A core part of AGL’s strategic framework is to unlock growth, and an important way that we are doing this is by building our digital capability and enhancing our customers’ experience. Another strategic goal of AGL is to drive productivity, and one of the ways we are doing this is to leverage market opportunities and implement our customer value strategy.
AGL continues to face an increasingly competitive retail market, with over 35 active retailers across the National Electricity Market (NEM). However, our Customer Value Strategy combined with targeted operating cost initiatives is driving strong returns. AGL’s internal marketing channels now contribute over 80% of total sales and retentions, and our customer loyalty and reward participation increased over 45% during FY2016, delivering improved customer loyalty.
Total customer accounts decreased by 1.4% across the portfolio, due to continued strong competition in the market. During FY2016, AGL launched an inactive and unidentified consumption program, resulting in a 67% reduction in inactive and negative value accounts, and a corresponding impact on customer numbers of around 46,000.
Consumer gross margin per customer account rose 9.1% to $216 and consumer EBIT per customer account increased 25.6% to $108 through disciplined and effective price management, changing customer mix and reduced operating costs through targeted operating cost initiatives. The consumer net operating costs to gross margin ratio also decreased by 6.6 percentage points to 49.9%.
The cost of serving each customer account decreased by 4.2% compared to FY2015, predominately due to lower bad and doubtful debts and other operating costs.
For more information see AGL's 2016 Sustainability Report.