Customer retention, stickiness, or churn - whatever term you use, we know that retaining customers by even small percentages can significantly increase profitability.
According to CustomerGauge, just 5% increase in retention can equate to between a 25 and 95% boost in profit. And while the same article also states that energy and utilities typically have a strong retention rate, we also know that churn is still a pain point for a number of reasons:
Price: Energy can be perceived as a commodity, which means cost-sensitive consumers will choose energy sellers based only on price. These customers are highly likely to churn as soon as their contracted period is completed and will go for the cheapest offer in market at the time.
Indifference: An indifferent consumer is one who is not loyal, places little value on service, and possibly does not even recall who their energy provider is. This group is easily churned if a competitor can provide a more seamless, simple experience that minimises effort on the customer’s behalf.
Environmental focus: The opposite of their indifferent counterparts, these customers are extremely interested in their personal energy consumption and want to go with the energy seller that is providing services aligned with their personal values. If there is a competitor better aligned, these customers will move.
Customer experience: Savvy shoppers are those seeking the all round experience; price, flexibility, rewards, and an excellent customer experience. They may use comparison tools and review sites to inform their decisions, but also present great opportunities to retain because they are not solely focused on cost and instead are seeking a provider that can meet all their needs.
The symbiosis between billing software and customer retention
There’s a number of factors that impact customer retention including price, product, service, and processes. The billing of modern energy products is an increasingly complex workflow with multiple potential points of friction that can impact all of these areas.
When billing goes right, it is generally a neutral experience (as in it doesn’t have a lot of impact on the customer). But if something is incorrect or irregular on a bill the customer has to contact their energy provider, which can be time consuming, and irritating. The flipside of this is that billing could indeed enhance the customer experience - all the data that is collected as part of the billing process can be harnessed for better service delivery and product innovation as well as insights on usage, preferences etc to tailor offers, deals or services. But this is just the beginning - let’s delve into some of the other ways billing software can increase customer stickiness:
Automation Modern, cloud-based billing software like Flux is automated, which means little to no operator intervention and reduces the risk of manual errors. Plus, this provides operators more time to focus on other, value-adding tasks to improve the customer experience.
Relevant, timely product launches or changes The modern energy landscape is changing rapidly. Energy sellers are steadily bringing new products and services to market, so the ability to respond quickly to market changes by launching new products or altering existing ones can be the difference between retaining and losing customers. We’ve talked a lot in the past about inflexible legacy billing software, which often requires weeks, or even months to configure new products and tariffs. This certainly does not support an agile product innovation practice because if a product can’t be billed, it certainly can’t be sold! And if responding to market changes and customer needs is something that impacts customer stickiness, then billing software is an important cog in the wheel.
Event-driven customer engagement The data used in the billing process is generated by events that happen on a customer’s account. This data can be used to trigger relevant and timely communications, which could significantly impact customer outcomes. For example, a higher than normal energy usage notification early on could alert a customer to something amiss that they could get sorted quickly to minimise greater impact. This is the kind of proactive service that keeps customers loyal and avoids an unwelcome surprise at billing time.
Self service More consumers today prefer to self-serve rather than make a phone call. Putting the power of change into the customer’s hands means they don’t have to wait and often can get an immediate resolution. With modern billing software powering self service portals, it’s just another way to improve customer stickiness.
Proactive customer management, with Flux
Whether directly or indirectly, modern billing software can have a positive impact on all aspects of customer stickiness - price, product, service, and processes. Automation helps eliminate errors and reduces manual intervention, data can be used to streamline processes, provide insights into improvements, product effectiveness, pricing and new product development, APIs can trigger events in marketing automation software for well-timed customer comms, and so on.
And this is where Flux adds value.
Flux connects those who make, move, and sell energy, equipping organisations in the sector with the power to drive change. Where ability to adapt to market shifts is vital, innovation in products and services is table stakes, and shareholder returns are imperative, Flux’s next generation billing software sits at the heart of energy businesses driving success by enabling management of greater data and complexity, delivering new tariffs and products at speed.
We’re not just here to deliver great billing software, we’re here to mobilise visionary companies leading the transition towards the future of energy.
The future of energy is here. Our job is to help you capture the opportunity.