Revolutionizing Utility Billing: The Shift to a Proactive Pre-Collections Approach – GWC Mag

With more than 20M households behind in their energy bills, and almost 34% of consumers reporting that they sacrifice basic expenses to pay their utility bill, operations and finance executives face evolving challenges, notably the spike in delinquent accounts in the wake of the COVID-19 pandemic, employment trends impacting entire segments of our customer base, and the impact of lingering inflation on our customers household budgets. Clearly, something has to change.

Traditional approaches to billing and collections, although effective in past decades, now show their age amidst rising energy costs and shifting customer financial realities.  To fortify both energy equity and customer trust, utility leaders should consider embracing a more proactive model for Pre-Collections.  In this article, we examine the drawbacks of long-standing practices and make a compelling case for the benefits of a proactive model.  We advocate for this type of solution not just because of its merits, but because utilities already possess the foundational tools to implement a more customer centric approach making it easier to achieve the customer engagement and financial resilience the utility desires.

Drawbacks of the Traditional Approach

Historically, utility companies relied primarily on a post-facto paper based method of bill inserts and past due notices to notify customers of account delinquencies and manage their pre-collections process.  While functional in a strict sense, relying too much on paper processes today presents some clear drawbacks.  Customers increasingly avoid the mail when they know they are overdue on their accounts and past-due mail often remains unopened, so legacy approaches fall short.

Furthermore, the reactive model inherently lacks proactive customer engagement techniques by focusing on the symptoms (unpaid bills) rather than the causes or the potential solutions.  Customers with delinquencies on their energy account usually struggle with other household expenses or have experienced a hardship that upsets their budget.  Many of these customers may be unaware of the availability of utility sponsored assistance programs, government support, or community resources to help them fix their budget challenges.  Instead of guiding customers proactively towards these resources, legacy programs like past-due notices means that the utility’s primary communication becomes an impending threat, missing a perfect opportunity to build trust, loyalty, and ultimately ensure customers resolve their overdue balances effectively.

Conceptualizing the Pre-Collections Program: A New Paradigm

In response to these legacy obstacles, ibex’s Utility Solution Group developed a forward-thinking program designed to engage customers preemptively and manage delinquencies in a customer-centric and consultative approach.  Beyond a reactive prescriptive process used after a high bill season, our Pre-Collections program uses data analysis throughout the year to anticipate customer challenges and engage customers proactively in new digital channels with the goal of reducing delinquency problems.  For example, by using predictive analytics, we can identify a customer’s potential financial challenges, which allows for early intervention with assistance programs or tailored payment plans that prevent the account from reaching a delinquent status in the first place.

This new paradigm underscores a reimagined utility-customer dynamic.  Instead of a purely transactional relationship punctuated by punitive notices, the Pre-Collections Program fosters a preemptive approach that demonstrates that the utility understands the needs of its customers and offers prescriptive solutions.  Utilities adopting this approach not only safeguard more of their billing revenue but also affirms their value as a supportive advisor to customers, actively assisting them in navigating the occasional financial challenge.  A revisioned Pre-Collections approach enhances customer trust and loyalty, as well as improves the overall efficiency and effectiveness of the utility’s billing and collection processes.

Components of a Proactive Model

ibex employs capabilities of a Business Intelligence team, a digital agency, and a world class Customer Experience  operation to shift the focus from reaction to thoughtful anticipation of utility and customer requirements.  Utilities employ modern data analytics informed by CIS, energy use and demographic data to more accurately forecast payment behaviors and patterns to identify accounts with signs of potential delinquency.  

A proper Proactive Model includes:

1. Data Analytics
2. Specialized Contact Center Teams
3. Personalized Content Campaigns and Digital Engagement

Data Analytics inform models for at-risk accounts so that the utility can preempt a traditional high-bill season with proactive engagement for average monthly billing programs and special rate plans where available and applicable. Utilities leverage dynamic new content about the programs on their websites combined with social and email programs to “look-alike” audiences with the potential for payment challenges.  Research shows that many Low to Middle income (LMI) customers with delinquencies often don’t know of the availability of payment assistance and other support programs.  By the time a bill is past-due, traditional engagement tactics deliver limited efficacy, so a modern proactive approach engages customers before they encounter a serious account problem.  Utilities have the opportunity to inform and enroll customers in suitable assistance plans that delay, defer, or avoid financial difficulty to their energy accounts.

