Tailoring service for prepay is more critical than ever this winter

As we enter winter, prepayment demand is expected to surge by 50%. Affordability challenges are already at an unprecedented level in energy, and with prepayment customers being most sensitive to this, tailoring service to meet their specific needs is critical.  

Servicing prepayment customers is often deemed challenging in comparison to Direct Debit. The complexity of processes and regulatory requirements mean it can fall into a ‘too hard’ position for some suppliers, but this only exacerbates the customer situation, and places heightened operational strain on service teams.

The stakes are higher than ever this winter – customer debt is at a record-level, and the Winter Fuel Payment has been cut. Servicing the subsequent increase in demand will be increasingly complicated for prepayment customers, driven by a reliance on manual workarounds, metering issues, and limited cash flow options.

As we explore below, a bespoke approach is needed to address the immediate challenges of a surge in winter demand, while building a sustainable, long-term approach to prepayment servicing.

Understanding the challenge of servicing prepayment customers

Servicing prepayment meters is fundamentally different to managing credit meters. Differences in cash processing and billing create operational complexity, heightened further by the stringent regulatory requirements set by Ofgem.

As the temperature drops, prepayment customers will see an immediate and direct increase in their weekly cost of living. Some won’t be able to manage this themselves, generating increases in demand, debt, and challenging conversations for suppliers.

These circumstances create a need for bespoke system requirements and standalone operational process that can be complex, specialised, and often reliant on manual workarounds.

Compounding these challenges are metering arrangements, whether it’s traditional meters creating issues with missing payments and tariff mismatches, or out of comms smart meters allowing customers to free vend. These failures can lead to lost revenue, margin erosion, and ultimately more financial strain for prepayment suppliers - creating a cycle of increasing debt and service complications.

Immediate actions to address surging prepayment demand

A 50% increase in contact from prepayment customers is typical from late November onwards, continuing through to Spring.

To manage this peak demand period successfully, we see the following actions as critical, as part of a broader focus on bespoke prepayment service: 

1. Identify your top demand drivers. This can include Assisted Credit Requests, emergency call outs, and customers querying their usage. Ensure you have clear policies and processes in place to deal with these specific requests effectively, which are consistently communicated across all relevant teams.
2. Equip your teams for success. Set your customer service teams up for success by providing the right prepayment-specific training, regular communication updates, and targeted upskilling on problem demand drivers.
3. Develop a dynamic response capability. This will allow you to meet increased demand in a controlled way. Ensure real-time, intraday monitoring of your key performance indicators, allowing you to swiftly adapt to changing customer needs and mitigate potential impacts.

Meeting the specific needs of your prepayment portfolio 

At BFY, we have a proven track record of helping suppliers meet the specific demands of their prepayment portfolios, including lowering ACS levels, reducing and recovering debt on meters, and eliminating waste demand. We’ve also helped with complex prepayment data challenges, finding the necessary insights to pinpoint root cause improvements.

Working with our experts can create the immediate headroom needed to get through a difficult period, while establishing the enduring capabilities to prevent recurring problems later down the line.

We can help with:

1. Creating immediate headroom. We help alleviate operational pressure during difficult periods by developing rapid response capabilities, implementing real-time intraday monitoring of KPIs, and supporting prioritisation and business decision making to enable quickly improved outcomes.
2. Reducing debt impact and revenue loss. With industry-leading frameworks for policies, processes, and business controls, we help mitigate commercial risks and recover financial losses.
3. Creating a strategic advantage. We can help develop your prepayment function into a true centre of excellence, by optimising processes, enhancing system capabilities, and providing training and insights. Crucially, we integrate technology with commercial control, allowing you to mitigate demand while still retaining a handle of debt and other elements of financial risk.

For more on tailoring service to prepayment customers this winter, contact Jon Vincent.