Analysts: Down on utilities. Is the party over? That’s the tough question posed in a research note by Wachovia equity research analyst Samuel Brothwell.
The Customer as Strategic Asset
in organizational values. Additionally, business processes that are trapped in silos in disparate functional organizations prevent the utility from:
Gaining real-time access to accurate customer data; Integrating customer service and billing records that drive CLV calculations; Accurately accounting the total value of each relationship; Effectively managing customer functions in an integrated way; and Exploiting the future business it could do with each customer.
Business Process Outsourcing as Customer Asset Enabler
To address customers as a strategic asset beyond the commodity service, some utilities are collaborating with skilled billing and customer-care outsourcers to streamline and automate business processes that affect customer satisfaction-hence customer asset value.
UtiliPoint International's recently completed survey of outsourcing in 305 utilities in North America notes, "Originally using financial gains to justify outsourcing, utilities are increasingly stating business process improvement as a key factor in outsourcing a portion or all of a certain business process."
Utilities benefit from service companies that go beyond passive outsourcing to improve business processes. Through their expertise with customer-facing processes across the utility's entire revenue cycle, business process service providers have experienced the upstream and downstream effects of automating business processes.
They recognize that high-billing exceptions affect statement accuracy, which then drives up call-center activity that then results in late payments. By having access to the entire revenue cycle, versus isolated functions, business-process providers can streamline and automate these interconnected processes in an integrated manner.
These process improvements allow the utility to capture a lower cost of operation and higher internal efficiency. However, from a customer asset perspective, the utility has driven up customer satisfaction by reducing errors, decreasing cycle time, and increasing staff effiencies.
Engaging Customer 'Touch Points'
Every second of every day, utilities touch hundreds of customers. When customers are treated as an asset, every "touch point" presents an opportunity to know the customer better, to improve satisfaction through accurate and convenient transaction handling, and to increase profitability through cross-selling, up-selling, and programs tailored to their commodity needs.
By leveraging those specific BPO providers whose expertise lies in optimizing customer touch points, utilities are able to use their customer data more effectively due to real-time access, integrated transaction systems, and data analytics that provide business intelligence.
Meanwhile, many utilities recognize that the rate-case-driven, guaranteed-return financial model ended with the advent of the 21st century. New technologies, new economics, new investment players, and customers that are more demanding have changed the rules.
In the next few years, utilities that couple deep knowledge of customer lifetime value with high customer-satisfaction rankings and increased profitability will become the new powerhouses. Like their commercial counterparts who are rewarded with Wall Street confidence for high return on customer assets, these utilities will be seen as better positioned to exploit future opportunities.
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