Water utilities spend a disproportionate amount of time engaging with disadvantaged communities, often to address delinquent or unpaid bills and service disconnections that leave everyone worse off. Customer Assistance Programs (CAPs) are a good way to address affordability issues with these customers, and preexisting notions of disadvantaged customers being out of reach of electronic communications methods are, in fact, incorrect.
While many low-income customers do not have traditional Internet services or access to personal computers, over 50% of these households do have a smartphone as a primary communication device with at least access to text messaging if not full web access. Even now, the digital lives of Americans with lower and higher incomes remain markedly different, according to a Pew Research Center survey of U.S. adults.
Utilities have a substantial opportunity to improve disadvantaged community engagement by utilizing the kinds of targeted communications that customer self-service platforms enable. By employing these new data technologies, utilities can address issues of affordability and social equity while simultaneously driving down service costs, protecting revenue, and improving customer satisfaction.
Cost Disparities, Especially in Water Utilities
A decade ago, the bottom 20% of earners spend almost 3% of their after-tax income on water, which is nearly five times the amount spent by the top 20% of earners. Whether it be natural gas, electricity, or home heating and fuel oils—the lights must be kept on; key appliances must function; and when the seasons dictate, the air conditioner or heating system must be run.
"Aside from the actual purchase of a house and keeping up with monthly mortgage payments, one of the most important bills consumers spend money on is utilities" according to a recent Bureau of Labor Statistics of Labor Statistics Report.
Whether it be natural gas, electricity, or home heating and fuel oils—the lights must be kept on; key appliances must function; and when the seasons dictate, the air conditioner or heating system must be run.
This makes these users vulnerable to costly, unpopular, and health impacting service disconnections.3 Digital engagement can be used to encourage this hard-to-reach demographic to submit timely online payments, enroll in Customer Assistance Programs (CAPs), and save water. This approach provides a better experience for customers, lowers their bills, and is more financially responsible for utilities.
The Water Research Foundation estimates that 1 percent of households are unable to pay their utility bills at any given time. In certain cities and regions the problem is more widespread. For example, disconnections are a persistent issue for utilities like Detroit, where 23,000 out of the 30,000 customers on a payment plan have defaulted and are at risk of being shut off.
Collection Management
Utilities across the country struggle with the challenge of payment delinquencies, and at a disproportional level when it comes to disadvantaged communities. In fact, disadvantaged households are three times more likely to have their water service disconnected than other households.4
There are three major problems with disconnections as a collections management tool:
- They are onerous to the households being shut off, who have to bear the health risks and economic costs
- They are deeply unpopular and are the subject of heavy criticism from the public and elected officials
- They are expensive. Utilities are unlikely to recover the full cost of a service disconnect/reconnect.
Managing Disconnects
Disconnects and reconnects are expensive events for a utility to manage because they have to roll a truck with field staff members trained in service connections. While disconnects can be batched along a route, reconnects occur when the customer needs to be turned on right away, and are thus more expensive.
The total cost to disconnect and reconnect averages around $60, yet the reconnection fee is typically around $40, so a utility loses around $20 for each reconnection.
Reducing disconnects through proactive outreach to disadvantaged communities on money-saving measures and information on Customer Assistance Programs is a superior and less expensive option for utilities to address affordability issues.
The Many Flavors of Customer Assistance Programs
Customer Assistance Programs (CAPs) offer utilities benefits in demonstrating social responsibility, enhancing public relations, and reducing costs associated with debt collection and service disruptions.
There are several different types of Customer Assistance Programs. Some programs offer customers direct discounts on their bills. Others offer flexible payment terms or levelize payments. Water Budgets are a type of CAP where each household receives a certain allocation of water to cover its basic needs. There are temporary assistance programs that help avoid disconnections in the case of one-time emergencies. Finally, there are efficiency programs that subsidize water efficient actions and appliances.
How Software Helps
The following framework is inspired by the EPA for implementing Customer Assistance Programs. Customer self-service software can help utilities implement their CAPs more efficiently at every stage.
IDENTIFY A TARGET SEGMENT BASED ON INCOME AND OTHER ELIGIBILITY CRITERIA
The right segments can be identified and targeted based on a variety of eligibility criteria. For example, the City of Davis, California needed to test water samples in homes built from 1982-1986 per EPA’s lead and copper rule. Customer engagement software from our Customer Self-Service Analytics Platform helped Davis assemble a targeted list of homes that met the criteria and send a communication with personalization details for each household. Results were measured and Davis achieved a 50% open rate and saved hours of work compared to a manual process for identifying and communicating with recipients.
ANALYZE OPTIONS, INCLUDING RESOURCE AND FINANCIAL ANALYSIS
The most time-consuming aspect of analysis is preparing the data to be analyzed. Research has found that analysts spend 40 to 60 percent of their time on data preparation and quality assurance. Utility data analytics platforms ingest information automatically and in a consistent manner, resulting in less time spent on data preparation and QA and more time on high value items like conducting analysis and making informed decisions about CAPs.
TRAIN STAFF
A well-trained customer service representative (CSR) makes all the difference to water utility customers. This is especially true when a CSR is dealing with a stressed customer. Likewise, providing ongoing training for utility staff is one of the most crucial tasks for software providers. Like the best utilities, software providers who truly stand out realize that there is no such thing as a 100% self-service software platform and therefore invest a lot of resources into staff training.
CONDUCT PUBLIC OUTREACH TO EDUCATE THE PUBLIC ABOUT CUSTOMER ASSISTANCE PROGRAMS
A program that nobody knows about will not accomplish its goals and CAPs historically have very low participation rates.7 Public outreach is key. However, the outdated, one-size-fits-all method of mass communications is expensive and ineffective. To reach customers more efficiently, utilities should employ the type of targeted communication that is enabled by a customer engagement platform. This is about targeting the right people with the right message at the right time over the right channel.
For example, when promoting a customer assistance program, instead of waiting until a customer is delinquent and sending them an impersonal bill insert CAP program application, or advertising the program in the local newspaper, a utility might obtain a list of participants from other assistance programs and send them personalized invitation via text or email. Targeted public outreach is effective public outreach for customer assistance programs.
TRANSLATIONS AND CULTURAL SENSITIVITY
When translating your materials from one language to another, be mindful of that transition. Some English phrases do not translate well directly to other languages. Be sure to make modifications as needed and consult a translator who is specialized in localization and is proficient in cross-cultural translations.
As an illustration, consider the East Bay Municipal Utility District in California (EBMUD). They have initiated a Diversity, Equity, and Inclusion (DEI) program to create a language strategy plan aimed at effectively communicating with their diverse, multilingual community. After careful data analysis, the District crafted advertisements in English, Spanish, Mandarin, and Vietnamese to engage with and empower the entire service area in adopting water-saving practices.
IMPLEMENT, EVALUATE, THEN ADJUST
As the old adage goes, “you can’t manage what you can’t measure.” Technology that measures and reports on ongoing customer interactions, and enables utilities to segment and directly communicate with their customers, is a game changer for implementing customer assistance programs and beyond.
Best Practices for Engaging Disadvantaged Communities
Customer engagement and analytics platforms like our Customer Self-Service Analytics Platform can help implement Customer Assistance Programs effectively and make the most out of the small budgets that are typically allocated to these programs. By identifying key segments of users in need and targeting them with the right message at the right time, analyzing data, conducting public outreach campaigns, and tracking implementation, utilities can bring their Customer Assistance Programs to the next level.