Margin per Attempt (MPA) ...The Next Big KPI
It's baseball playoff season and we thought, in the spirit of baseball, it would be interesting to take a “sabermetric” like approach to our world of inter-carrier voice. In our world, we don’t use stats or KPIs like Batting Average, OPS, ERA or Slugging percentage. No, in our world of inter-carrier voice, we use stats such as:
ALOC, ASR, ABR, ARPM, AMPM, ACPM, and PDD to assess performance. All of these are reliable metrics that help provide information about the general performance of a carrier's inter-carrier voice performance. They are easy to measure, calculate and compare over time.
At GCS, we have been noodling around what other KPIs we could be using because we think that there is some interesting information that is available. Information that might be even more informative about the overall business performance and, may, point to areas of action for a carrier.
Just like in baseball, the use of “Sabermetrics” has provided all the players, managers, coaches and GMs important information to be used in evaluating player performance (Think WAR) So, too do we think there is a need for an inter-carrier voice version of Sabermetrics.
So, what is our first new metric that we think carriers should use?
MPA — Margin per Attempt
See, we view a network’s results as a simple equation based on the inputs. Nothing earth shattering here, but we think it's an often overlooked component. Erlang may have provided us the formula to calculate capacity to handle projected “arrivals” of calls, but he didn’t care about turning that into the all important business metric, “Margin”.
We think Margin Per Attempt (MPA) has the chance to become as important as AMPM, ACPM and ARPM. Ultimately, we are talking about network yield which we define as:
(the minutes delivered by the network) ÷ (the call attempts requested to the network)
If carriers started measuring network yield we think it would allow them to focus not only on the termination side of the network, but also on the origination side. Our perspective is that the origination side is as important as the termination side.
But in most inter-carrier voice operations it gets very little attention or focus. But maybe, if carriers spent a portion of the time focusing on the origination or input side of their network, they could find opportunities to improve their performance.
Like that old adage, “ You get out what you put in!”
So…what are we talking about?
Here’s some data from one of our customers over a recent 3 month period:
It’s interesting that their Best Margin per attempt month was Month 2 which correlates with their lowest Monthly attempt volume.
So, even though they had an 18% increase in attempt volume in Month 3 over Month 2, the comparable margin increase for that period was only 8%. Knowing this, maybe they can look at the origination mix and make smarter pricing and routing decisions to improve their MPA, which improves the overall network yield.
We think it is interesting…what about you? What other metrics are you tracking?