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Overcoming over-servicing to turn negative cash flow positive

When Third Horizon set to work to help a newly merged service provider turn negative cash flow into a positive business outcome, it found ways to improve earnings by almost $20 million in just six months.

Background
A telecommunication service provider‘s Australian Business Segment (ABS) had negative EBITDA and subsequently negative cash flow. Management believed some customer segments were being over-serviced and the sales force continued to sign low value customers.

The acquisition of another major organisation gave management an opportunity to transform the combined organisation by rationalisation of support costs and improve the overall sales capability.

Our Role
We reviewed Service Assurance core process performance metric to identify the major gaps in the level of performance, and identified a set of initiatives, which enabled simultaneous improvements in cost and time. These included:

  • The implementation of a 'Network Based Strategy' by focusing the sales force on the sale of AAPT network solutions, rather than selling repackaged solutions
  • The use of contracted contribution as the primary measure of customer profitability, re-defining segmentation to focus on the most profitable customers
  • The realigning of the sales and service model, removing low value add tasks from the sales force
  • The development of new sales targets, filters and rules aligning sales activity with profitable growth
  • The restructuring of management to a territory based management structure and the rationalisation of support costs through utilising shared services.

Results
The Sales and Segment Review determined that an improvement of $19.5 million could be achieved in 6 months. Third Horizon was subsequently engaged to implement and project-manage the recommendations of the review.

Additional information