Traditionally, monopolies have little incentive to enhance customer services since they have a captive customer base. However, customer centricity as a strategy can benefit a player even in such situations. Today’s customers are better informed and have high expectations of their service providers. Moreover, we’ve seen a number of services previously provided by monopolies transition into competitive market conditions through privatization initiatives (e.g. telephone services, airlines, banks, TV channels etc.). From these perspectives, adoption of a customer centricity strategy can only serve the electricity distributors well.
In a 3-nation study (Bangladesh, India, Sri Lanka) of the electricity sector, pi STRATEGY looked at the Bangladesh market. This article will discuss the current state of the electricity distribution sector from five different lenses: service provisioning, getting a connection, bill payment, lodging grievances and awareness building.
SERVICE PROVISIONING
Despite being monopolies in their geographies, distributors in Bangladesh offer a variety of services to enhance customer experience. Online application for new connection, SMS notification, customer service center, and bill payments through mobile phones are some of those services that are being offered by all five distributors. Some up-to-date services such as load shedding forecasting, 24/7 call center, online bill payment and pre-paid meter services are offered by some urban distributors.
The study identified three major problems consumers face in service provisioning: a) black-outs, b) voltage fluctuations and c) inaccurate bills. In comparison with the other two countries, Bangladesh is in the worst situation across all three challenges. 97% respondents from Bangladesh said they experienced black-outs at least once in the last two years whereas the number is 72% for India and 84% for Sri Lanka. In Bangladesh, with the growth in electricity generation, occurrence of black-outs have reduced considerably in recent times. Nonetheless, the percentage of inaccurate bills seems to be much higher (18%) in comparison with other countries.
There is a clear opportunity for improvement in this space. In addition to ensuring accuracy, the bill itself can be viewed as an awareness building platform leading to mindset shifts towards smarter consumption habits among consumers. Moreover, providing the bill in Bangla will extend the accessibility of the information on the bill. Implementation of 24/7 call centers by all distributors is critical to ensure improved customer service. Greetings and instructions in call centers can be in the dialects of the callers so that they feel comfortable and have better understanding. Pre-paid meters have been launched in limited areas within Dhaka. However, this seemingly good initiative was stalled because of multiple back-end issues such as manufacturing and funding challenges. Intervention from all stakeholders is needed to address those challenges and expand the reach of pre-paid meters.
GETTING A CONNECTION
In Bangladesh, electricity is viewed as a necessity, and the demand is greater than supply. Distributors have not had to do much to find new customers. Instead, customers line up in long queues and make unofficial extra payments to get a connection. Information on how to get a connection are provided through three channels: customer care outlet, phone call and website. Sometimes, customers are assisted with the application filing process if they visit a distributor’s office. The survey suggests only 35% of customers think information on procedures and documents for getting a new connection are readily available. This number is even lower (27%) for re-connection. The majority of the customers (75%) are unsatisfied with the time they needed to wait to get connected after applying, and a similar percentage (77%) are unsatisfied with the time required to reactivate a connection.
There lies significant opportunities in terms of process streamlining in getting a new connection. The entire process can be made paperless through digital verification and approval which will mitigate time and cost to a large extent both from supply and demand ends. Though online application has been launched by all distributors, the uptake has been limited so far. Even the percentage of bills paid through online is somewhat negligible in comparison with the total number of bills. These initiatives need to be more widely publicized among potential user groups.
BILL PAYMENT
Post-paid is the predominant bill payment system in Bangladesh. However, DESCO and PDB also introduced pre-payment systems in some pilot areas. Post-paid bills are issued in paper format and breakdown of information (e.g. fixed charges, usage charge, taxes and surcharges) are also provided with the bill. Customers have several options to pay bills: bank branches, customer care centers, payment via MNOs and online payment. A billing month is often different from the calendar month. A significant portion of people (more than 40% ) in Bangladesh and India said they pay electricity bills through landlords or neighbors, whereas around 70% in Sri Lanka said they pay bills through customer care centers.
Information printed on bill seems to be quite comprehensive – a large segment (62%) said they are satisfied with billing information. Payment via mobile phone, however small (less than 10%), is only observed in Bangladesh. This has made customer’s life a lot easier, however a large segment of this user base are from urban geographies. The reach of this service needs to be extended to semi-urban or even rural areas to maximize the benefits.
LODGING GRIEVANCE
Customers lodge complaints in several ways. There are three major channels to lodge complaints: customer care center, phone call and email. To better address and trace the grievances, a reference number is provided. It takes 1 to 7 days typically to solve bill related issues, 1 to 3 days for reconnection and 7 to 15 days for bill related problems. 61% feel complaining is of no use.
AWARENESS BUILDING
From the supply side, several initiatives have been taken to close the gap between supply and demand (e.g. by reducing the consumption through energy efficient alternatives). One particular effort in this regard is Efficient Lighting Initiatives of Bangladesh (ELIB) that sought to replace 30 million traditional lamps with an equal number of energy efficient CFLs. Various mass media campaigns (e.g. leaflets, posters, advertisements) in print and electronic media were used to raise awareness on managing consumption. 75% customers said they have switched to CFL, 5% said they turn-off appliances and lights when not needed. Half of the respondents said they knew about potential power-cuts in advance, mostly through public announcements. The government has also initiated awareness campaigns to encourage reduced usage of air conditioners both in commercial and residential settings.
OTHER OBSERVATIONS
In addition to the key areas discussed above, a few other efforts are worth recognition. Renewable energy today reaches more than 15% of total households that have electricity, although this accounts for 1% of the total electricity need. However, this presents a greener alternative for connecting those who are still in off-grid areas without electricity.
Another commendable effort is pre-paid meters. About 60,000 pre-paid meters have been installed on a pilot basis so far. These meters deployed by two urban distributors come in two forms: card-based and key-pad based. In the card based system, customers are provided with a smart card ready to use for recharging. Multiple vendor stations were implemented at the locality for providing the recharging service. Whereas, key-pad based meters are recharged through tokens available at retail outlets. A token has a code printed on it, which is then entered into the key-pad based meter to load credit. Prepaid meters reduce leakage through eliminating the need for meter readers and bills, leading to zero bill arrears. They are a bit cheaper (about 2% on average). They also enhance consumer awareness about consumption.
Across all the dimensions outlined in this article, adopting and enhancing customer centricity in the electricity distribution sector can lead to significantly improved business outcomes for the distributors. It can also lead to enhanced customer satisfaction, greener consumption habits, and to some extent, reduce the gap between supply and demand for electricity.
This article was written in 2015.
pi STRATEGY