Npower: The only way is up
Published In: Intelligent Utility Magazine March/April 2013
Npower is among the least popular organizations in Britain. For the fifth year in a row, the British utility has been voted the country's worst energy supplier in terms of customer satisfaction by price comparison website uSwitch and for the second successive year by the Consumers' Association, more commonly known as Which?
In recent years, Npower has attracted notoriety and heavy regulator fines for poor customer service. Recent offenses include mis-selling by door-to-door salesman, mishandling customer complaints and making "abandoned calls" (when residents answer a recorded message).
Npower, however, is not alone and could be fairly described as "the worst of a bad bunch" in terms of customer service satisfaction levels. Its main competitors EDF Energy, E.ON UK, Scottish & Southern Energy, British Gas and Scottish Power have received fines for similar offenses. Britain's unique power utility sector gives clues to understanding why customer satisfaction is so low.
Following the privatization of the Central Electricity Generating Board in 1990, Britain's power system was divided into three generation companies and 14 regional electricity suppliers, plus national transmission system operator National Grid. Over time, mergers and acquisitions, and the division of the 14 regional companies into liberalized retail businesses and regulated distribution network operators (DNOs), the number of market players has been whittled down to six large national utilities, which both generate and sell power (and gas).
With their liberalized retail businesses, the so-called Big Six are free to compete for customers throughout Britain, paying the 14 DNOs to physically supply the power to homes and businesses on their behalf. Npower, owned by giant German energy company RWE, is an amalgamation of National Power, the largest of the generating companies created by privatization, and a number of the 14 regional suppliers like Midlands Electricity, Northern Electric and Yorkshire Electricity.
The acquisitive nature of Npower's growth, like its competitors, has come with a cost to customer service. With 35 offices across Britain, 28 historical billing systems and multiple ways of managing customers and industry processes in various parts of the business, Npower's customer service strategy has hitherto been one of fire-fighting rather than progressive change.
This is set to change dramatically under new Npower CEO Paul Massara, who took over from outgoing Volker Beckers on January 1, 2013. Massara's stated aim is for Npower to lead the customer satisfaction charts by 2015.
To this end, Npower has embarked upon a customer transformation program to organize the business around its 5.5 million customers rather than the other way round. The first step is the £200m ($316m) Atlas program, the migration of its customers to a custom-built SAP IS-U and customer relationship management (CRM) platform, as well as adoption of customer-focused telephony systems. In conjunction with technology partner IBM and RWE IT, the group's technical organization, Atlas is being rolled out across Npower's entire customer service and sales teams to handle administration, maintenance, billing and payment.
Having begun a pilot in summer 2011, Npower has now migrated 90 percent of its customers to Atlas. The new system means customer service employees can more easily access required information like contract history and invoice information.
Npower says this enhances customer experience by reducing time spent resolving problems, while the introduction of a Genesys-based telephony system lowers waiting times as information is gathered while they are connected and passed to the correct adviser. It has also switched to a Freephone service. (Previously customers had to pay to call the company.)
The UK's liberalized market ensures a healthy switching rate, so Atlas not only has to deal with existing customers but also the churn of those leaving and joining the company. The company employed the services of AMT-SYBEX to design a dataflow management platform in order to manage more than 30 processes that involve data exchange between Npower and other British utilities.
These processes range from simple transactions such as receiving meter reading information from a data collector, to complex multi-stage processes for transferring a customer from one utility to another. The entire process is automated; so there is no need to input any data manually, and the solution even generates chase-up emails when data is missing or late (and can escalate any problems to the appropriate people if necessary).
Npower is not the first of the Big Six to install an SAP system. Given the surge in customer complaints some of its competitors have suffered due to SAP technical system issues, this is no bad thing, according to Tim Stothart, head of Npower's Customer Competency Centre.
"We're gone quite slowly. Others have been far more aggressive, pushing high volumes through and this has created adverse customer impact. We went live in September 2011 with a pilot programme of 89,000 customers with clean accounts. Since then we've performed a series of medium-scale migrations of around 500,000, slowly increasing the volume and with each migration," he said.
"As we progressed, we became more confident: We migrated customers in debt, customers with pre-payment meters, and customers with closed accounts, i.e. customers who have left us or moved. In the last 10 percent, we are migrating customers with multiple meters or related meter points in the house."
With a £200 million investment in SAP, one would expect some efficiency savings, and Atlas is no different. Npower has a large back office, which runs to thousands of employees who conduct manual processing to ensure customers can be billed effectively. With SAP, much of that is automated, so the need for the numbers of employees dealing with customer accounts is significantly reduced.
"There is a significant order of magnitude which gives a return on investment of over £200 million," said Stothart. The company has also made efficiency savings by consolidating a number of smaller, regional offices and opening a 2,200-employee contact centre in Sunderland in the northeast of England.
In tandem with the implementation of Atlas, Npower created a number of virtual centers of excellence-customer service teams with particular expertise, such as pre-payment accounts, house movers or customers in debt. Key functions such as complaint management have also been centralized in order to enact organization design changes to support the Atlas program.
When the Atlas migration is completed this year, Npower will embark upon the next stage of the customer transformation program, This entails a large element of centralization to ensure efficient, standardized customer processes, officially renamed the six Npower Customer Journeys: I move, I pay, I enquire, I join, I leave, and my terms change.
"Customer journeys are about understanding how and why a customer needs to interact with us, and designing every step of the process to give them seamless customer experience," said Stothart. "For each customer journey, we have conducted workshops with frontline staff to understand the points in the current process that cause pain or irritation for our customers, our people and the business as a whole. For each major irritant, the six-journey teams are developing recommended solutions to the problem, and pilot teams road test the solution before formal implementation."
The ultimate aim of this is to reduce the volume of customer contact through improved service. A major chunk of Npower's call traffic consists of queries about changes to billing and payments. Two-thirds of Npower's customers make payments by direct debit; upon receipt of an estimated/manual meter reading Npower changes the amount to be charged in future.
Npower's customer transformation program is currently focused on optimizing billing and simplifying tariffs to reduce call volume. Stothart said, "We have too many tariffs, and they are too complicated. We are also harnessing customer feedback to reengineer billing. The way we do this will differentiate us from our competition, and, as we simplify the bills, we have to improve the direct debit experience."
Npower's smart grid rollout, scheduled to be complete by 2019, will ameliorate call volume by ensuring accurate metering and therefore billing and, indeed, this is built in to the Atlas program.
Npower CEO Massara is aiming high by wanting to become number one for customer service. Time will tell whether he gets his wish.
Tim Probert is a London-based freelance writer with a focus on European power markets and new smart grid technology. He helms Millicent Media and can be reached at firstname.lastname@example.org.