MECOMS Thriving for industry class Cost-To-Serve
Introduction
The Energy and Utility markets are in constant evolution. We are constantly faced with new challenges related to changing market models and the introduction of new technologies. New regulations on the roadmap towards creating a level-playing field puts cost-to-serve more and more in the spotlight. Recent unbundling projects revealed the excessive costs often associated with legacy Customer Information Systems (CIS). The entrance of new niche players and new information exchange platforms require agility and quick response.
Cost components
Industry Analysts state that a solution that can minimize the cost of providing customer service, for customer care as well as meter-to-cash should be of top priority while evaluating Customer Information Systems.
• Billing inaccuracy rates ranging from 0,004% to as high as 8% (source: Customer service Benchmarking study US). We all know that inaccurate bills drive up costs – In B2C environments, the cost of 1 call center complaint often equals the customer’s yearly profit
• The number of staff required to operate billing systems & billing exceptions & Collections can easily vary depending on the operational efficiency achieved in these processes. As an example, benchmarks ar new small energy suppliers vary from 2000 customers/employee – 6000 customers/employee
• Cost-to-Serve Targets vary from 45€ to 38€ to 25€
• Scale impacts on costs when comparing Large, Medium and Small European suppliers, with a €4.82 difference between a Large and a Small supplier
• AMR, staffing and number of bills sent are key sensitive KPI levers that can deliver a 10% saving in cost-to-serve (source: European Utilities Residential Cost-to-Serve Metrics)
These figures vary by region and depend on your market role, size and the costing model. Nevertheless, cost of billing, moving, switching, meter reading, customer call center and administration easily add up to more than 50% of the total costs of doing business and are directly impacted by the Customer Information System in use.
MECOMS Cost-To-Serve Benchmark
If interested, please let us know if you would like to participate in Mecoms’ Cost-to-Serve Benchmark to see how we can help your organization achieving best in class cost-to-serve.