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Prepaid Customer Lessons from the Telecommunications Industry

When it comes to prepaid service, electric utilities are at the place where telecommunications companies were many years ago. Utilities can borrow a number of vital lessons from the telecoms industry and avoid making the same mistakes.

Extensive Payment Network

Utilities must make authorized payment centers accessible and easy to find. They should also offer a wide range of payment options including credit cards, checks and cash. That said, cash must be prioritized over any other payment option. Prepaid customers are often at the lower rungs of the income ladder and therefore underbanked. They’ll usually carry out multiple cash payments over a standard billing period.

Reduce Call Volume

Due to financial constraints, prepaid customers will check their account balance more frequently than postpaid clients. This can drive up call volume which is expensive given each call averages $5. There are several ways these costs can be minimized.

Set up a caller ID system that automatically plays out the current balance. You could also leverage text alerts to regularly send out account balances. Deploy a web portal where prepaid customers can check balance information. You could provide energy consumption forecasts based on the customer’s past energy use.

Adjust Your Rules

Prepaid customers are hard pressed to respond to a diverse range of basic needs. They’ll make the minimum payments and purchases needed to get by. That includes their electricity expenditure. Since power is so essential, they’ll almost always eventually make the required payment even when they delay for a couple of days.

That’s why energy utilities should look at changing their rules to accommodate short payment delays. For example, they shouldn’t cut off the power supply late on a Friday or during bad weather.

Lower Monthly Spend

Telecoms companies discovered that prepaid customers spend a considerable amount less than post-paid consumers. That’s because they have limited resources and therefore budget conscious. Each electricity prepayment is a significant financial decision that could throw their plans off balance.

Adjusting Price Won’t Alter Consumption

In other words, there isn’t demand elasticity. Poorer households buy what they need because they cannot afford anything more. Whereas reducing the price of a kilowatt-hour can stimulate higher power consumption (in both kilo-watt hours and dollars) among middle and higher income households, prepaid customers will spend a fixed amount regardless of price.


Utilities must recognize the need to handle prepaid customers differently from postpaid ones. While prepaid clients can seem difficult to manage at the beginning, understanding their spending and consumption patterns is the way to go if you want to attract and retain them.


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