Recent regulatory changes have brought billing accuracy into stark focus for energy retailers and transported it into the consciousness of the consumer through national press coverage. From May 2018 new license conditions replace existing voluntary arrangements and oblige all suppliers to write off unbilled consumption that is over 12 months old unless it can be clearly demonstrated that the customer is at fault.
For large suppliers, annual write off amounts can total millions of pounds and be a major contributor to poor Profit and Loss performance. Sending corrective bills (which are on average £1,160 and in extreme cases can exceed £10,0001) inevitably leads to customer dissatisfaction and drives inbound calls and complaints, increasing operational costs. The challenge is also applicable to Smart customers with Citizens Advice findings showing that around 3% of smart meter users had gone more than six months without an accurate bill2. It is imperative that suppliers understand and address billing problems proactively in order to limit both financial and customer impacts.
This final blog in a three part series on Billing and Collection optimisation, examines how, through the effective and innovative use of data and Data Science techniques, suppliers can more proactively manage their customer base and improve the billing experience.
Introducing Data Science
Data Science is an evidence-driven approach used to extract knowledge and actionable insights from data. It requires specialist technical expertise, infrastructure that enables disparate data sources to be combined in a compliant manner and hardware capable of running analytics on vast data sets.
Moving from reactive to proactive issue identification
Using Data Science techniques, accounts with billing issues can be identified proactively and far sooner than via traditional exceptions-led identification. By leveraging data from across the IT estate (often spanning multiple internal systems and totalling millions of records) sophisticated analytics can uncover the true root causes of billing issues, accurately pinpoint problem accounts and provide an end to end view of account ‘health’. This approach enables the earliest possible intervention and in some cases allows for corrective action to be taken before a data integrity issue has translated into a billing problem, which is key for safeguarding the customer experience.
Improving the resolution process and stemming the inflow
Data also plays a vital role in billing issue resolution. Fix processes are made more efficient as data insight enables issues to be diagnosed more precisely, reducing effort by up to one-third. This same insight is also invaluable input to support the business in developing measures to address upstream root causes and prevent further inflow of impacted accounts.
Reducing calls and complaints through effective tailoring of customer treatments
Research commissioned by the Ombudsman Services3 found that Energy is one of the most complained about sectors, whilst suppliers’ own submissions to Ofgem show that ‘billing issues’ are a key driver of those complaints4. Data analytics can provide additional insight to target those customers likely to be most affected by billing process issues and support a tailored engagement strategy.
Billing accuracy is a subject which has the attention of the regulator, the press and consumers, and issues have potentially material financial and reputational impacts for suppliers. By effectively leveraging Data Science techniques, suppliers can achieve a step change in overall billing accuracy and in doing so significantly improve a core service provided to customers.
Ofgem Complaints Data