Lessons Learned From Technological Pioneers
by Michael Kelly, Navigant Research
For a century, the relationship between utilities and customers traditionally has been harmonious: consumers pay for the electricity they receive on premises in addition to a fixed rate to cover the capital costs of grid infrastructure. This relationship has primarily been limited to correspondence through monthly bills and negative events, such as power outages or unexpectedly high bills.
Customers, however, have come to expect higher levels of service from their utilities. This comes in part from the shift in consumer expectations around other industries, whether it be video (Netflix), lodging (AirBnB), music (iTunes), retail (Amazon) or transportation (Uber/Lyft). Common to each of these shifts has been a period of technological disruption, with a focus on customer-centric thinking. These revolutionary business models and the companies behind them ultimately focus on what the end consumer desires: convenience and value. Utilities are coming to accept this change in customer preference and expectation and are already leveraging some of the lessons learned from these technological pioneers. This is where the utility sector is headed.
Customer Experience vs. Engagement
Customer experience is all about maximizing the value of utility customer service. Getting this right is foundational to establishing long-term customer trust and value, which leads to customer engagement. In turn, customer engagement is foundational to extending utilities’ value proposition—upselling customers on other programs, products and services that are becoming increasingly important for utilities’ business models.
The “Appification” of Everything
In the span of just nine years, the nature of how consumers interact with businesses and the channels through which they do so have undergone a radical shift. What used to be just a desktop website has evolved to include mobile responsive websites and mobile applications. Soon it will likely include an Apple Watch app and maybe an in-home audio interface like Alexa.
For utilities, mobile applications, if managed effectively, provide one of the most direct and effective means of customer engagement. Smartphone dashboards should be viewed as real estate, and capturing this space with utility- or vendor-specific applications is the next gold rush. Mobile applications can provide users with a high level service experience, allowing them to view and pay their bills, receive energy insights, submit service requests, view outage maps, report outages and more.
Convenience, Speed, Simplicity
The rise in popularity of ridesharing apps like Uber and Lyft have demonstrated that customers value convenience, speed and simplicity. With these apps, users can hail a ride in the span of three user-intuitive clicks from a substantial and growing population of drivers around the globe.
In New York, Consolidated Edison adopted this customer-focused mindset during the recent overhaul of its utility website. The new version splits the homepage into two sections: Pay Your Bill and Cool Ways to Save. Under Pay Your Bill, customers are guided to select one of three options: Pay Bill, Report Outage, and Set up New Service. The goal is to minimize the number of pages or redirects the customer must go through to reach their intended webpage. This setup helps minimize data overload for the customer, while also addressing the highest of call center volume (billing inquiries) and average wait time (setting up new service) concerns. By streamlining these processes, utilities can offer their customers a convenient, fast, and simple means of interaction.
Attract and Maintain
There has been a strong drive in recent years to invest in solutions aimed at improving customer acquisition and retention rates. Whether it be Apple and Netflix investing in new, original content, Uber developing its loyalty rewards credit card, Amazon increasing the number of Prime-eligible products, or Spotify’s acquisition of Preact, a provider of customer service and predictive analytics software, these investments are all at least partially driven by a business case around customer acquisition and retention.
Energy retailers in deregulated markets should take heed. These markets are also dependent upon customer acquisition and retention as their primary revenue streams. Under this non-traditional structure, customers have a choice as to their energy retailer, which act independently from generators (e.g., Exelon) or grid infrastructure owners (e.g., CenterPoint, Oncor). The number of competitive electricity markets has grown in recent years, and now includes Australia, New Zealand, Illinois, New York, Ohio, Pennsylvania, and Texas, among others.
Just the Beginning
Many utilities are just beginning their customer experience journeys. The industry is still immature in its evolution from a static, siloed environment to one that is digital, dynamic, personalized, and predictive. Advanced tools like data analytics, machine learning, and artificial intelligence hold the promise to exponentially improve utilities’ understanding of their customer bases, and how to best optimize their experience. And while the path to transforming the utility business model and optimizing customer experiences will be fraught with challenges, there are also important lessons and strategies to be learned and leveraged from those who have done it before.
Michael Kelly Kelly is a research analyst contributing to Navigant Research’s Digital Grid research service within the Utility Transformations program. He also maintains a lead role in the development of Navigant Research’s Global Grid Infrastructure data service, and specializes in smart grid IT systems and data analytics, as well as advanced metering infrastructure.
Prior to joining Navigant Research, Kelly worked as a research analyst at Energy Acuity, where he researched renewable energy projects and transmission planning dockets. In this role, he also contributed to the development of annual reports on solar and wind markets and analyzed public planning documentation. Kelly holds an MS in geography and environmental science, with a focus on geospatial analysis, from the University of Colorado Denver, and a BA in environmental studies from the University of Colorado Boulder.