Contact Centers complement and amplify this proactive approach by turning a traditional billing and collections group into a hub for consultative intervention.  Instead of waiting for account delinquencies to multiply, teams set up for proactive Pre-Collections delivery across multiple channels for customer support and guidance.  Trained representatives equipped with a comprehensive understanding of available utility and community support programs assist customers in real-time, providing tailored solutions that best fit individual needs.  Combined with custom digital portals and content, customer service representatives connect customers with available resources, going so far as to call customers preemptively for utility sponsored or community assistance offers, even enrolling those customers in special programs to ensure continuity of service and fortifying the relationship between the utility and its customers.

Content Campaigns close the loop on this preemptive approach and deliver lasting value to utility customers.  Utilities often struggle to make their websites accessible for customers beyond the “Start/Stop/Move” service feature or a billing portal link.  Adding a regular stream of content tuned to the needs of at-risk customers helps build a resource center on the utility website that offers lasting value to customers whenever and wherever they experience a challenge.  A catalog of helpful content on energy efficiency, tips to reduce costs, and the availability of utility and community assistance programs makes it easy for customers to stay informed. Content can be “pushed” to customers through social and email programs, and adding links to content across multiple touchpoints on the website enables utilities to “pull” customers to the right information.  Adding regular content on these topics also improves search engine results enabling customers to find those topics on search engines like Google when they have questions.

As an example, Georgia Power does an impressive job of linking customers with dynamic content on their website about utility, state sponsored, federal and community programs to help customers get ahead of energy bill challenges.   Their content is indexed actively by search engines, putting their articles at the top of natural search results, and links on their site connect customers to enrollment forms on the utility’s own site, as well as for community and government sponsored programs, giving their customers a path to overcoming their payment obstacles, and demonstrating to customer that Georgia Power understands their needs.

Operationalizing the Proactive Model: Steps for Implementation

Transitioning from a legacy billing and collections model to the Pre-Collections approach requires blending people, process and technology around a customer centric framework.  Each workstream requires focus, but develops in parallel to achieve results on an optimal schedule.  

1. Aggregate Data
2. Build Basic Predictive Models
3. Deliver Personalized Proactive Campaigns 
4. Deploy Specialized Teams

We suggest beginning by aggregating billing and energy use data to identify predictive models and trends to identify customers with the potential for billing disruption.  Incorporating past payment history, energy use data, and even seasonal models, a talented business analyst can coax an initial set of customer models to inform a preemptive customer engagement campaign. This basic set of models provides a starting place for outreach that can be measured for customer engagement and program participation and tuned regularly through testing to continually improve program performance.

Pre-Collections programs depend on personalized, relevant and timely digital engagement campaigns to inform and engage customers beyond the typical 1:All emails of a traditional marketing communications approach.  For example, data models help identify a cohort of customers with more than one late bill and an upward trend in energy use during hot months.  A creative campaign personalized for each customer in that cohort, utilities can improve engagement with those customers and offer insights on payment assistance plans, with a link to website content or a toll free number to the Pre-Collections specialists with the training to get customer enrolled before their late bill issues become problematic.  Social campaigns can inform larger groups of “look-alike” audiences with helpful and professional updates on the status of utility sponsored or local programs if billing trends warrant a larger challenge to the market.

Those Pre-Collections specialists in the contact center benefit from focused training on a set of consultative skills to build empathy and the specialized knowledge required to help customers assess their needs and eligibility for the available programs.  A dynamic knowledge base and refresher training for the Pre-Collections team helps them stay abreast of changes in the ecosystem so that they have the most current and helpful information available to customers.  Operationally, it helps to have this team on a dedicated queue in the contact center to enable customers to get right to the front of the line for Pre-Collections questions due to the sensitive nature of their call.

What’s Next?

Reimagining the traditional billing and collections model as a proactive engagement process to manage delinquencies and enable customers to avoid financial obstacles offers utilities a Pre-Collections model that improves operational effectiveness and reduces financial risk, as well as builds lasting trust and loyalty from their most at-risk customers.  The approach blends advanced data analytics, empathetic and consultative contact center teams, a robust knowledge base, and a dynamic digital communications and content program to remove obstacles for energy equity.  

Most utilities already have all of the basic building blocks to modernize their approach, and teams like ibex can help with the strategy and playbooks to get organized.  It’s evident that the success utility companies merit in the future depends not solely on their operational effectiveness, but also on the depth of trust and engagement they cultivate with their customers.  A modern Pre-Collections program that preempts many of the legacy risks in billing and collections practices offers the benefit of both outcomes, reducing financial risks from bad debt and dramatically improving customer satisfaction and engagement as the utility becomes a trusted steward of supportive programs for their all of their customers.