article

Resale Channel: Stop Gold from Turning to Straw

Posted: 06/1999

Stop Gold from Turning to Straw
By Eileen M. McGervey

You’ve sold the accounts and signed up the customers. Watch the money roll in. But
wait, it’s not as much as you thought. Maybe next month? It’s still not there.

Sometimes it’s not the sale, it’s the post-sale. So before you start blaming the
customer, your order-entry people, your underlying provider, the local exchange carrier
(LEC) or just about anyone you can think of, ask yourself if you know:

  • What percent of your orders end up confirmed on the first submission?
  • What percent are initially rejected for a presubscribed interexchange carrier (PIC)
    freeze? How many do you fix and how quickly?
  • What percent of your orders are in a reject status?
  • Does your confirmation percent or interval vary between regional Bell operating
    companies (RBOCs), independent telephone operating companies (ITOCs) and competitive LECs
    (CLECs)?
  • How many of your confirmed orders do not have any traffic?

If you already know the answers to these questions and are satisfied with the numbers,
that’s great and read no further. But for some resellers, it’s not unusual for 30 percent
to 50 percent of their orders to never be confirmed. To put this in perspective,
assume you add $10,000 each month in new revenue. If your current confirmation percentage
is 60 percent and you increase that to 70 percent, you’d receive almost $80,000 more in
annual revenue, an increase of more than 15 percent over a one-year period.

So what can you do to turn more orders into paying customers? First, you’ve got to know
the numbers. Second, take appropriate action to make sure they’re moving in the right
direction.

Following are different areas to target in boosting those revenue numbers, including
tips on what you should be looking for and asking about.

Know the Numbers

Knowing the numbers is a basic requirement. Look at your internal reports. What kind of
visibility do you have to order and billing status throughout the process? How current is
the data? How accurate is the data?

Next, do you reconcile your internal order reports with those provided by your
underlying carrier? How often? Make sure the underlying carrier sees what you see. This
keeps the carrier honest and helps you keep your own operation honest as well. Regularly
reviewing and reconciling these reports catches problems before they become big. Sometimes
there may be a real problem, but sometimes it may be a miscommunication on who does what.
It also makes sure your underlying provider stays focused on your business and knows what
is important to you.

Understand Confirmation Intervals and Percentages

Every day you should look at orders received, orders submitted to the carrier and
responses back from the carrier. If you haven’t already, establish benchmarks for how long
it takes orders to get to the carrier, how long until you hear back from them, how long
until they are confirmed by the telco and how long until the first billing call data
records (CDRs) are received. Exceptions to these benchmarks should be monitored and
investigated.

You should know the confirmation intervals and confirmation percentages for each
RBOC, CLEC and ITOC with which you do significant business. Differences can vary widely,
impacting your projected cash flow.

Do you know what type of provisioning arrangements your underlying carrier has with
each LEC? Are they online, direct into their systems, or does the carrier transmit
electronic files? Do you know how often files are sent and how frequently the carrier
receives information back from the telco? Does it ever fax orders to the telco? This is
not always as bad as it might sound because in some instances, faxed orders may have a
shorter interval. But that should be the exception, not the rule. If you identify problems
with certain LECs that cannot be resolved, you may want to modify your target sales areas
or factor that impact into your revenue projections.

Work PIC Freezes

The PIC freeze is an issue that continues to grow and can wreak havoc with confirmation
percentages. Quick turnaround is critical to resolve these while the sale is still fresh
in your customer’s mind.

To make it as painless as possible, establish a process, such as:

  • Identify who will follow up on PIC freezes;
  • Establish a set time to "blitz" these rejects on a weekly or more frequent
    basis;
  • Prepare a list of LEC contact phone numbers;
  • Gather any necessary forms that may need to be submitted to the LEC in support of a
    request; and
  • Develop a script for your reps to use when contacting these customers and/or the LEC.

Look at this as an opportunity to reaffirm a customer’s buying decision by proactively
contacting them quickly and professionally to get their service with you up and going.

