How to really drive down your cost to serve
As energy suppliers continue to seek new and innovative ways to drive down their cost to serve, they’re faced with an amalgamation of challenges that can make realising this objective quite difficult.
What really is cost to serve?
In the context of the energy sector, we’re talking about the overall cost to serve and manage the customer base.
There are a number of factors that contribute to the true cost to serve, which include: the costs of the actual systems you’re operating on (and the interface with the customer); the cost of the people to resource and operate those systems; the time factor, for example how long they’ve spent during those interactions and even the quality of work executed by all of the above resources.
A highly regulated industry, high customer expectations and strong competition are all key drivers that put the pressure on margin for energy suppliers who need to respond in order to profit. This has become increasingly challenging, especially when you’re unable to influence or change some of these factors, such as regulation.
However, one thing a supplier can control (and not fall fowl to legislation) is the software platform they operate on and this can make a significant difference to your operating costs, and ultimately your true cost to serve.
Price versus cost: the supplier dilemma
Suppliers in different stages of growth have different views and needs when it comes to software solutions. It’s typical that a new entrant will opt for the apparent ‘cheaper’ option, but this tends to be unsustainable as the supplier ‘outgrows’ the solution. It’s a false economy because as the supplier scales, the cheaper price quickly becomes costly as staffing, operational and management costs increase.
As the saying goes, cash is indeed king and so it’s understandable that businesses will opt for the lowest apparent cost. The total cost inevitably becomes painful as many processes are manual and this can quickly become ‘unmanageable’, and the supplier will have to, at some point, make the transition to automation.
There are also suppliers who have grown and their seemingly ‘automated’ technology has not evolved with them. Debt management processes plus the challenge to achieve ‘first time right’ resolution in a fast and efficient manner, can quickly become a drain on a company’s resources; costs spiral and customer retention is a problem.
How can software really impact the cost to serve?
There are immediate cost savings that are realised with highly automated software. Automating processes that have heavy manual involvement not only make a significant resource saving, but there are significant time and quality benefits too.
By its pure nature, automation achieves a consistency that is unrivalled, removing room for human error and other environmental elements such as shift changes and breaks as well as varying levels of experience and competence. So straight away, a process that was once costly, timely and painful becomes automated, fast and error-free. The chain of benefits continues – resolution times improve, bills are more accurate, customers are more satisfied (and pay their bills on time!).
How to get the most out of your software
When you’re investing in automated software, look beyond the apparent software capabilities. Software is only as good as the operators – and the data – so you need a solutions partner who is proactive, hands on and takes you through the process of software implementation, starting with the scope.
Together with the business, the first important step the partner will take [in the process] is identify all the key customer interactions throughout the business. These will be identified so they can be streamlined as much as possible. Around those, a solutions partner will work out exceptions and address how to manage them, to reduce any cases where there isn’t a path.
Secondly, the software will only be as good as the data. Cleansing and managing your data at the start of the project will give you a better user experience throughout.
It’s an iterative process so the idea is that there will be a phase one of implementation, followed by a phase two, possibly three and then regular management reviews to ensure that the software is performing optimally for the business.
If you’re looking to introduce a new process or service, it’s very important to engage your software partner at the start of the process, so they can help ensure this is optimised from a technology perspective.
A good software partner can help to future-proof your business
Cost to serve benefits aren’t only short-term. When you’re working with a software solutions partner who is committed to your success, they will help you to continue realising cost savings and benefits throughout the lifecycle of your software. This is a continuous programme of review and development.
As your business scales, evolves and even diversifies, the software needs to grow with you. It’s about future-proofing and good technology investment will serve you cost effectively and efficiently as your business scales, whether by volume, through additional services or both.
Think beyond cost to serve [as we know it]
It would be remiss not to mention the significant cost savings a company can make from brilliant software automation – that go beyond the traditional ‘cost to serve’. For example, we’ve helped customers reduce the time it takes to close their month from days to just a matter of seconds – just by automating the financial data.
Not only does this save significant time (and resource), but also further enhances the cash flow process. The main point here is that brilliant software solutions can drastically improve a business’ capability to function more succinctly, greatly improving the customer experience and significantly reducing the operational costs.
If you’d like to discover more about Gilmond software, please contact us