Billing Insights from the First Quartile Consulting Customer Service Benchmarking Program
This post shares findings from the results of the First Quartile Consulting's (1QC) Customer Service Benchmarking Program. Focused on customer service within North American utilities, this article focuses billing, just one of several areas 1QC benchmarks.
Billing Composition and Cost Analysis:
In 2022, billing expense comprised approximately 20% of all Operations and Maintenance (O&M) costs in Customer Service for North American utilities. This expense category can be divided into two main components: labor and postage, contributing 30% and 50% respectively to the overall billing expenditures.
Labor expenses are notably influenced by two primary factors: printing and mailing of bills, and manual billing review. High-performing companies exhibit an impressive efficiency level, requiring manual involvement for only 1-2% of bill. This involves exceptions, errors, and the cancellation and rebilling process. Conversely, less proficient companies allocate resources to address billing matters for as much as 5% of their accounts. A significant portion of these tasks (76%) are generated from prebill edit algorithms integrated within nightly batch processes to validate meter readings. Even with automated meter reading constituting the majority (approximately 98%) of all recorded data, median-level utilities handle over 320,000 exceptions annually, indicating the need for a billing staff of around 28 people. Swift processing, aimed at ensuring timely billing, remains a crucial factor driving the heightened staffing requirement. An impressive achievement in 2022 was the resolution of 84% of all exceptions within three days in our panel.
A substantial portion of billing expenses is attributed to postage costs. As of 2022, median postage expenses reached $3.69 per account. This expense, beyond the control of companies, exhibited a discernible pattern over the five years leading to 2022. The cost of bulk USPS postage for a 1oz metered letter increased by a significant 17%, reaching $0.42. This upward trend was further fueled by an additional 3% increase in July 2023. Concurrently, expenses linked to paper and printing also rose. However, the strategic promotion of eBill adoption emerges as a countermeasure against these escalating costs.
In 2022, companies demonstrating superior performance achieved an eBill adoption rate of 42% or higher, resulting in substantial yearly savings exceeding $2 per account. In contrast, companies with a lower eBill adoption rate of 25% or less saw only marginal reductions in their postage expenses.
Notably, a participating company showcased a remarkable 54% eBill adoption rate at our recent Insights Conference, leading to consistent cost savings in subsequent years, even amidst continuous postage rate increases. During their presentation, they shared their key initiatives, challenges, mitigation strategies, and insights from their multi-year journey.
The insights garnered from the 1QC’s Customer Service Benchmarking Program emphasize the pivotal role of streamlined billing processes and effective cost management strategies in the domain of North American utilities. Companies striving to enhance customer service and achieve significant cost savings are encouraged to delve into the findings of this benchmarking program. Non-participating companies interested in learning more can reach out to Rob Earle at Rob.Earle@1qconsulting.com for further information.
First Quartile Consulting's yearly Customer Service Benchmarking Program presents an in-depth analysis that delves into the core functional areas of customer service. This comprehensive study provides separate coverage for each major sector, ensuring a thorough understanding of various aspects. The program encompasses essential customer service subjects, including Overall Customer Service, Contact Center, Field Service, Meter Reading, Billing, Payment Processing, Credit & Collections, Revenue Protection, Customer Service IT, and Safety. Our program offers an informative and holistic perspective on various customer service domains. By meticulously exploring performance metrics, practice investigations, and demographic influences, the program empowers businesses with the knowledge needed to refine their customer service strategies and excel in their respective industries.