What should your customer service policy include?

Happy New Year!

Let me start by wishing you and yours a Happy New Year for 2017! 2017 marks the 6th anniversary of the Utility Information Pipeline and I look forward to another year of offering insights into how your utility can operate more efficiently and better serve your customers. As always, if you have suggestions or ideas of a topic for me to cover, please email me!

Last issue

The last Utility Information Pipeline included the results from a poll asking if reader’s utilities have a formal customer service policy. It went on to explain why I believe having one is important. I promised this issue would address what should be included in a customer service policy.

Elements of a formal customer service policy

Let’s take a look at some key items that should be included in a customer service policy…

Application for service

For starters, your customer service policy should include what is required of a customer applying for service. What forms of ID do they need to provide? Are they required to pay a security deposit or an application fee?

Security deposits

If you do require a security deposit for new customers, the amount of the deposit should be plainly stated in your customer service policy, as should any nuances in how the security deposit is determined.

Do you charge a different deposit for renters than homeowners? Do you perform a credit check to determine the amount of the customer’s deposit? Do you retain the deposit until the customer leaves or do you refund it for good credit customers? All of these should be clearly defined in your customer service policy.

Rates and fees

Your rates and fees should also be set forth in your customer service policy. In addition to rates for the services you provide, your customer service policy should also include any fees, such as returned check fees or any other fees you charge.

And, of course, be sure to update your customer service policy each time your rates and fees change.

Due dates and disconnection for non-payment

The section most often referred to in many customer service policies is the one dealing with late payments and disconnection for non-payment. Be sure your policy clearly states how the due date is determined and how much the late fee will be if not paid on time.

If your utility cuts off for non-payment, your policy should also accurately describe when an account is subject to disconnection and how the cut-off fee is charged.

Payment options

How many ways can your customers pay their bill? Do you charge a convenience fee for credit card payments? Can your customers pay their bill online? What must your customers do to sign up for bank drafts? All of these questions should be answered by your customer service policy.

Budget billing

Does your utility offer budget billing? If you do, your customer service policy should explain the details of how the monthly payment is calculated and the requirements for customers to sign up for budget billing.

Disputed billings

Your customer service policy should outline what options are available to customers who believe their bill was incorrectly calculated. It should also describe the details if you offer leak adjustments or summer sewer adjustments.

Do you have a formal customer service policy?

If your office needs assistance developing or updating your customer service policy, please give me a call at 919-232-2320, or email me at gsanders@logicssolutions.com for more information about how a business review could help.

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© 2017 Gary Sanders

Why don’t you have a formal customer service policy?

The last Utility Information Pipeline included a poll asking if reader’s utilities have a formal customer service policy. Here are the results of that poll (clicking on the chart will open a larger graphic in a new window):

Poll results

Surprisingly, half of the utilities who responded do not have a formal customer service policy. Of those that do, two thirds haven’t updated it in a long time, leaving just 17% who have a formal customer service policy and update it regularly.

Importance of a customer service policy

I’ve written previously about customer service policies, but have never written about why I believe it is important to have one.

Everyone knows the rules

A formal customer service policy sets forth your utility’s policies and procedures and lets customers know what is expected of them. It also provides guidelines for your employees to use when evaluating a customer’s situation.

Customers don’t like it (nor should they) when they perceive to be treated differently from other customers. Having a customer service policy insures all customers are treated fairly, including everything from how much of a security deposit they must pay to who is cut off for non-payment.

Staff empowerment

Having a customer service policy, and enforcing it for all customers, empowers your customer service staff to make routine policy decisions. No one likes to have their decisions overturned by their boss, especially if it appears to be an arbitrary or if favoritism is involved.

Employee morale improves when your staff knows they will be supported in enforcing your policies. Customer service representatives are empowered when they know management stands behind them and will treat all customers fairly.

Next issue

Now that you have a better understanding about why having a customer service policy is important, the next issue will go into more detail about what should be included in your policy.

Do you need assistance developing a customer service policy?

If your office needs assistance developing a customer service policy, please give me a call at 919-232-2320, or email me at gsanders@logicssolutions.com for more information about how a business review could help.

Click here to subscribe to my free, bi-weekly email newsletter...

© 2016 Gary Sanders

Poll results and formal policies

The last Utility Information Pipeline addressed deceased customers and included a poll asking if reader’s utilities have a policy regarding deceased customers. Here are the results of that poll (clicking on the chart will open a larger graphic in a new window):

deceased-customers-poll-results

Poll results

I’m surprised to see only one utility has a formal policy regarding deceased customers.

This is the second informal poll I’ve conducted recently with the response of a formal policy being a distinct minority. The other was a poll regarding a policy for accepting loose coins.

Limited sample size

The deceased customers poll had 16 responses and the loose coins poll had 22. Statistically speaking, neither of these are very large samples, but, across my readership, I would like to think they are a representative sample of small and mid-sized utilities.

The current subscriber count for the Utility Information Pipeline stands at 322 and, in a good week, about 40% percent of subscribers open any particular issue. So that means, for any given issue, I can expect my newsletter to reach about 125 subscribers. Add to that a few views of my blog from followers on Facebook, Twitter, and LinkedIn and the number of readers responding to either poll is still significantly below 20% of those it reaches.

Importance of a formal policy

I’ve written previously about the importance of having a formal customer service policy. With so few responses to the two polls indicating these topics are addressed in a formal policy, this leads to one of two conclusions: (a) these utilities don’t have formal policies or (b) these topics aren’t covered in their existing formal policies.

If your utility has never been confronted with a customer dumping a huge pile of change on the counter to pay a bill, I can understand if accepting loose coins isn’t dealt with in your policy. However, with the requirement for each utility to have a Red Flags Rule policy, not having a policy regarding deceased customers is more surprising.

