Business Tools Blog

Let’s start with who measures churn?  Answer: The stakeholders:

• CRM,  Sales and Marketing
• Service Delivery
•  Billing/Revenue Assurance

Zayo uses a methodology that I describe as Balancing the Checkbook to measure net installs (net installs = gross installs less churn).

Step 1 –

The CRM, Sales and Marketing organizations gather information from customers about potential churn before orders come in.  They share this information with management and the team responsible for forecasting.  They also record reasons for churn when the orders are placed.  Reasons like, the Customer is …

• moving or going out of business
• building their own network
• a third party provider and their customer disconnected
• upgrading/downgrading service with Zayo
•  renegotiating price and/or term
• leaving Zayo for another carrier (this requires more explanation)

Step 2 –

The Service Delivery group manages disconnect orders.

• Manage the churn pipeline (all pending disconnect, move and re-rate orders)
• Ensure compliance with original contract
• Process order, update databases and redeploy equipment
• Report the churn pipeline and the dollar value of completed churn orders on a weekly basis
• Communicate to Billing, CRM, Sales and Marketing if there are termination penalties in the contract

Step 3 -

Like balancing the checkbook, Billing/Revenue Assurance verifies the financial statement revenue impact of churn each month.  Rather than getting a statement from the bank, we get a statement from our billing system.

• At 12:01 am on the first day of the business month, Billing/Revenue Assurance pulls an inventory of all BMRR (Billable Monthly Recurring Revenue) services.
• We compare this data to the report that we pulled at 12:01 am on the first business day of the prior month. 
• Any service where the BMRR decreased is reported as churn.  (In a later post, I will show you the tools we use to track and report this data)
• We identify why the changes happened (Disconnect, Re-rate, Discount, or Other)

Step 4 -

If the reports from Step 2 and Step 3 don’t match, we identify the discrepancy and apply a process fix to correct.  We report the correct churn value for the month.

Examples of discrepancies that we’ve found over the years include:

• The billing system and order system have different values for the same service
• Changes or fixes were happening in the billing system, without going through the order process
• The billing system was being updated on a different date than the order system
• Orders were missed or keyed incorrectly in a swivel chair environment (process where orders are re-keyed between service delivery and billing)