© 2003 peace software inc. all rights reserved confidential information utility customer...

© 2003 Peace Software Inc. All Rights ReservedConfidential Information

Utility Customer Profitability Analysis

Paul Grey

Chief Technology Officer


1980s

New Zealand deregulates energy sector

1989

First Peace utility CIS

1998 2002

Australia and Texas full retail competition

1997

First Peace Australian utility client

1994 1996

Peace launches browser-based customer care for utility call centers

First million-consumer installation

2000

Australia deregulates C&I

Peace pioneers industry’s first Internet self-service

1995

First North American regulated and competitive Peace installations

11-state regulated multi-jurisdiction implementation

2004

Systems Experience in International Energy Markets


Distribution

Transmission

Generation

Retail profit contribution

Customer care

Collections

Bill presentment

Billing

Receipting

Overhead

Retail cost to serve

Retail Customer

ProfitabilityTotal Revenue

Retail

Energy Retail Cost to Serve


. . . to individual customer contributionFrom overall cost focus . . .

Payment processing

Collections

Billing

Retail operational costs

Call center

Overhead

Metering

Cumulative Customer Profitability

% of customers

250

200

150

100

50

020 40 60 80 100

More profitable Less profitable

% of total profit

Focus on Cost and Efficiency

300

350


The Profitability “Whale Curve”Percentage of total profit

Percentage of customers

20% customers can erode 200% of the bottom line

20% of customers can contribute 300%+ of overall profitability

60% customers are around break even

More profitable Less profitable


Customer profile

Margin drivers

Cost drivers

Customer Profitability Analytical

Engine

Individual customer cost-to-serve & profitability

Customers

Customer Profitability Model


Identify and retain profitable customers

Understand the value of each of your customers

Target operational initiatives for maximum profitability impactCustomer profitability adds to the customer profile

Advanced CIS delivers operational value

Customer Profitability Analytical

Engine

Customer Profitability Analytical Engine

Individual customer cost-to-serve & profitability

Margin drivers

Cost drivers

Customer profile


Planning OperationsStrategic business improvement

Better understand your customer base

Know what questions to ask

Identify opportunities for operational improvement

M&A customer valuation

Priority customer care

Retention programmes and promotions

Better qualify prospective customers

“What-if” business planning tool

Assess potential impact of changes, costs, initiatives

CPA – Where’s the Value?


CIS is the Platform for CPA

© 2003 peace software inc. all rights reserved confidential information utility customer...

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