Do you have a formal customer service policy?

Does your office have a formal customer service policy? Please take this quick poll.

Once you’ve taken the poll, you can see the results to see how other utilities responded. I’ll publish the final results in the next issue.

Do you need assistance developing or updating your policy?

If your office needs assistance developing or updating your customer service policy, please give me a call at 919-232-2320, or email me at gsanders@logicssolutions.com for more information about how a business review could help.

Click here to subscribe to my free, bi-weekly email newsletter...

© 2016 Gary Sanders

How do you notify cut-off accounts?

Recently, in one of the listservs I subscribe to, the question was asked about how other utilities notify customers after they have been disconnected for non-payment. I found that to be an intriguing question, because it’s not one I’ve heard asked before.

A few responses answered how they notify accounts that are subject to being cut off, but only one other response directly addressed notifying customers after they have been cut off.

Notification options

My observation has been that utilities do one of two things to let a customer know they have been cut off – leave a door hangar or do nothing at all.

Do you have a legal obligation?

Some states require a utility to leave a door hangar, or other notice, alerting a customer that their service has been disconnected. Other utilities feel that it’s a good customer service policy to leave a door hangar.

If you do leave a door hangar and it can be distinguished from a door hangar you would leave for any other reason, you may want to consult with your attorney. I know of one utility that used a brightly colored door hangar for disconnects and a white one for all others. They were sued for a privacy act violation and, as part of the settlement, agreed to use a white door hangar for all situations.

Avoid confrontations

In the other camp are utilities trying to avoid potential confrontations with angry customers. These utilities simply have the service technician terminate the service and move on to the next account on the cut-off list without any further notification.

After all, you’ve let the customer know they are in jeopardy of being cut off, either with a second notice or on the original bill, so what more notice should you provide them?

Quick poll

How do you notify customers after they have been cut off for non-payment? Please take this quick poll.

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© 2014 Gary Sanders

Have you heard about this in the news?

Have you seen any of the negative publicity that Detroit is getting for cutting off water to delinquent customers?

I read this story online over the weekend and wasn’t surprised to read that Detroit was finally starting to cut off customers for non-payment.

Poor management

I had occasion to speak with the CFO of the Detroit Water and Sewerage Department last year. At that time, nearly 82% of their receivables were 60 days or older. On top of that, they hadn’t done cut-offs for non-payment in three years. Yes, you read that correctly – three years, not three months!

Could your utility remain solvent if over 80% of your receivables were seriously delinquent and you weren’t doing anything to tackle the problem? Of course not!

As Tom Curtis, deputy executive director of AWWA, stated in the article “If you never shut the water off for anybody, those people who continue to pay have to shoulder the entire cost of a system that is servicing a lot of customers that aren’t paying. That’s not a sustainable business model.”

There is no excuse, other than poor management, for a utility going three years without cutting customers off for non-payment.

Public outcry

Most of the public outcry is over the fact that, suddenly in the heat of summer, some customers who can least afford to pay are without water.

I believe for-profit and investor owned utilities have a responsibility to set aside some of their profits to offer assistance programs for customers who have legitimate hardships.

I don’t feel the same way about municipal utilities or utility districts whose priority is to provide the best service at the lowest rates for their customers. Most utilities I’m familiar with have a working relationship with local social service agencies, church groups, or other charities that provide assistance with utility bills and refer customers with economic hardships to those agencies.

An effective policy is the best way

The article goes on to highlight the case of Hamtramck, Michigan – another financially strapped city – that shut off customers as a way of stepping up their collection efforts. In a year, the city went from a $350,000 deficit to a $2 million fund balance in the water fund.

The article cites an impressive statistic – cutting off 150 customers caused 390 delinquent customers to pay. This bears out what I’ve always believed – adopting and enforcing an effective cut-off policy as part of an overall customer service policy the best way to reduce delinquent accounts.

Have you reviewed your cut-off policy lately?

Is your cut-off policy up-to-date and as effective as it should be? If you’re not sure, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could benefit your organization.

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© 2014 Gary Sanders

Did you catch this in the news?

If you’re not from North Carolina, chances are you may have missed this story in the news last week…

TV investigative report

A recent news segment by a Raleigh television station’s investigative reporter cast a negative light on our local investor owned electric utility.

It seems the electric utility surprised some of their customers with additional security deposits on their monthly bill. Enough customers complained to the TV station to prompt an investigative report on their practices.

Early editions of the story claimed the electric utility periodically reviewed all customer deposits. This was later revised to say the utility only reviews deposits when one of three triggers takes place:

  • Two or more late payments
  • Cut-off notice for non-payment
  • Having a payment returned

However, the customer quoted in the story claims this was not the case.

Protect yourself

If you’ve been a reader of the Utility Information Pipeline for any length of time, you know I believe in maintaining adequate security deposits.

I’ve written in the past about requiring accounts on the cut-off list to pay an additional deposit if their deposit is less than your customer service policy would require of a new account.

What this electric utility requires goes even farther by including multiple late payments and returned payments.

Don’t go overboard

In spite of my strong opinions about maintaining sufficient security deposits, I do think routinely running credit checks for current customers without a triggering event is extreme.

The best indicator of how a customer is going to pay in the future is how they have paid in the past. If you have a good paying existing customer, just because their credit report indicates they missed a few payments to other creditors, this doesn’t mean they should be penalized by your utility.

Do you need to review your deposit policies?

Do you need to take a look at your security deposit policies? Please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn more about how a business review could assist with reviewing your deposit policies and procedures.

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© 2014 Gary Sanders