Incentives Matter – Case Study

  • incentives matter

Every day we here at Telco Bill Cutters are confronted by examples of why incentives matter and why having the right incentive structure is the key to happy clients. Recently a new client in Brisbane came on board and we found significant savings applying our advisory software solution to their phone bill.

incentives matter

We were confronted by an extremely neglected account that for over 8 years had never been properly assessed by their provider (Telstra) and so there was a lot of work to be done! We found that they had 3 internet connections, of which only 2 were actually being used. Of the 2 connections that were being used, they were being used incorrectly. Basically, one of their plans was 50GB and the other 500GB and both had different functions within the business. The 50GB was used for the server connections and day to day usage in their office, the 500GB internet was used in their function room for streaming the odd skype call.

Essentially what had happened was 8 years ago when Telstra set up the plans, they were mixed up and the larger plan was used for the small job instead of being set up for the server. What that resulted in was 8 years of constant excess charges and on average over the last year, $500 excess per month.

Now the responsibility is not solely the providers, the IT company who set the plans up definitely did it wrong and the office management of the business should have alerted the charges but unfortunately this comes with poor phone bill management and the fear Australian business owners have with changing anything as it often leads to more problems and higher phone bills.

Now why the title ‘Incentives matter’?

Well, this particular account is what is deemed in the industry as a ‘corporate assigned account’. In normal language, that’s an account that spends enough money per month to be deemed important enough to be assigned to a Telstra employee instead of being dealt with by the privately owned, hungry wolf pack dealers. Being a corporate account and having a higher level account manager is supposed to come with certain perks. One of these perks is that the account executives have a CRM software that actually alerts them every single month when one of their assigned accounts has started to exceed their usage. Yes that’s right, for 8 years this businesses Telstra account managers have been alerted every single month about the excess data charges.

Either this is unbelievable negligence or… something else is happening. Telstra employees of these corporate accounts have certain targets, one of these targets being monthly revenues of their clients. Telstra actually gives incentives to their employees to keep increasing or at least maintaining their customer’s phone bills. What that means is this account has had this completely obvious mistake ignored for almost a decade because the ‘account managers’ were incentivised to actually do nothing.

Telstra could solve this incredibly malicious incentive structure by simply stopping this without being too liberal on the issue (as every business needs to make money). If Telstra simply takes out excess usage (which means plans that do not suit their usage) from the monthly revenue total it would incentivise their employees to actually help their customers instead of ignoring them for commission cheques.

Businesses have to make money, no one is denying that but is letting your customers exceed their plans on purpose legitimate business practice? We here at Telco Bill Cutters don’t think so which is why our management structure actually incentivises us to make sure no excess charges ever appear on the bills and if they do, we don’t get paid.. it’s only fair right? Incentives matter, if the incentive structure is skewed too far either way, everyone loses.

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