Investigate Rejected Orders

First and most important–work your rejects. Do you know:

  • How long it takes to hear back from your underlying provider on rejected orders?
  • Which rejects the provider works vs. ones that you should be working?
  • Your underlying provider’s interval for correcting its rejects? How about your interval
    for correcting your rejects?
  • How many orders initially rejected are fixed and translated into confirmed orders by
    your underlying provider? By you?

Similar to PIC freezes, rejects must be worked quickly. Again, it’s helpful to have a
specific team that focuses on resolving these as their top priority. While they may work
on other projects, these come first. You should have a benchmark of what is considered an
"acceptable" level of rejects and manage to that target.

Also, establishing targets and goals on preventing rejects as well as speed in
correcting them will help keep your team focused on this missing revenue. Translate the
rejected orders into lost revenue so it’s crystal clear that you’re talking about money
here. Look for patterns on your rejected orders–type of rejects, who sold them, who did
the order entry, particular service type, particular LEC–as another way to minimize the
problem by attacking it at its source.

Follow Up on Confirmed but No Traffic

Follow up on automatic number identifications (ANIs) that don’t show traffic within the
first 20 to 30 days. These customers may have reverted back to their previous carrier or
been slammed by another provider. Winback programs by competitors can result in orders
you’ve successfully provisioned producing little or no revenue because of a swift
switchback. Don’t count on being notified by the LEC or your underlying provider that this
has happened. Proactively monitor minute activity on toll-free, 1+ and other services and
follow up as needed.

Check That Address

If you send out confirmation or welcome letters (or even invoices) to your new
customers and any come back as undeliverable mail, or if the post office sends you a
change-of-address card, take action. For address changes, get those into your system (and
your billing company’s) as quickly as possible to prevent any delays or problems in
invoice delivery.

If the address is undeliverable, invoicing the customer will be impossible, which
should raise an immediate red flag. Since mail usually is forwarded for several months and
this is a new order, the address should be current. The problem can be as simple as a
mistake in order entry or sloppiness in writing up the order, or it could be an indicator
of a potential fraud situation. Either way you want to get this resolved immediately. It
doesn’t matter how many minutes someone uses if you can’t bill and collect. Again, if this
is a significant problem, track it back to its source–sales rep, order entry or file
problem.

One Last Note

Your priority is to get orders up and billing as quickly as possible. Your cash flow
depends upon it and so does your reputation with your customers. This is their first
impression of doing business with you. The amount of time it takes for you to provision
their order and send them their first invoice is an indicator of your efficiency and
thoroughness as well as the soundness
of their selection. According to Jay Conrad Levinson, "guerrilla market-ing"
expert, the "moment of maximum satisfaction" for a purchase lasts for 30 days.
You want to use that period to reaffirm your customer’s decision to go with you and make
sure any potential issues with their order and invoicing are resolved before that glow
wears off.

It is astounding the amount of revenue left on the table after the initial sale is
made. You’ve already done the hard part–make sure it pays off.

Carrier Beware

Underlying carriers should take note of a reseller
that has rejected orders piling up and doesn’t seem to care. Some resellers go for
quantity at the expense of quality and that can end up to be the carrier’s problem. While
initially a reseller looks like a great customer because the order and minute activity
looks great, very soon the calls will start. And they won’t be happy calls. An underlying
carrier may end up in the middle of disputes between the reseller’s end users and the
reseller. And in different states, responsibility is being placed on the underlying
carrier for actions undertaken by their reseller customers. As regulatory attention on
slamming continues to increase, it is imperative that you demonstrate your best efforts to
monitor suspect activity.

Eileen McGervey is a 13-year veteran of the long distance industry, serving in
positions with Sprint Corp., LDDS/WorldCom and Cable & Wireless Inc. At the time of
this writing, she was a consultant doing business as emc2, Falls Church, Va. She has since
been named director of marketing with Telsave.com, New Hope, Pa. She can be reached at emcgervey@erols.com.


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