When it comes to smart meters, the devil’s in the data

Missing and inaccurate data is the bane of incumbent energy suppliers, says Rob Stait, and the smart meter rollout does not offer an easy fix – in fact, in could make matters worse.

The latest Institute of Customer Service survey results for customer satisfaction by sector has once again placed utilities at the foot of the table, with energy suppliers among some of the worst performers. The energy industry’s poor reputation for customer service has languished for a long time and to some extent it is understandable: it is hard to delight customers by the nature of the products and services provided.

The utilities sector is not alone: insurance, the public sector and telecommunications share the distinction, so it has to be considered that the problem could be more structural and caused by the way the industry works.

Some scrutiny of Ofgem’s data, which tracks recorded reasons for complaints, is revealing (see box). Over three-quarters of all complaints relate to issues that could be considered to have structural causes: accuracy of bills, estimates or readings; the suitability of direct debits; and the effectiveness of the transfer process. In fact, we can go further and say that each of these has the data that flows around the industry’s structures as the common thread.

In Ofgem’s data, the quality of customer interaction is a very minor concern in comparison to the main drivers of dissatisfaction, which all have data-driven issues at their root.

In late 2014, Ensek commissioned in-depth research with directors and senior managers from 14 energy suppliers, including all of the big six and eight smaller suppliers, to explore in more detail the relationship between customer service and data quality.

The overwhelming consensus from this research corroborates the theory that data quality is at the root of the vast majority of complaints and dissatisfaction. It found that inaccurate data is the biggest barrier to delivering consistently good customer service: suppliers confirmed that service issues were fuelled primarily by the complexity of data flowing round the industry, the sheer volume of workflows passing through suppliers’ systems and the quality of data in the industry.

Despite such consensus, and the strong themes of Ofgem’s own statistics, the industry regulator tends to focus on other areas. Its primary performance measures relate to aspects such as customer debt levels, disconnections, switching performance, guaranteed standards payments and, of course, complaint numbers.

These are all important measures, but none really addressing the root causes of dissatisfaction and the poor quality data that flows around the industry. As a result, suppliers, too, can be guilty of reacting to what is measured and fixing symptoms rather than the cause, with focus (and investment) prioritised typically in the quality of customer interaction or billing systems.

Great strides have been made to improve aspects such as the overall quality of customer engagement, but with little impact on the real causes of dissatisfaction and complaints such as sudden jumps in bill amounts, erroneously high direct debits, refunds not materialising or meter readings not being used.

It is time for the industry to dig deeper and look at the fundamentals of the data that drives its processes. So, what did the industry tell us through Ensek’s research?

Suppliers interviewed for the research pinned the blame on incorrect data in the billing system, creating errors and driving customer complaints that cannot be answered immediately. This leads to another driver for complaints: an inability to solve customer queries at the first point of contact. A managing director at one supplier explained that this not only frustrated customers, it also cost more because extra headcount was required to investigate and resolve such exceptions.

The relationship with data and complaints extends to switching. The quality of data flowing around the industry means that often suppliers acquire customers with inaccurate or missing meter readings, customer information or other data attached to their accounts. This lack of accurate customer data was deemed to be a major issue by smaller suppliers in particular, which are entirely dependent on acquiring customers to grow their customer base.

Smaller suppliers explained that incorrect or incomplete records of new customers causes problems and long delays with the switch, or creates issues when the first bill is issued. All suppliers acknowledged the frustration that poor data can and will be inherited, despite improvements in an individual company’s systems and processes.

These problems could also be exacerbated by moves to significantly reduce switching times to three days – and ultimately to 24 hours. The suppliers interviewed were almost unanimous in their opinion of the impact poor quality data and missing information would have on their ability to meet the new targets, despite efforts across the industry to amend codes to speed up the movement of data.

The problems caused by data – inaccurate bills, delays to switching, complex exceptions and an inability to resolve issues at first point of contact – undoubtedly link it to the root causes of customer complaints. However, many believe the issues to be a temporary problem, and that the introduction of smart meters by the end of 2020 will solve much of the issues.

The truth is that smart meters may not be the panacea that some in the industry hope them to be. The problems caused by missing or inaccurate customer data could actually be exacerbated by the huge increase in data flowing around the industry, from hundreds of workflows to hundreds of thousands each day. A 2014 report by Elexon and MRA into data quality acknowledged this, and suggested that data issues may hinder the smart transition without a major data cleanse.

The sheer volume of data could also cause problems: suppliers will receive 96 domestic meter readings a day, compared with one or two a year. One big six supplier admits that its systems already struggle with the bulk data, and the additional mass of smart data will only add to the issue, views echoed by smaller suppliers interviewed for the research.

The research makes it clear that data quality is increasingly a business risk, impeding both business performance and customer satisfaction. By addressing data quality, suppliers can address the issues it causes: inaccurate bills, switching delays, meter read issues and sudden bill increases.

While work is taking place at an industry level to ameliorate data issues by improving settlement processes and the wider smart programme, this will take time. The fundamental issue highlighted in the report is the quality and accuracy of data, caused by the complex industry structures and processes. It is unlikely that any new measures to target the data quality issues that prompt complaints and dissatisfaction will be introduced any time soon, so suppliers will not be forced to improve these aspects. In the absence of an industry solution, suppliers must create their own single source of energy data, which reconciles settlement and billing data before it enters their systems, to identify and tackle any inconsistencies and exceptions.

As the public face of the industry, suppliers will continue to be held responsible for the ongoing service and performance problems caused by data. Suppliers cannot afford to ignore the issue.

Rob Stait, director, Ensek