Customer Transfers (Churn): internal, external, fast, and slow

Summary

Developing a more generalised 'customer transfer' (churn) application can allow billers to perform common processing across different billing systems and multiple networks. By centralising the customer transfer process into one application, billers will reduce the development and support of similar processing across different networks. The centralised mechanism can address the common processing of customer transfer validation, and the order and timing of each transfer step.

As the biller implements new billing systems or networks, the customer transfer application can be extended to each new system / network in turn without the need to address every inter-network and inter-billing system transfer combination.

What is customer transfer / churn?

Many networks support the movement (transfer) of customers' network services between different retail providers whilst retaining service continuity. Customers retain their existing service details, but the retailer (and possibly the network) supporting the service are changed. Examples of networks with customer transfer processing include:

Fixed line phone services
Mobile phone services
Intelligent network phone services (e.g. 1-800 toll free numbers)
ADSL data services
Contestable retail electricity and gas services

Steps common steps to almost all customer transfers are:

Transfer request validation: Are all fields correctly populated? Is the request reasonable given the current status of the network service?
Transfer preparation: Are both the gaining and losing network providers available to perform the transfer?
Execute the Customer Transfer
Notify Interested Parties of Transfer Completion: This list includes both the gaining and losing providers, as well as other industry (e.g. phone) networks that need accurate information to operate

The intention of the customer transfer process is to reduce the 'lock-in' of customers to one network, and allow competing retail providers to access customers without the customers losing their existing 'investment' in their service (e.g. phone number) and / or network infrastructure. Networks where changes are too difficult (manual), costly (document and signage updates) or where customers lose their contact details (investments in advertising) have greater scope to raise their prices and relax service levels safe in the knowledge that customer cannot or will not move.

For example, a customer transferring between phone companies in a country without a transfer process would need to cancel their existing phone service (losing their existing phone number), connect a phone service with their new provider (discovering their new phone number in the process), and then update their stationery, advertising and signage to reflect their new contact details.

A country with a customer transfer process that will allow customers to move their phone services seamlessly to a new retail provider retaining their existing (phone network) contact details. Customers can invest in their phone service (advertising, business cards, letterhead) over the long-term without being held to ransom by their phone provider, or incurring substantial costs if they decide to change providers. Retail providers must compete on service, price, features and scope to retain their existing customer base and win new customers.

Customer transfers are performed between networks / providers

Customer transfers are initiated by customers (rather than billers) with requests usually sent from the gaining network / provider to the losing network / provider. Customer transfers between networks can occur in at least three ways:

Remain with the same retailer but on a different network (an internal change of technology)
Change retailers but remain on the same network (an external change between resellers on a wholesale / resold network)
Change retailers and networks concurrently (an external change between different infrastructure providers)

Depending on how billers have implemented their billing systems, each of these transfer types may generate intra- or inter-billing system updates to reflect the new customer relationships.

Same retailer, different networks - Some billers maintain multiple network technologies within the same provider. A contemporary example of this situation are providers operating two or more mobile phone networks (GSM, CDMA, 3G). Existing customers may move their existing phone service between these networks for reasons of coverage, price, content or features. Whilst the entire transfer process is internal to the biller, the customer's service must retain service continuity and the same phone number whilst it is moved.

A similar version of this transfer can occur when a biller reselling multiple networks modifies both the retail provider (network reseller) and the network technology (e.g. GSM, CDMA. 3G) within the same customer transfer.

In both circumstance, external phone networks need to be told of the service's new location on a different network, even though the network's ownership is the same.

Different retailer, same network - Customer transfers performed on resold (wholesale) networks change services' nominated 'retail' ownership whilst retaining the same network infrastructure. Processing follows the same steps to transfer ownership with the biller retaining the service at its current network location. The retail 'ownership' update of the biller's network can limit the people and organisations allowed to view and update the service in the future.

