Customer service is becoming an increasingly important leverage tool in today's competitive business world. With so many options to choose from, customers can easily switch their allegiance to a new company if their needs are not being sufficiently met. This situation is relatively new to the utilities industry, however, as legacy utility companies have operated competition-free for decades. The newer market entrants understand the importance and value of customer retention and have molded their business objectives around keeping their customers -- and winning new ones -- by providing quality customer service. For the larger, more established utility companies this has been a more difficult concept to embrace, begging the question: Why isn't every reasonable effort being made to retain customers?
A recent survey of 105 utility companies conducted by InterWeave, a Tampa-based consulting firm, found that the industry is falling short when it comes to meeting customers' expectations for quality service. Out of all of the respondents surveyed, only 46 percent reported that they were satisfied with the customer service they received.

Given the multitude of operational challenges facing utilities companies, including environmental issues, conservation, regulations, new infrastructure and unpredictable forces of nature, it goes without saying that customer service can sometimes slip through the cracks. But when you consider that there are such few opportunities to interact with your customers and that your company may only have one chance to make a first, and lasting, impression, you can begin to see the value of providing exceptional customer care.

Focusing on the Customer in Customer Service

Successful utility companies are those that embrace and address the elevated expectations of their consumers. After all, customers compare your company's service not only to that of other utilities, but also to the service they receive in other industries. As deregulation and re-regulation continues, customers' increased buying power and access to information may lead to easy utility switching, like we see today in the form of long-distance telecommunications and cable operators. All forward-looking companies need to ask themselves if they are sufficiently differentiated to withstand that level of instability and customer choice.

For example, a large retailer of electricity and natural gas with over 700,000 existing customers created a partnership to help increase the overall customer experience while driving down their "total cost to serve." This company recognized the importance of customer care but needed assistance in streamlining their business processes.

A completely outsourced solution was designed to provide both front- and back-office support and to lower operating costs. Once implemented, this model significantly reduced the client's cost of service and produced greater customer satisfaction scores. The initiative reduced customer resolution time by over 10 percent, decreased cost of delivery by more than 30 percent and increased service levels -- resulting in a 70 percent reduction of workforce churn.

How Does Your Company Compare to Your Competitors?

To be successful, utility companies must obtain new customers, improve retention of existing customers and reduce overall business support costs. For this reason, many companies are partnering with business process outsourcers (BPO). BPO providers possess the infrastructure, technology, scale and experience necessary to help utilities improve their customer service abilities and reduce operating costs.

Consulting firm Platts and Capgemini recently released the results of a utility executive survey that pointed to continued growth in the BPO industry. According to the survey, over the next five years BPO will gain increasing popularity, particularly for such services as call centers, customer acquisition, customer retention, billing, metering and technology inventory management.

A similar study conducted by consultants EquaTerra and UtiliPoint found that 44 percent of respondents identified BPO as an "important" way to improve business processes, and an additional 15 percent said it is "very important;" 33 percent have already fully outsourced some processes while 53 percent have partially outsourced some; and 65 percent of companies outsourcing are either satisfied or very satisfied with outsourcing.

Areas for Improvement

Proper management and adherence to customer interaction trends is just one way BPO providers can help utility companies improve customer satisfaction while simultaneously reducing costs. Some other areas needing improvement are lead generation, billing and credit, customer relocation and general unresponsiveness, especially during outages. The companies that invest the time and resources into improving these areas will experience higher customer satisfaction scores and enjoy a more loyal customer base.

Utility companies should also work with their outsourcing partner to ensure that their existing customers are pleased with the service offering. One way to do this is to create "retention teams" that focus solely on the company's current customers and identify new ways to secure their long-term loyalty to the company. For example, would an existing customer be interested in a new service that lets them consolidate expenses at a fixed rate for three years instead of two?

Utility companies are beginning to reap the benefits of their increased focus on customer care. Over the past six years, the J.D. Power customer satisfaction survey has given electric utilities steadily improving scores for core customer care functions such as billing, payment and the call center. As utilities companies continue to partner with outsourcing providers these scores will doubtlessly increase.

BPO Benefits Beyond Customer Care

A BPO provider with experience in the utilities industry can help companies improve their efficiency across all business functions, in addition to customer care and retention. An established outsourcer offers its utility partner the ability to consult, build, host, manage or co-manage both operational and IT infrastructures. BPO providers can also help ensure adherence to mutually agreed upon contractual Key Performance Indicators (KPIs) and Service Level Agreements (SLAs) which, when met, result in higher customer satisfaction scores. Experienced BPO providers with expertise in the utility industry can manage simple and very complex transactions and processes to help companies streamline their business across all functions.

Start Small

Although the strategic benefits of outsourcing are clear, first-time outsourcers are often hesitant to entrust their customers' satisfaction to another company. In my experience, however, this anxiety is often lessened when companies take a cautious approach and start by outsourcing some of their lower-risk functions. Outbound telemarketing, collections calls, back-office systems and support and inbound sales are examples of functions that can be easily outsourced to help familiarize a first-time outsourcer with the process.

As the utilities industry continues to embrace outsourcing as a strategic business tool, BPO providers will offer innovative ways for companies to retain and up-sell existing customers, obtain new ones and maintain lower business-related costs. Leading outsourcing partners can easily offer global sourcing markets around the globe, and determine which location is ideally suited for the respective companies based on their unique and desired criteria.

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