Using key performance indicators (KPIs) to track and measure progress and success is more important than ever for utility companies. Environmental initiatives, COVID-driven behavior changes and technological evolutions impact how utilities must operate, and clearly defined KPIs can help organizations understand these factors and their scope of influence.
How Do Utility Companies Use KPIs?
KPIs are used to monitor the progress utilities make when working toward short-term or long-term targets. KPIs can be used to track improvements related to financial, quality, efficiency, productivity, or performance goals, using hard data to help businesses recognize shortcomings, flaws, or obstacles in their daily processes or operations.
Why are KPIs imperative to the daily operations of utilities?
- They provide a tangible way to track efficiency when delivering utility services to the community.
- They can be used to evaluate the effectiveness of certain aspects of the utility business, such as marketing, labor, communication, and more.
- They track how external influences impact utility operations, such as emerging technologies, COVID-related shifts in demand, and environmentally-focused regulations.
- They help utilities understand what’s actually happening, preventing any unhelpful generalizations.
- They allow utilities to proactively plan for upcoming changes—such as federal or state regulations—that may impact how they operate.
Important KPIs for Utilities to Track
Now that you understand the concept of KPIs and how they can help utilities meet certain standards, here are some important KPIs for utility companies to track:
Cost-to-serve refers to the total cost of providing service to an individual consumer account—including technology, production, and labor—divided by the total number of customer accounts. Utility cost-to-serve typically includes any charges dealing with billing, meter reading, payments, collections, and customer support.
Understanding cost-to-serve is important to identify unprofitable sectors, unnecessary labor costs, and more. Although the process may be time-consuming and tedious, examining each charge related to cost-to-serve can help utilities save in the long term.
2. Staff Efficiency
This KPI can vary depending on utility size and structure, but it’s used to measure the efficiency and overall performance of employees. This can be determined in different ways, such as tracking output compared to the amount of time needed to achieve that output.
A staff efficiency KPI can help utilities avoid wasting resources by determining the number of employees needed to finish a project, checking for any gaps from the start of the project to its completion, and ensuring the project is completed within a reasonable timeframe. And ultimately, by improving this KPI, utilities will be able to better-allocate resources to their top priority initiatives.
3. Customer Engagement
Customer engagement refers to the relationship between a consumer and a business or organization. This KPI measures satisfaction levels related to your services, so it can be improved or weakened through every customer interaction.
For utility companies, this KPI allows for a diverse range of service options and mitigates problems when rates increase or service disruptions arise. It can also identify pain points, recurring issues, conflicts in communication, and more. Strong customer engagement and high satisfaction can potentially prompt faster payments from customers who are satisfied with their service and billing arrangements.
4. Billing Accuracy
Billing accuracy is vital to utilities. Correct meter readings and collection, precise usage tracking, and secure payment options are all important elements of billing accuracy.
Inaccurate billing creates problems for both customers and utilities. Customers get understandably frustrated when they’re overcharged for usage and can quickly lose trust in their utility provider, whereas utilities that undercharge for usage lose valuable revenue.
To ensure they’re correctly charging customers, many utilities are turning to third-party, cloud-based solutions such as VertexOne, which offers a single point of contact for bill production and payment processing.
Boost Your Utility Business with KPIs
KPIs are important for utilities to gauge progress toward utility goals, identify ineffective protocols, and provide customers with excellent service. Learn more about how KPIs can boost your business by watching our webinar, “UtilityWide Talk: Debt Relief and Revenue Security.”