By Jim Malcom
Chief Financial Officer and EVP of APOGEE Interactive, Inc.
Utilities have struggled for years to engage their customers, and in no segment have they struggled more than low-income. Low-income consumers have historically been difficult to serve, and managing the challenges of delinquency and bad debt have further bogged down these relationships. Today, even though the stock market is hitting record highs, unemployment is on the decline, and poverty rates are falling, this problem might seem like an issue that utilities can take a break from focusing on. That isn’t the case.
The rebounding economy has not improved conditions for millions of low-income families in America who are still living in perpetual financial insecurity. Helping these families manage their energy spend so they can keep the lights on and ensure that their children stay warm in the winter should be a priority for every utility. With proposed federal budget cuts on the horizon this situation could decline even further.
ACEEE reports that low-income households are spending an average of 7.2 percent of their income on utility bills, that is more than triple the spend of median households. Utilities now have a unique opportunity to ease this energy burden and help these families get ahead.
How can utilities help and still be profitable?
In researching a solution to the low-income burden on both families and utility Apogee discovered that it is common for this customer segment to contact the utility several times every month repeatedly. These customers are well known to the utility, they may not be hard to reach but they are hard-to-serve.
The benefits of a successful low income strategy include substantial rewards. For every 10,000 low income customers, if you reduce one call per month for ten percent (10%) of these customers, the annual savings to the utility is between $60,000 and $90,000. For larger utilities, for every 100,000 low income customers, the savings are $600,000 to $900,000 annually. These savings do not consider other hard costs such as reductions in collection efforts, bad debt, and avoided disconnect and reconnect services, nor the benefit of improved cash-flow, improved customer satisfaction and increased customer engagement.
What’s the secret?
Deliver a message that is relevant, personal, and prompt. Remember the basics of customer satisfaction. Give customers control, care, and choice.
- Just in time energy and payment alerts delivered by email or text that allows time to adjust behavior before the high bill arrives.
- Energy saving recommendations that put customers in control of their energy use. Suggesting actionable low cost or no cost opportunities to save energy.
- Program awareness offering opportunities to participate and benefit.
- Deliver your message with dignity when there is still time to make a difference in the bill.
- Reach out through social organizations.
- Offer multi-lingual communications and address cultural differences.
- Communicate multiple payment options like budget billing, authorized payment centers or pre-pay options.
- Allow customers to choose their preferred method of communication.
- Use a mobile friendly preference management system
Apogee is dedicated to helping utilities build trust and bring value to low income communities while easing the burden to serve this growing segment. Apogee’s new Energy Platform for Information & Communication, or EPIC, offers a way to tackle the challenges associated with engaging hard-to-serve customers proactively, through ongoing engagement. EPIC gives actionable guidance for renters, low-income or multifamily dwellers.
Mr. Malcom, has been Apogee’s advocate for low income initiatives for the past 2 years. He brings more than 25 years in corporate finance and accounting to Apogee, which began with the firms KPMG and Ernst & Young in Atlanta. He has held senior posts as chief financial officer, corporate controller, vice president and treasurer for such area companies as Heidelberg USA, LecStar Telecom and Powertel.
Jim is a graduate of the University of Georgia with a bachelor’s and master’s degree in business administration, a certified public accountant, and a chartered global management accountant.