Gary Praznik
First Contact

When a Duke Power customer telephones the company to discuss credit and collection issues, they doubtlessly assume that they are speaking to a company employee. However, the call has been routed through the Duke phone system and into a call center for First Contact in Charlotte, N.C.

Because the handoff was seamless, the customer expe-riences the same quality and satisfaction as if they were talking to a Duke employee. However, First Contact employees are uniquely trained to manage the credit and collection call. Duke Power and First Contact have collaborated on a unique training program where Duke provides the policy and procedure knowledge and FCI provides the soft skill and collection techniques. First Contact has been given access to the client's mainframe computer system, giving them such customer information as payment history and due dates.

The result of the partnership has had a significant impact on a number of key metrics. Overall service levels have improved, customer satisfaction has increased and Duke has experienced an overall reduction in net bad debt.

Utility companies are finding it more cost effective to hire professional agents to handle calls from delinquent customers regarding past-due bills.

Each month, First Contact, a subsidiary of Columbus, Ohio, based IntelliRisk Management Corp., fields 400,000 calls from customers inquiring about credit and collection related issues on behalf of a variety of power companies, including Duke, Central Illinois Power, Dominion Resources and Ameren-Union Electric.

First Contact makes more than 100,000 outgoing calls—all made in the name of the client—to inform customers of their delinquency and work to arrange amicable terms that rehabilitates the customer back into a profitable one. While utility companies have used third-party vendors for decades to collect old accounts (90 days and older), only within the past five years have companies have turned over other accounts for collection.

The advantages of utilizing a third-party vendor for collections include:

• Enabling utility to outsource non-core functions and focus on its core business
• Enabling utility to allocate resources to other revenue generating projects
• Increasing overall recoveries and netback.

"We want to get them to pay their bills, but if they can't, we can put those customers in an appropriate payment plan that retains the customer and eliminates the high cost of termination and reconnection. Then, everyone wins," said Kevin Brown, First Contact Center Director in Charlotte, N.C.. "The utility gets paid and the customer has a payment plan they can handle."

First Contact had a modest operation when it began working for utilities in 1996. It now has more than 1,700 employees in its Charlotte office, all dedicated to utilities and telecommunications industry collections.

By hiring a third-party vendor, a utility can save 15 percent over the cost of operating its own call center because it doesn't have deal with staffing issues, keeping up with technology and handling volatile call volumes. Also, because vendors train employees to handle difficult calls, they are more efficient in getting full payment.

Power companies once wrote off bad debt with little concern for the loss. They simply included the bad debt as part of their justification for the next rate case.

However, regulators are less forgiving these days. Piling hundreds of thousands of dollars of seemingly unrecoverable debt into a rate case is no longer an accepted practice, making power companies looking at ways to track down those who tried to leave power companies in the dark about their whereabouts.

"Power companies generate power, they're not in the business of collecting bad debts," said First Contact Vice President of Sales, Jay Johnson. "A good vendor needs fewer people to handle the same size portfolio, which automatically generates a cost savings. Generally, our Average Handle Time with a customer is 25-30 percent less than an in-house staff person. That represents a lot more calls being handled over the course of an eight-hour shift. And, we're calling during the most productive contact hours at night and on weekends through the use of part-time employees, which is often difficult for utility companies to manage.

"By letting us handle their delinquent accounts, which is a non-core function, it enables them to focus on their core business. This is what we do. It makes great financial sense for a utility to hand over that aspect of their business to us. We treat the customers like they're our own, which is often times a concern for utilities."

Third-party vendors are trained in dealing with delinquent customers. However, a utility company's universal agents take calls ranging from new service hookups to disgruntled customers.

Utilities have found that their own employees often times don't hold customer to their business rules. Dealing with a confrontational customer requires a unique skill set that is very difficult to develop with a universal agent. We train our associates in negotiation skills, conflict resolution, empathy and the common soft skills surrounding tone, clarity and articulation, all of which is critical to manage delinquent customers. The bottom line is our people are trained to handle difficult calls. And they use these opportunities to educate the customers on the benefits of preserving their valuable credit and on keeping their account current.

Praznik is vice president and COO of First Contact, a division of IntelliRisk Management Corp. that specializes in various outsourcing services. He can be reached at gpraznik@irmc.com.