Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
Issue link: https://fhpublishing.uberflip.com/i/324177
utILItY WeeK | 6th - 12th June 2014 | 27 Customers Rising levels of unemployment and economic uncertainty are restricting consumer spending and leading to debt defaults. In addition, some unscrupulous consumers exploit loopholes in utilities' business processes to default on their payments. Utilities can efficiently man- age their debt portfolios and minimize bad debt write-offs with a three-pronged revenue protection framework. Predictive analytics, targeted collections strategies and enhanced customer experience interventions form the core of this framework. The first level of this framework focuses on segment- ing customers by forecasting customer risk behaviour, using predictive analytical models. The models are based on cus- tomer profile parameters such as demographics, meter set- tings, usage patterns, payment history, complaints, and credit rating data from credit bureaus. Insights generated from analytical modelling can help utilities prioritize accounts for collections, based on their revenue risk quotient. For instance, utilities can create a collections prioritization matrix based on the risk score and outstanding debt value, to decide on the next steps in the collections strategy. The second level focuses on an efficient customer segment collections strategy to improve collections performance and reduce cost-to-collect. Almost all utility companies use the services of Debt Collection Agencies (DCAs) at different stages of customer delinquency. DCA commissions are as high as 50 per cent in late-stage debt collection. Therefore, placing all debt accounts with DCAs is not recommended. Low risk and high outstanding debt customer accounts should be prioritized for in-house collection, while high risk customer accounts – requiring greater collection efforts –should be placed with DCAs for cost efficiency. Despite the pressing need to recover dues from default- ing customers, utility providers need to be mindful of customer satisfaction and experience. Aer all, customer satisfac- tion is a prerequisite to sustain momentum in debt recovery. The third and final level of the framework focuses on enhanced customer experience interventions, ranging from understanding the customer's ability to pay, identifying vul- nerable customers, recommend- ing suitable repayment options, adhering to consumer protec- tion regulation to advising customers in financial distress. Optimizing the debt collec- tion process shows significant positive results within a short period of implementing a pilot with the three-point framework. Efficient customer debt manage- ment methods implemented by WNS have resulted in increases in collection rates of as much as 50 per cent and reductions in cost-to-collect by more than 20 per cent. What's more, the pay-off is much higher than the investment and sustainable in the long run. Chris Lloyd, Senior Vice President, Sales – Utilities, UK, WNS Global Services eXPert VIeW Chris LLoyd, senior ViCe President, saLes – UtiLities, UK, Wns GLobaL serViCes Get a handle on debt default Consumer debt default is a harsh reality for utilities living through tough economic times, but implementing the right mix of technology, analytics and processes can significantly reduce the amount of bad debt write-off. Market view Digital advantage Making their lives easier is something customers value, says Peter Veash. E nergy providers have been at the receiving end of much vilification. The number of complaints about suppliers surged by 224 per cent in the first three months of 2014, according to the sector's ombudsman. Cost is a significant driver of such sentiment, but another factor is transparency and communication. We recently commissioned research into this discon- nect between customer needs and energy companies' current services. It revealed that 68 per cent of customers are fed up with inefficient traditional customer service channels, particularly phone calls, and would prefer to communicate through mobile apps or online. If offered digital tools to help service their accounts and save time and money, over half of people would consider switching provider. The digital tools in question include easy-to-read bills and speedy response to enquir- ies via email and mobile channels. This compared with just 18 per cent who would switch if offered fixed rate tar- iffs, indicating that convenience is a stronger pull than once thought. Mobile was the preferred digital communication channel, with 25 per cent of customers wanting to inter- act via a mobile app, and 33 per cent choosing a mobile app as their preferred method of submitting energy read- ings. Our report only reiterates the need for providers to put digital at the heart of their organisations. The need for more seamless communication is clear, but how can energy brands look to integrate digital into their current operations and which platforms work best? Our research shows that online remains a key channel for energy brands to interact with customers and 80 per cent of respondents chose this as the preferred channel of communication. This reiterates the importance of an energy brand's website to display the most up-to-date and relevant information, as well as featuring the neces- sary tools to make managing energy bills simple. When incorporating digital tools into the business, energy brands also need to consider different groups of consumers and their varying needs. Every homeowner or renter has to use an energy supplier, but their require- ments differ depending on lifestyle and this can influ- ence their choice of provider. For example, our research showed that consumers under the age of 34 are more likely to want their energy provider to offer a mobile app and interact over social media. Energy brands need to think beyond one channel and think multichannel when looking to improve their digital offering to cater for a variety of customer needs. Peter Veash, chief executive, The BIO Agency