Consumer debt and switching growth
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Utilities customers are exercising their right to switch. A report from Ofgem reveals that in 2016, energy customers changed suppliers at the highest rate in six years, switching providers 7.7 million times. The Energy Switch Guarantee is presenting a more favourable climate for change, empowering consumers and increasing choice.
Across the utilities industry the Guarantee looks set to stimulate competition and encourage firms to deliver an improved customer experience. But there is a risk inherent to this fluid movement of consumers across the industry. Consumers may move freely between utilities firms, but information on their debt does not always move with them.
Increasing bad debt levels during uncertain times
We know that consumer debt is a widespread concern across the utilities industry, particularly during times of economic uncertainty. 2016 Figures from PwC unveil a 60 per cent increase in bad debt levels in the energy utility sector and a 44 per cent increase in water utilities bad debt over the last five years.
As Utility Week has pointed out, “In volatile times, customer circumstances may alter in new and difficult to predict ways, making the tough task of identifying nascent debt problems that much harder. For utilities who aspire to proactive debt management, this is a real problem”.
With pressure on organisations to complete consumers’ switches in a shorter period of time, due diligence may be rushed. Customer information may be held in silos in organisations, making it impossible to access. Processes, systems and platforms may not be conducive to information-sharing between parties.
Minimise risk with a data-driven approach
Balancing business risk management with an ethical, supportive customer-first, collaborative approach must surely be the Holy Grail of debt management in utilities. And yet, I think, it’s achievable.
To me, the answer lies in companies adopting a data-driven approach to customer information management. Again, Utility Week observes: “Firms must find ways of improving and increasing customer contacts as well as building better data insights if they want to support a meaningful collections strategy”.
Gaining deep insights into customer data is a wise business strategy whatever your organisation. In an industry under pressure to deliver improved performance and minimising risk while supporting vulnerable customers, it is invaluable.
But drawing together data stored in disparate locations into a clear, accessible, secure and consistent format to garner insight and identify risk is not an easy task.
As utilities firms open themselves up to broader communications channels across mobile, social and smart devices, still more data is generated and captured.
Add to this the volume of data in the industry expected to be generated in the near future – 680 million smart meters installed globally by the end of this year, generating 280 petabytes of data, for example – and the scale of the problem looks insurmountable. However, as CapGemini state, “This Big Data surge is an opportunity for utilities to drive new levels of operational efficiency and transform the customer experience.” And so they are.
Connecting data to provide context
Businesses are joining the dots and identifying patterns within a customer’s data to create a comprehensive Single Customer View, across a high-performance software platform.
This takes disparate, disconnected data sources from across different channels, from different silos, and brings them together to create a clear picture of exactly who companies are doing business with.
Inaccuracies are flagged, errors highlighted and underlying risks exposed. It’s an insightful, intelligent approach to consumer debt management. It helps businesses achieve a 360 view of their customers and drives down risk, whilst offering an improved, personalised and supportive customer experience at the same time.
Pitney Bowes will exhibit at the Utility Week Consumer Debt Conference on the 16 March, in Birmingham.