Different retailer, Different network - This is the most complex customer transfer type because the transfer must address the availability, capabilities and timing of two (or more) providers and their networks. The customer's transfer must be established as legitimate, the losing network/provider must agree to relinquish the network service, and the transfer itself must then be performed. Once the transfer is complete, all external networks must forward future communications and transactions (e.g. phone calls) to the receiving network.

Customer transfers occur internally within billing

Billers can change their customer segmentation generating internal customer transfers within the same billing system and external customer transfers between segment-specific billing systems. These transfers are internal to the biller and often transparent to the customers in question. As a result of being transferred, customers may receive new segment-specific customer inquiry numbers, bill formats and credit management processing.

Internal transfers within a single billing system - Billers often segment their customer database to support differentiated service levels, rate plans and marketing. For example, residential, small business and large corporate customers are often treated very differently. Each biller will use different criteria to segment their customers, and both their customers and their criteria can change over time. For example, the number of segments can change, small businesses can grow to become large corporates (and the other way around!), and businesses can be acquired across segmentation boundaries.

The biller's processing must update the billing database(s) with customers' new segmentation details which may include the movement of historical transaction details where these are stored by customer segment.

External transfers between billing systems - Billers can operate separate, segment-specific billing systems reflecting the processing cost / revenue benefits delivered by different customer profiles. For example, residential customers may be billed using a less complex (i.e. cheaper to operate) billing solution, whilst large corporates with complex rate plans, large billing hierarchies and specific bill presentation needs may use a more powerful (and costly) billing solution.

Transfers between different billing systems must address problems of timing, billing cycle alignment, suppression of final/initial bill processing, mapping between different product definitions, and ensure accurate financial postings are maintained.

Customer transfers occur at different speeds

Across different networks and industries, customer transfers are performed at widely differing speeds. Three 'speeds' that are evident are:

Close to real-time
Within a few days
Aligned with the customer's next bill

Close to real-time - Examples of these customer transfers are those performed between mobile (cell) phone networks. These networks have minimal infrastructure at the customer's connection to the network (e.g. SIM card, mobile handset), and retail stores are common sales channels for new and transferring service connections. Customers expect their customer transfer to be performed quickly so they can use their new phone's features or their new network provider's content services.

In Australia, the Australian Communications Industry Forum's (ACIF) Industry Code 570 'Mobile Number Portability' talks of 'completing 90% of ports [transfers] within 3 standard hours of operation, and 99% of ports [transfers] within 2 business days'. Billers with mobile networks must maintain online and real-time transfer applications to both initiate and receive these customer transfer requests.

Within a few days - In Australia, Telstra's fixed phone network is resold to other retail providers who compete against Telstra's retail business. This process requires Telstra Wholesale support transfers between and amongst Telstra Retail and its resellers. These transfers are performed under the ACIF Industry Code C546 'Customer Transfer' and occur in a timeframe measured in days from request through to completion.

Aligned with the customer's next bill - Some networks, such as electricity retailers, may perform their customer transfers aligned with the customer's next meter reading (and therefore, their next bill). This can delay completion of a customer's transfer by months. The scheduled meter reading acts as the final meter reading for the losing retailer, and the initial meter reading for the gaining retailer. An example of such processing is provided by electricity retailers in Victoria (Australia) who operate under the 'Electricity Customer Transfer Code' regulated by Victoria's Essential Service Commission.

Billing and other processes must be updated

When customers are transferred, related systems must be updated along with the networks. Where a transfer is between separate retail networks, the relinquishing network must ensure final billing processing is initiated, and the gaining network must establish each new service within billing and ensure the fraud process is made aware of the new service.

The speed with which a service is transferred influences how promptly this processing must be initiated. An electricity retailer may have latitude to establish a new service (meter) fully within a few days since the next meter reading will not be performed for a period of months. In contrast, a mobile phone network must enable its new services within minutes or hours to monitor for new customers who may initiate fraudulent activities.

Tags: Billing, Customer Transfer, Industry Codes, Segmentation