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Market Focus: Energy: Shocking!
Some energy companies are deploying CRM systems for cost cutting; others are focusing on customer acquisition and retention.
For the rest of the December 2006 issue of CRM magazine please click here
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CRM stands for Collect Ratepayer Money. At least that has been the joke within the utilities space about how many energy companies interact with their customers. Customer relationships with energy companies have sometimes been viewed as, quite simply, the cost of doing business. But as many energy outfits continue to grapple with the effects of deregulation, whether they operate in a regulated or deregulated environment significantly impacts how they approach CRM. The CRM emphasis for energy companies operating in regulated environments doesn't lie in differentiating themselves based on customer service, according to Zarko Sumic, vice president with Gartner's energy and utilities industry advisory service. Their customers don't have the choice to select a service provider. It's determined by location, and as a result, service providers tend to focus their efforts on cutting costs, especially around customer care and billing. In fact, a growing number of energy companies continue to catch on to self-service solutions that verticals like financial services and telecommunications have been using for a number of years: IVRs and e-bill presentment and payment (EBPP) systems. Companies like Checkfree and Oracle's Siebel Systems (via Siebel's acquisition of edocs) offer EBPP solutions that are gaining traction with energy companies. "In the regulated space CRM systems really end up being what I would call a glorified accounts receivable system," Sumic says. However, in deregulated markets, where companies operate in a competitive environment, the need to focus on customer service as a competitive differentiator becomes more prevalent. One way that companies in a competitive energy retail market are distinguishing themselves is through value-add services like outbound notifications that alert customers when usage is close to exceeding a predetermined amount, according to Sumic. Some energy companies are leveraging SFA, marketing automation, and analytics solutions to analyze customer behavior, like propensity to switch providers and consumption patterns, to create targeted marketing campaigns.
But only the most progressive utilities have moved toward SFA and marketing automation, according to Jim Norton, vice president of the utilities practice at Exstream Software, a provider of enterprise software that streamlines document creation processes. "The utilities that are implementing SFA strategies are doing so with their [commercial and industrial] customers," he says. "These customers have a choice, and both cost and service are key drivers for their selection of provider." Case Study: DTE Sparks Outbound Communications Operating in a financially strapped region doesn't make the collections process any easier. Just ask DTE Energy. The diversified energy company services one of the most underemployed states in the country; as of August 2006, Michigan's unemployment rate of 7.1 percent tied it with Mississippi for the state with the highest jobless rate, according to the Bureau of Labor Statistics. To make matters even worse, DTE--which operates in an increasingly complex regulatory environment--must also cope with swelling energy costs. But by relying purely on basic internal dialers and manual outbound dialing to contact customers about outstanding bills, DTE's agents were often able to focus only on customers in such severe delinquency that they were in danger of having their service disconnected. Usually "about 60 to 70 days past due would be when the first calls would be placed," says Jeff Moran, director of credit and collections at DTE. When payments were two to three months past due "we were finding that they were completely unable to pay it. We felt that there would be a significant opportunity if we could get to our customers sooner." The company turned to PAR3 Communications's hosted automated communications solution in 2005 to enhance efficiency in its collections process. DTE started using the outbound solution to contact early stage delinquent customers, but has since implemented it in other areas like late stage, appointment scheduling, and surveys. DTE's automated method allows customers to feel less threatened, which enhances its ability to collect more money. "We found that they'd much rather talk to the technology and do their transactions versus talking to the old type of collector where they're being lectured," Moran says. The results are impressive: The utility realized a 200 percent increase in list penetration, a 298 percent increase in average payments for each record attempted, a 119 percent boost in payments, and $252 collected per dollar spent. Moran says,"Even with the economic challenges that we're having, the fact that we've improved in many of our areas is very telling of this partnership." --C.B.
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