on how much the error upsets customers and authorities. You can be sure the costs will include handling Customer Service calls and staff time spent issuing credits. It may also involve the cost of writing and sending letters, goodwill credits to make amends, and staff time spent explaining and avoiding further embarrassment with the regulator and press. This can quickly add up. So how much do you lose when you underbill, your Revenue Assurance team corrects, but they over-correct and the customer is overbilled? And how often are RA’s slip-ups (which tend to generate costs for customer-facing functions and may lead to churn) get subtracted from the benefits they calculate for themselves to give a true picture of net benefit added to the business? I could go on… but I know the average RA person does not want to hear about RA making mistakes. RA people often start from a mindset that other people make mistakes, and it is RA’s job to correct them. That can lead to a dangerous inflexibility in thinking, with RA concluding it can never do wrong, and hence blinding itself to its potential to do more harm than good. Rather than argue the abstract, let me demonstrate by sharing a story about recent events in Canada…

For reasons best understood by Canadians and best ignored by the rest of us, Canadian domestic phone users have to pay an extra monthly fee for touch-tone phones. Old customers who still use a phone with a rotary dial are exempt from this fee. Along came Bell Canada’s RA team and they had a thought: they would check if customers provisioned to use touch-tone services were paying the extra fee. If not, the RA team would ensure the touch-tone fee was added. So far, so good. Bell Canada’s RA team found 20,000 customers provisioned for touch-tone and not paying the fee. With the fee worth CAD 2.80 per month, the leakage was… well, not all that much, but still worth about USD 0.6m per year. So they whacked on the extra charges.

Now, bear in mind what kind of customers were likely to get this unexpected extra charge: old people. Old people were likeliest to be a long-running customer who had a rotary handset. Anyone moving in the last 17 years would have been provisioned and charged for a touch-tone phone from the beginning, so only very long-standing customers at the same residence would be likely to still get a bill without the extra touch-tone fee. Here are a few stereotypes about old people: they are easily taken advantage of, they do not understand technology, they are vulnerable, they are poor, they trust big business… surely I do not need to go on.

What if Bell Canada provisioned a touch-tone service for a customer that used a rotary-dial phone? Presumably this possibility did not occur to their RA team. What then if Bell Canada had no record that the customer had ever asked to be provisioned for the touch-tone service? And what if the one customer was old? Well, you can tell what happened. Marrian Trafford, a 79-year old inhabitant of Toronto, Bell Canada customer and user of an old, old rotary-dial phone, asked her son for advice about the extra charge on her November 2009 bill. Her son is the kind of guy who knows who to complain to when telcos screw up, and now Bell Canada must answer a lot of uncomfortable questions about whether they try hard enough to avoid overbilling of customers.

So what is the harm done? Bell Canada can say sorry, credit one old lady and hope nobody else finds out. Right? The problem is, obviously others did find out - or else I would not be writing this. That means that even if Marrian Trafford was the only customer wrongly charged, Bell Canada now suffers reputation damage. Worse than that, any normal person will assume that if Bell Canada can make 20,000 goofs of failing to charge for a service that has been provisioned, they probably goofed more than once when it came to provisioning services that should not have been provisioned. In other words, if Marrian Trafford was overcharged, then the assumption will be that lots of other people were overcharged. Even though you cannot put a dollar value on reputation, it still needs to be thrown into the scales to balance the extra fees that RA have generated. Marrian’s son got in touch with Canadian consumer protection groups, and they got in touch with the Canadian regulator. Look here for what the consumer groups had to say. The main points of what the consumer groups want from Bell Canada are as follows:

… undergo independent audits, to file reports… to revise procedures, and to compensate affected customers…

… all monies collected from subscribers under this fee should be reimbursed or credited to affected customers, with interest…

…The compensation order should be without prejudice to the rights of subscribers to the exercise of any civil remedies that may be available to them…

…The Consumer Groups also submit that as a remedy, the Commission should require Bell to return all affected customers to rotary dial service, unless the customer (not Bell) requests, in writing, to stay on Touch-Tone service. If any customer does so choose to remain on Touch-Tone service, the Commission should order that the reimbursement for those months during which they had Touch-Tone service without requesting it nonetheless be credited, as for customers remaining on rotary dial service…

…The Consumer Groups further submit that as a remedy, the Commission should require Bell to notify all customers in writing who have been unjustly charged for Touch-Tone…

…The Commission should require Bell to file information on the services and customers affected by the “DMS Cleanup” and if any charges were added that were not explicitly requested by the customer, to disallow them, to require Bell to return the customer to the original service and to order credit or reimbursement for all stand alone or rate capped customers in the manner proposed above for added Touch-Tone charges…

…The Consumer Groups submit that Bell should be required to pay their reasonable costs of making this application…

It will be a while before this is concluded, but the Canadian regulator has taken the baton (see here) and run with it. Bell Canada has already responded (see here) saying they were already intending to do a lot of the things the consumer groups asked for. But that only begs a question of why they did not do those things before - and so avoided any damage to their reputation.

