Searching for revenue enhancement? Look to operational efficiencies as offset.

October 10, 2018 | Blog

Many of our utility clients are searching for revenue enhancement.  Most for profit and not for profit utilities desire to increase revenues as a means of increasing earnings or cash-flows.  Promoting electric vehicles is definitely a beneficial electrification opportunity as well as converting fuel oil and propane customers to natural gas, all of which Apogee can support.

But don’t forget about operational efficiencies as a way to increase earnings and cash-flows.  For not for profit utilities with an operating margin of 15% or a for profit utility with a net income margin of approximately 12%, every dollar of operating efficiency equates to $6 to $8 of revenue enhancement.  Also, considering opportunity costs, operating efficiencies frees operating budgets for other initiatives and programs.

A straightforward way to drive operational efficiency is through enhanced customer communication strategies and improved customer service initiatives.  Apogee’s personalized communication solutions have proven to increase customer engagement by a factor of six times over typical utility communications.  Furthermore, by providing proactive and relevant customer communication that encourages engagement, a utility can expect a 15% decrease in customer call volumes.  Assuming a customer calls the utility three times per year and average cost per call of $8.50 to $12.50 per call, a utility will save between $380,000 to $560,000 for every 100,000 customers.   These savings do not consider the benefits from reduced truck rolls, improved payment collections and increased customer satisfaction.  THESE CUSTOMER SERVICE SAVINGS EQUATE TO BETWEEN $2.3 MILLION TO $4.5 MILLION IN REVENUE;  you have to sell a lot of kWh or therms to generate that amount of revenue!

About The Author

Jim Malcom, Chief Operating Officer

Jim Malcom, CPA, CGMA, and MBA, provides oversight business and financial operations of the company. His senior management experience in the telecommunications and management consulting industries is providing strategic direction for Apogee’s continued growth and success.

Malcom brings more than 20 years in corporate finance and accounting to Apogee, which began with the firms KPMG and Ernst & Young in Atlanta. His career steadily expanded to include senior posts as chief financial officer, corporate controller, vice president and treasurer for such area companies as Heidelberg USA, LecStar Telecom and Powertel.

He is a graduate of the University of Georgia with a bachelor’s and master’s degree in business administration, a certified public accountant, and a chartered global management accountant.