At the IIR Billing & Revenue Assurance conference this week, we enjoyed a fantastic presentation from the NT Power & Water Corporation, who implemented a new billing system that went … well, not very well.
Many customers were billed incorrectly and the media went absolutely crazy over the “scandal”, so in addition to fixing the problems and dealing with angry customers, stakeholder management became a huge issue (will delve into that some other time).
So what did fixing the problem really cost them? How do you calculate the cost? In addition to the direct staff cost in fixing the software and making adjustments to customer accounts, there is the blow-out in aged debt that affects cashflow (customers whose bills are wrong don’t pay them), the cost of implementing systems to rope collectibles back in, the compensation payments (which are both actual for incorrect billing, and goodwill to calm angry customers), the stakeholder management costs (like that auditor who just won’t let go), and of course the opportunity cost of the whole exercise.
A few weeks ago, Telecom NZ announced a refund process for customers overcharged one day’s line rental over a period from 1989 to 2006 (see here). The average refund to customers was $NZ 2.45, which includes a CPI recognition.
In this case, there was no public scandal to deal with. Rather it was probably picked up by an audit, and TNZ decided to be proactive and give the money back as a PR exercise. But at what cost?
The cost of working out which customers were affected, how much each one is owed, and of putting in all of the adjustments and managing all the stakeholders could easily double or triple the actual amount refunded. Not to mention the “opportunity cost” – what other useful things could they be doing if this had not happened?
Have you ever considered the true cost of billing errors? If you have, what would you (should you) proactively invest to make sure they don’t happen?