What is the outcome here? The main point, which is easy to lose in the sequence of events, is that Bell Canada are going to end up auditing their billing and their provisioning. If they had done the two audits together, then the risk of a public relations fiasco would have been much smaller. Because Bell Canada did the billing audit as a stand-alone exercise, overcharged one bill, and will now do a provisioning audit to sort out the mess, they saved no assurance-related costs whilst putting their reputation at risk. They will also suffer all the costs of dealing with the regulator and communicating with the relevant customers, and might even pay the costs of the consumer protection groups. Any money they took but should not have taken will get paid back, possibly with interest. Bell Canada will likely suffer higher compliance costs in future, because the regulator is likely to remember what happened and point to this incident to justify tougher rules and sanctions when the opportunity arises. And a heck of a lot more people will be checking their bills from Bell Canada and phoning up to complain - even if the bill is perfectly accurate. Answering those Customer Service calls will increase costs for Bell Canada too.

There are two ways to do revenue assurance. The wrong way is to hunt for opportunities to make more money. The right way is to search for things that have gone wrong - irrespective of which side benefits from the error. Look only for errors that reduce bills, and you risk missing the errors that increase them. As shown in this case with Bell Canada, a simplistic approach to RA - just reconcile the bills to a trusted source of data and add charges where the reconciliation suggests you can - is badly flawed if you are trusting unreliable data. When relying on data, and determining how quickly to act, thought must into the wider implications for customer relations if something goes wrong. The signs of poor risk management are painfully evident: Bell Canada’s RA team effectively targeted old people for extra charges and little was done to manage customer expectations. Old people are perceived to be vulnerable and will have the public sympathy. I am not going to blame the people working in RA in Bell Canada, as they probably have only a narrow remit. In other words, they are expected to do revenue assurance in a silo that is primitive and narrow. They did not even know if provisioning was reliable - evidently not, if rotary dial customers get provisioned for touch-tone services and if services are provisioned but no record of the customer’s order is kept. In Bell Canada, the RA team were not expected to consider wider repercussions of their actions, and in all likelihood nobody else in Bell Canada was expected to do so either.

Divorcing revenue assurance from the wider risk context can end up costing the business more money saved by reduced leakages. RA practitioners need to consider the risks as well as the rewards generated by their actions. The myth that revenue assurance can do no harm and only improves the bottom line is as outdated as a phone with a rotary dial.

I was speaking to the new Revenue Assurance manager at a previous employer and was thrilled to hear my friend took over that department. The wellbeing of those team members has been renting space in mind for some time. I emailed an ex-colleague to say thanks for looking out for what remains of this team and was struck by a thought. What exactly was renting space in my mind? The wellbeing of the function I am passionate about or the great many people putting heart and soul into it?

The mind and language philosopher Wittgenstein says language belongs to groups, not to individual or isolated minds. Language reflects communal practices and specifically how those communities use the words in that language. The language also has context and is infused with socio-cultural detail, which further informs the common understanding and adoption of the specific language as practiced.

The term Revenue Assurance has a generic meaning to all who are interested in the subject, yet not specific enough to categorise its components when we reduce the term to a cipher, or a bit, or an atom. A lot of what is going on in blogs, advertorials, vendor white papers and certification efforts are based on pretty much the technical stuff. The how to, or with what cool tool. The sales pitch is about the technology, with added benefits of consulting and on-site support. It assumes that the question is How to do RA?

Is this the question? Does answering this question inform of us of what exactly RA is? I could not help to reflect that for many of us in the RA industry, RA is a logical certainty. One for which we are prepared to fight, motivate and convince. Is the question perhaps Whether to assure revenue? The answer would certainly be yes. Does this require a dedicated team and specialised tools? Ask a commercial bank or car manufacturer and the answer is no.

Is RA perhaps rather a personal relationship? In some of the material I review for the research I find reference to technique to convince the CFO of the merits and benefits of investing in RA. The mere fact that there are executives who do not immediately see the must have of this function and who need a compelling business case to assign funds in this direction rather than that, is cause to revisit the question.

What is the correct RA question to ask to get an answer of 42?

For the second year running Charlie Thomas, CEO of RA firm Razorsight, has been named one of the ‘Smart 100 CEOs’ in the Greater Washington region. The Smart 100 list is compiled by Washington SmartCEO magazine. You can read the press release here.

Razorsight is a revenue assurance and cost management vendor based in Virginia, USA. Thomas joined Razorsight in 2004 and became CEO in 2005. Razorsight announced improved revenue figures for 2009 but the business is best known for the USD 4.5m payout following a 2008 court judgement that Razorsight stole software code from rivals TEOCO.

