Customer: Synergy is the government owned energy retailer in Western Australia headquartered in Perth, with more than one million customer accounts. Like all organizations with large residential customer bases, Synergy has the ongoing challenge of managing and reducing late payment and overdue balances owed.
Result: Clear results showed within the first two billing cycles of program launch, and in less than one year, the program has reduced Synergy’s total balance of past due accounts by an astounding 45 percent.
Before the SMS program
Between 2009 and 2014, Synergy would follow up late payers with an initial reminder notice three days after the due date, with a subsequent ‘disconnection warning’ letter 10 days later. A small number of customers with larger debts would then receive a manual outbound collections call by a customer service representative.
This collections strategy lacked both timeliness and consequences for customers who failed to comply with a payment request. The final step in the collection strategy was referral to a mercantile agency, however, the number of debtors and amounts owed limited the effectiveness of collecting debt.
Synergy’s Manager of Credit Management Strategy, Craig Butler, reasoned that a proactive program of more frequent contact using SMS could outperform the existing program. SMS was identified as a low-cost and effective way of increasing customer contact and encouraging more customers to either contact Synergy to discuss payment or use the link within the SMS to make payment. This would then reduce the impact of inbound calls on contact center staff.
A thoughtful, well-planned program
Mr. Butler conducted extensive research into effective collections practices and designed a communication plan featuring multiple positive, proactive messages to overdue customers. Key among Mr. Butler’s findings was customers’ tendency to be reluctant or embarrassed to actively contact Synergy to discuss their payment options. This reluctance led to further costs and unmanageable levels of outstanding debt.
Synergy took time to communicate all intended enhancements to the collection strategy with internal and external customers. Synergy also briefed all stakeholders ranging from internal staff and collection services to financial counsellors and external agencies directly involved in assisting customers in hardship.
Getting everyone on board early was critical in achieving a smooth and well-received program launch. All supported the initiative to contact overdue accounts to encourage earlier payment when overdue balances were smaller. All stakeholders felt that increased contact levels would encourage more customers to respond earlier, thereby keeping debts lower and more manageable.
First phase surpasses expectations
The initial program included three contact points:
1) a reminder immediately after the payment due date
2) a second reminder prior to disconnection of service and
3) an outreach after the customer had moved out of the subject property.
Synergy initially expected slow adoption rates, believing it would take up to twelve months to change customer behavior. However, the initial result was a 24 percent response rate to the first SMS reminder, and 45 percent to the second.
Noticeable improvement in reducing overdue accounts appeared in the first two billing cycles (four months), and strong improvement within six months. In less than a year, Synergy’s 90-day overdue payment total had been reduced by 45 percent.
Throughout, Synergy has taken a positive tone in its messaging program. Links to Synergy’s payment portal within the payment reminder messages were especially useful. Mr. Butler notes, “Most overdue customers would rather not speak with a collection or customer service person about their account, preferring to make payment through either the online or IVR (interactive voice response) payment channels.”
A large percentage of the automated SMS contacts are generated via standard SMS using MessageMedia’s business text messaging services. For accounts with only landline services, messages are converted to voice messages with text-to-speech technology. Both methods have proven highly effective in contacting customers and encouraging them to either call or make payment via the online portal.
Second phase planned
Mr. Butler is pleased with Synergy’s overdue debt reduction to date, but further initiatives are being investigated and developed. Synergy is preparing for a second phase, which will be even more proactive, reaching those customers with a history of late payment. For this segment, Synergy plans to add three new SMS campaigns:
1) a reminder three days prior to the due date
2) an additional reminder to every customer with an overdue balance exceeding a certain threshold and
3) an outreach prior to referring the account to a mercantile agency.
Synergy remains committed to its successful positive, collaborative approach to working with overdue accounts. Synergy has achieved outstanding results while staying well within guidelines for collection established by Australia’s Consumer Protection Commission (ACCC). Synergy’s leadership use of SMS for proactive overdue account management truly represents a great opportunity for utility companies worldwide.
Find out how payment reminders can cut your late or non-payment rates.