Do you know why? Because their customers will change supplier despite the unlikelihood to change their football team even when it loses against the last one in the championship. Nevertheless a lot of the energy customers can handle to be hammered from their suppliers.
To explain my point I will tell you the true story of a businessman whose monthly gas bill was always less than $300. When he once suddenly received a bill for over $27,000, he assumed that this was an error, and as a good customer of his gas supplier it would be swiftly resolved.
Yet, the gas company continued to send the businessman extortionate bills, either as a result of trusting their own billing mechanisms or an attempt to test the customer’s patience and loyalty, with one bill for $28,872.92, another for $41,938.97, and another for $43,963.42. Although the businessman continued to complain, the gas supplier responded by sending him another increased bill, this time for $55,107.813.63. Incredibly, he then received even more bills on top of the previous ones he’d received - ones for $64,861.39, $66,621.15 and $78,851.58. Finally, a bill for an unbelievable amount of $87,716.99 was issued by the supplier. Regrettably for this customer, because he’d previously set up a direct debit, the $87,716.99 was automatically withdrawn from his account, leaving him overdrawn by a small fortune. Can you imagine? The guy really paid that bill.
Unfortunately this is not an isolated case, and if you look on the internet you can easily find a lot of similar billing complaints, where previously set-up direct debit agreements have meant that by the time the error is spotted, the money has already left the person’s account.
With the growing rise of automated data validation technology, it’s important to question why utility companies haven’t already started to deploy monitoring mechanisms that can easily analyse large volumes of changing data, regardless of the underlying systems being used, such as legacy systems, core billing systems or recent enterprise resource planning (ERP) implementations.
These days many customers will not investigate the reasons for these kind of mistakes; they will instead complain to the competent authorities and ultimately, after giving bad reviews, switch their energy supplier.
Only a few years ago, utility companies didn’t have to worry much about customer loyalty because their customers had little or no choice in their supplier. However, current market liberalisation trends have changed all that. Consumers can now switch from one utility company to another in many countries in the world, meaning that energy suppliers now need to pay more attention to customer loyalty. In fact, customer loyalty has become critical for utilities at a time when margins are under pressure, and customer acquisition costs and churn rates are rising. In the Netherlands for example, the cost of acquiring a new customer rose from €108 in 2008 to €135 in 2011.
- If the customer has complained several times why this information wasn’t used to improve the business operations or to improve the billing accuracy?
- If there was an issue reported why wasn’t the identification of the root cause used to improve the process itself?
Like telecom companies that have cemented their path in Revenue Assurance (RA) and Fraud Management (FM) methodologies, utility companies are now also starting to actively adopt similar RA and FM solutions in order to reduce the effects of inaccurate billing. The implementation of billing accuracy mechanisms will provide energy suppliers with the opportunity to build a stable process for assuring revenue, by building controls into the process before going live. This “make it right the first time” approach can save millions in customer goodwill write-offs, system reconfigurations and accounting or audit adjustments.
Nevertheless, whether energy companies decide to implement these kinds of automated auditing mechanisms for billing accuracy or not, it’s unlikely that we’ll see consumers wearing their energy supplier’s team colours to show their support, like they might do for their football team. Yet one thing we can be certain of is that they will change their supplier if the monthly bill is not what they expect.
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