This is part two of a two-part review. See here for part one.

Carving into the meat of KPMG’s latest RA survey, there were some telling figures on the estimated leakage suffered by telcos. Whilst the report headlined that 54% of telcos estimated that leakage (excluding fraud) was greater than 1%, I found it more interesting to think about the other side of the coin: that 46% said leakage was 1% or less. This implies that the median leakage is close to 1% and that typical claims of ‘average’ leakage are exaggerated. Hopefully this is a sign of progress and increased sophistication with several aspects of RA maturity: measurement, coverage, detection and prevention. With only 15% of telcos estimating their leakage is over 3%, a whopping 85% were claiming leakage to be 3% or less – which should help to put an end to the scare tactic of claiming that 5, 10, 15 or even 20% leakage is the norm. The leakage numbers reported in KPMG’s survey are reminiscent of the findings in the TMF’s benchmark study. The TMF report stated that the average measured leakage, excluding fraud, is 1%. One interesting quirk in KPMG’s report is that it says “leakage estimates by senior management were higher than estimates provided by RA function heads”. What would explain this? RA Heads should be the people with the most data and hence likeliest to be accurate, so after years of brainwashing, have senior executives finally changed from being complacent to being fearful of revenue loss? Might it be that RA heads now underestimating leakage, justifying the perception of year-on-year improvements thanks to their work? Or do senior managers take a broader view of what should be counted as leakage?

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This is part one of a two-part review. See here for part two.

KPMG recently published their 2009 survey of telco revenue assurance departments. You can download the report from here. The report is reasonably balanced and contains messages both good and bad. Even the report’s title, “Progressing or Preserving”, hints that the onward march of RA is far from inevitable. I find this encouraging, as it suggests that a healthy dose of realism has come back into fashion. But with this report, there is more going on underneath the surface that the report writers care to admit. Read on to understand why…

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Many years ago I was contracted to do process re-engineering at a government department. Somewhere during this time I became involved in an ISO certification exercise for this particular department. Not having had much experienced with ISO implementations, I asked the project manager to explain to me in brief terms what ISO quality standards were. He responded with “document what you do and do what you have documented”.

That has pretty much become my motto for Revenue Assurance, and much broader really. This pertains to anything that should be documented. Business rules, business processes, system flows, system rules, you name it. Very often these are not documented which means we all do what we think we should, or are capable of doing given the uncoordinated chaos between systems and departments that is most often the norm.

It becomes difficult to assign and monitor KPI because you are not working from a known and agreed factor. Much like yelloware: firm enough to touch but not solid enough to hold. I have seen many first stabs at KPIs and these are based on gutfeel or general common sense things we should measure. These KPIs were not scientifically determined or based on any maturity index of the department or function’s capability and/or capacity.

I have recently spoken to a number of junior level staff, both in the RA field and other industries and disciplines on the topic of defining KPIs for their business functions (such as procurement and SLA Management) and their individual performance (how are they performance managed against the job’s KPI’s).

I was astounded to find that both the HR people I spoke with (1 was senior) did not see the relevance of the continuous string of interconnection between the organisation structure; to the job role (stating the role objective in context of the strategic and tactical plans); to defining the job outputs (those core responsibilities that would add the execution view to the strategy); to the KPIs to measure and manage the contribution to the organisation. A Balanced Scorecard was some academic thing that resides with the Head of Department and does not filter through to the job description. That means the performance management chain is broken.

I also found that all KPIs discussed with me assumed a process maturity of between 3 and 4. In other words, it assumed the processes involved in producing the output to be measured, or support processes to enable the output, are all in defined and managed mode. I did not find one KPI that was aimed at establishing a capability, as you would assign for a level 1 or 2 maturity. Needless to say, those poor individuals with these sky-high targets did not have the basic doing capability in place let alone the measuring and reporting capability. For some reason organisations assume that building the infrastructure and processes with which to run and grow the business are either in place or relatively easy to just do as part of the overall job.

It was quite alarming to realise how few individuals thought their personal KPIs had any relevance to any measurements that might be in place for specific financial or service related work they may be involved in. This I would put down to not speaking to an individual who had both a set of KPIs used for annual performance management as well as measurable and reportable work tasks, typically the stats you would find in a call centre, help desk or RA. The Customer Service and RA people I spoke with did not have a Balanced Scorecard and those individuals with a BSC don’t work in an environment where objective performance measure are taken.

I have seen this in telco and have tested it now at 2 Banks. Same mindset. There is a disconnection somewhere, a fragmented view on this complex whole we call an organisation. Yet, come financial yearend we are back to drawing up the new BSC because last year’s failed.

Am I seeing a connection where there isn’t one or have I just not seen this implemented anywhere?