How Optivia helped a large energy retailer transform its price-setting process

Energy retailer case study

Deliverables

One of Australia’s largest energy retailers recognised a need to modernise their increasingly complex price-setting process. Traditionally housed in spreadsheets, the process was highly manual, time-consuming, difficult to repeat and challenging to audit.

The energy retailer decided to invest in a new platform to manage its pricing structures. However, they quickly realised they needed additional support to get the most benefit from it. They decided to partner with Optivia, who were not only able to cleanse and prepare the data that would feed into the platform, but also build out complex models and governance structures that would inform the new pricing program, as well as other areas of the business.

The challenge

The immediate challenge for the company was to collect and transform the vast quantities of customer consumption data collected from smart metres into usable information.

“When we started this work, we didn’t have a good sense of how complex the data environment was, how messy things were and how much data cleansing was needed,” said the Pricing Program Lead.

Additionally, the retailer needed to extend the capabilities of their new pricing platform to be able to build and process their pricing models. This would allow them to bill their customers quickly and accurately despite the many variables at play, such as state-based pricing limits and deadlines.

Operating in a highly regulated industry, the company was also subject to rigorous audit and compliance checks. The lack of effective data governance across the pricing program was also causing poor visibility and a lack of data to support decision-making.

The solution

“Optivia’s work had been recommended to us and we initially engaged them to help us with the data preparation. Since then, they’ve also helped us to build out many complex pricing models, as well as define and develop proper governance around our data platforms,” said the Pricing Program Lead.

As part of the project, Optivia pulled data from more than a dozen different platforms and identified gaps and data quality issues, before transforming it into an integrated, trustworthy and usable data source that could feed into the pricing platform. Where there was incomplete or missing data, the team was also able to create analytical models that predicted customer consumption.

“The key thing here has really been the Optivia team’s willingness to invest time in understanding our business, data and context. That’s allowed us to work through problems systematically and find long-lasting solutions to the data quality issues that are just inherent given the age of our customer base.”

When it came to building out the pricing models and governance around them, the energy retailer has been able to go much further than they initially planned thanks to Optivia’s involvement.

“They’ve built many iterations that have helped us get to the point where we have usage, expenses and revenue models that can be mixed and matched so that they’re leveraged right across the business,” said the Pricing Program Lead.

“The Optivia team’s willingness to invest time in understanding our business, data and context [has] allowed us to work through problems systematically and find long-lasting solutions.”

“We can now do a lot more scenario modelling and this is impacting budgeting, investments and other decisions in the business that aren’t just related to pricing.”

For example, with the ability to manipulate the new pricing modules, the company has much clearer insight into individual customer cost stacks and customer lifetime value, which can be used to inform a wide range of business decisions, from transforming the existing customer base to investing in a new CRM.

The outcome

The project well exceeded the original benefits case that the pricing department put together. Thanks to Optivia’s expertise, the ROI also proved to be deeper than a simple dollar amount.

“We have a much better understanding of our portfolio and the impact of pricing changes on our customers, so we can make balanced decisions and ensure we’re continuing to meet regulatory requirements,” explained the Pricing Program Lead.

“We also have greater visibility within the pricing model and our portfolio. New questions are much more easily answered and we can see when an error occurs, such as billing a customer incorrectly, and fix things quickly.”

“We have a better understanding of our portfolio and the impact of pricing changes on our customers, so we can make more balanced decisions and ensure we’re continuing to meet regulatory requirements.”

The energy retailer has also benefited from a long-term relationship with Optivia, with the team developing a deep understanding of the business over time. This enabled them to speak directly to subject matter experts without the need for intermediaries to translate the business need.

“We can hand them work and they understand enough about the business and how we operate to piece things together and get the right answer in a reasonable timeframe,” said the Pricing Program Lead.

Finally, the client was appreciative of the valuable cross-skilling and knowledge sharing that Optivia offered, enabling their internal BAU team to make changes when new requirements came up.

“Optivia has given us the skills we need and that’s the real difference between what they do versus other consultants we’ve had in the past.”

“While we won’t hesitate to bring the Optivia team back in to make further enhancements to our pricing program, I think their legacy is that they became a working part of our team and helped us deliver something that we could continue to own and manage ourselves.”

“When new requirements come up, our internal team can make the changes. Optivia has given us the skills we need and that’s the real difference between what they do versus other consultants we’ve had in the past.”

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