Note 1: Billing as a primary 'Customer Contact' point

Posted: 27 August 2005

Billing as a primary customer contact point

In today's business environment with its focus on cost-effective customer contacts, there is a movement away from person-to-person communication and towards arms-length electronic processing. This means that there are fewer customer touchpoints aside from when (say) a new service is connected for a telecommunications company, the utilities are connected when moving into a new house, or there is a problem with the biller's services. This reduction of 'customer contact' between the network biller and its customers puts pressure on the primary point of contact - the bill.

Naturally this reduction is most applicable in the consumer mass market where customers number in the thousands or millions. Corporate customers are generally managed with a closer relationship since their needs are usually more complex, and their bills are generally worth more!

Thus, the bill a customer receives needs to perform many functions. These can include clearly articulating how the amount payable was arrived at (a core requirement not always achieved), highlighting details of future billing changes (e.g. price rises or specials), possibly marketing new offers to customers and, most importantly, informing them as to how they can pay their bill.

If the bill performs these services well, the customer is more likely to be positive about the biller's network and its services and feel less need to call the biller's customer service staff with questions, complaints or disputes (or change service providers). Importantly, the bill is more likely to be paid promptly.

Billing Systems that are 'Fit for Purpose'

Not all billers require the same sophistication to operate their business. Billers require systems that both meet present requirements, and are adaptable to future (perhaps unknown) needs. Some of the questions billers may ask themselves when thinking about their billing systems' 'fitness' can include:

What is the complexity of my billing? - If a business is primarily based on monthly recurring charges, its billing needs are less complex than those of a business having high-volume daily transactions with tailored rates for different customer segments.

What is the cost of the billing systems? - Cost includes the purchase price of new systems, and the operational costs of existing and possible new environments. The system, business and human costs of any transition from an old to a new environment must be taken into account. Depending on the required complexity, the cost of a network operator's billing can be material to its 'cost of doing business'.

What is the cost of modifying the billing system? - New features and transaction sets are often developed to enhance the biller's market offerings. What are the system development or configuration costs required to deploy new transactions and interfaces?

How does the billing systems process information? - This involves the speed and latency with which events and business updates are reflected into and through the billing systems. This processing speed impacts the functionality provided to a customer, and the speed with which network access and events can be converted into money.

How quickly can bills be modified to reflect new market offerings? - A biller needs to be able to develop and bring new offerings to market quickly (lead time) and to anticipate or address a competitor's offerings (responsiveness). Their bills must reflect these changes.

Are the billing systems transparent? - Billing is not performed in isolation. The biller's management and outside parties (e.g. regulators) often require access to billing information in a timely manner. Is the required information available in the required format within the required timeframe ?

These questions highlight the many different and inter-related tradeoffs in billing between 'complexity' (with its benefits of adaptability), and the 'cost' of providing and supporting that complexity. The billing solution a biller selects must align with the functions to be performed today, provide suitable adaptability for the future (as the biller's vision sees it) and operate within the biller's available funding envelope (for development and ongoing support).

Transaction and customer volumes are a factor here, since increased size generates more complex product combinations, system scaling issues and exaggerates the impact of any billing problem or defect.

Once a biller has chosen a set of tradeoffs, she can move them over time as her network, operating environment and competitors (if any) change around him. Yesterday's solutions may be inadequate today and obsolete tomorrow. But decisions must be made, and wise decisions will confer a competitive advantage, or at least lowered costs to a network.

The Billing Process

Once the network business has defined who its customers are, the services it is willing to provide to those customers, it needs systems to charge those same customers for the services rendered. The collection of the resulting charges and subsequent request for payment is what billing is all about.

Viewed as an end-to-end process, billing:

Captures the billable events, i.e. the details of access and services provided
Calculates specific charges against the billable events
Aggregates the charges for a 'customer'
Deducts charges against a pre-paid balance, or asks for payment
Determines the ongoing entitlement to network access

Captures billable events - This is the touchpoint between the network and the billing process. The richness, timeliness and accuracy of the data captured here drives the subsequent billing processes. Billable events can include charges for access as well as for the actual consumption or use of the biller's network.

Calculates specific charges - Once the billable events have been captured, a financial value must be placed against them. The precise value can depend on the customer's details (e.g. business, residential), special features of the event (e.g. a 'reverse charge' phone call), captured event details (e.g. call duration, call destination, quantity of electricity, megabytes downloaded) - in short, all the information available about the specific customer, her demographic segment's characteristics, and any special and standard pricing arrangements.

Aggregates the charges - After charges have been given a financial value, they are periodically collected and formed into a bill. The bill may allow discounts on aggregate totals and taxes applicable to the nett charge. If charges are prepaid, the customer's balance may be reduced by the charge's total.

Seeks payment - The (post-paid) bill, representing the consolidated, discounted and taxed charges, is sent to the customer for payment using the biller's approved methods.

Determines the ongoing entitlement to network access - A prepaid customer may have her access to the network terminated when the prepaid balance is consumed or her balance may be recharged via (say) a credit card to enable continuing access. For postpaid customers, if the requested payment is not made, ongoing access may be denied or financial penalties applied.

Tags: Billing