Bill shock is quite simply the shock when you receive a bill. It’s a term that has become more commonly used in the telecommunications industry. It derives from the notion of “sticker shock” – when you go into a shop and see something you like, you develop in your mind a sense of what that product might be worth. Then, when you see the price sticker, you may get a shock if this is very different to what you expect.
Post-paid telecommunications services are essentially a line of credit. Service providers give their customers rope, and every month work out how much rope they have used, and send them a bill for the usage. It’s largely the same with utilities like water, electricity and gas. Until you receive the bill, you may have no idea how much you actually used, and therefore when you receive the bill there is potential for some nasty surprises. In addition, because you receive the bill some time after usage finishes (say, several days after a monthly billing period completes), you may lose a sense of what you did during that month to suddenly run up such a huge bill. It’s not as if you’re at a supermarket with a trolley full of goods, and you can look at it and say – “this is around $150 worth”. The time gap between being invoiced and using the service is a big contributor to sticker shock.
Bill shock is not a good thing, for a couple of reasons. Firstly, it does not manage customer expectations well. It’s very important to give the customer at least as much as what they expect to be getting. It doesn’t matter if they expect a lot or a little, only that the service provider deliver as much or more than they are expecting. When you expect a bill of $50 and get a bill of $100, then immediately the customer is not happy, and becomes suspicious of the service offering. Secondly, when faced with bill shock like this, there is a risk that the customer will dispute the bill, and may not pay it. Both of these are a customer service nightmare, with both the cost in dealing with the issue, and the potential to lose revenue.
So, what can be done about it?
Well, in a post-paid billing environment, the key is:
(a) for the service provider themselves to monitor and find out in advance if the customer’s bill may exceed what they expect to pay.
(b) to communicate this proactively to the customer.
Once you do (a), then (b) is relatively easy. Part (a) depends on the timing of the service provider’s wholesale charges. If they come in daily and are processed daily, you can accrue the amount of unbilled against each customer, and use analytics to determine whether there is a spike in usage or if it will exceed what the customer expects to pay. This information can feed into exception reporting, which can in turn result in either an e-mail, letter or phone call to the customer advising of what will happen. That is managing customer expectations well.
To implement this, the service provider will need to work with their wholesale suppliers (to ensure the charge usage records come in a timely fashion), and their billing system or billing provider. This may not be simple to implement (if it was, everyone will have done it), and as at the time of writing there has been resistance on the part of the industry to comply.
However, it is a case of an ounce of prevention being better than a pound of cure.
This is also posted at [Billing Bureau].