by Kristen Wright, senior editor
Walmart, Neiman Marcus or Smallville Electric Co-op, businesses are learning they’d better treat every customer as though each were their only customer, lest a disgruntled patron tweet, blog or post on Facebook of an unsavory experience.
Utility customers, it turns out, want the same, click-of-a-button ease they encounter with other industries: instant, simple and on their terms. They want an awesome experience.
“Customers are no longer comparing us to the utility next door,” said Retha Hunsicker, general manager of smart energy systems and processes at Duke Energy Corp. “Customers are comparing us to the Amazons.”
Hunsicker presented on smart grid-enabled customer care and Duke’s enterprise customer system during CS Week 2012 in Dallas. She said that in 2008, Duke tried to forecast what customers really want. Among its findings are:
- A transformation of the utility customer model;
- A comprehensive framework from regulatory to customer interactions;
- Changing customer expectations;
- Developing strategic relations with customers; and
- New infrastructure and energy efficiency programs.
Hunsicker said electric utilities, in general, operate in the same, reactive mode they always have. Duke, however, is working hard to become proactive. Still, utilities are slow to change anything, and customers are frustrated with the status quo.
For the second year in a row, residential utility customer satisfaction has fallen, according to a J.D. Power and Associates study released in July.
The study confirms Duke’s findings. Eighty-two percent of customers, the study shows, prefer to be contacted proactively with information and updates during outages. What’s more, a direct correlation exists between the amount of outage information a utility delivers and customer satisfaction, said Chris Oberle, senior director of the energy and utility practice at J.D. Power and Associates.
“Customers value being kept up-to-date and want to resume their lives as quickly as possible,” Oberle said in a statement. “Notifying them in a proactive manner ensures that they know the latest information and are kept apprised of their unique situation.”
On the study’s 1,000-point scale, electric utility customer satisfaction averages 714 when utilities communicate electronically with customers—89 points above industry average. And, according to the study, satisfaction is notably higher among customers:
- Who use electronic billing and payment;
- Are provided outage information by email, text or mobile apps;
- Visit their electric utilities’ websites; or
- Recall messages sent to them by email, website or social media.
Hunsicker said Duke is trying to change the way it communicates with customers and increase the amount of useful information it supplies customers. Part of the change involves dispensing customers’ usage information.
“Our goal is that we have yesterday’s data today,” Hunsicker said.
That means displaying customers’ electricity usage 24 hours later in hourly intervals. With that information, customers will be able to quickly alter their usage patterns. Fewer displeased customers who complain about last month’s high usage means less call center traffic. In other words, happier customers make for a happier utility.
Duke is involved in other customer outreach programs, as well, Hunsicker said. Teams are trying to find ways to work with businesses and brands customers already know and trust, for example.
“How will we build alliances with other vendors— Lowe’s, Best Buy?” Hunsicker said.
The utility also has a customer prototype program using customers in pilots.
“Those folks in pilots get treated with kid gloves,” she said.
Duke’s efforts to win over customers are working. In the J.D. Power & Associates study, Duke placed fifth in the Midwest region’s large utility division, with 637 points, behind MidAmerican Energy (666), Alliant Energy (646), We Energies (645) and Xcel Energy-Midwest (639).
On the American Customer Satisfaction Index (ACSI), another national economic indicator of customer evaluations, Duke’s customer satisfaction increased 2.6 percent; from 77 in 2011 to 79 in 2012.
Tied at 83, the highest index score among investor-owned utilities, are natural gas supplier Atmos Energy and gas and electric supplier Sempra Energy. CenterPoint Energy, another natural gas provider, followed with a score of 82.
Claes Fornell, ACSI founder and author of “The Satisfied Customer: Winners and Losers in the Battle for Buyer Preference,” attributes the recent growth in customer satisfaction of natural gas to the fuel’s lower prices, plus recent electricity outages.
“Typically, storms do not cause outages for natural gas customers,” Fornell said in a statement. “Lower prices for most households—coupled with better service reliability—make natural gas a superior energy source in the eyes of many customers.”
Fair weather and improved reliability contributed to a score of 81 for both Southern Co. and NiSource. The companies posted 5 and 7 percent gains respectively on the index. Also posting gains were PPL at 1 percent, NextEra Energy at 3 percent and Dominion Resources at 4 percent for a three-way tie of 80.
Customer satisfaction surged 10 percent for American Electric Power and Ameren to 79 and 78 respectively. And Pepco Holdings posted the year’s largest ACSI gain of 28 percent with a 69. The previous year Pepco logged a 54, the worst score among more than 200 companies in the index.
“A year ago, it was apparent that frequent and prolonged outages had taken a sharp toll on customer satisfaction for Pepco Holdings,” Fornell said in the statement. “The utility’s focused efforts to improve its power grids, bolster reliability and speed up power restoration—including a quick response to outages caused by 2011’s Hurricane Irene—have gone a long way toward repairing the utility’s customer relationships.”
This year’s lowest-scoring utility is Northeast Utilities. Its ACSI score fell 21 percent to 59. The index attributes the decline to severe weather, including Hurricane Irene in August, tornadoes in June and a snowstorm in October.
Municipal utilities scored better on the index this year, tying investor-owned utilities. The outlier, however, is Long Island Power Authority, which logged a 58. It’s the lowest score among all utilities and likely a result of outages after Hurricane Irene, when some customers had no power for more than a week.
Cooperatives fared better. According to the index, small co-ops are neck and neck with the 2012’s best investor-owned utilities.
Is it possible for electric utilities to achieve Amazon-type customer satisfaction? Maybe utilities should hire somebody from Amazon and find out.
3 Ways to Enhance the Customer Experience
by Jordan Bayless, Optimal Strategix Group Inc.
A significant shift is occurring in the utility industry. Deregulation is increasing competition while technological advances are requiring more customer understanding. In combination, the utility industry is facing a customer insight crisis.
“With substantial amounts of data, utilities are very well-positioned to turn their information into insight through detailed analysis,” said James Etheredge, managing director at Accenture. “Today, however, most utilities lack meaningful insight about their customers because they have simply not had the need, tools or capabilities to gather the necessary information.”
Utilities that gather superior customer insight will be able to translate this understanding into better relationships and winning results.
The challenge remains: How can utilities excel at generating and understanding customer insights to enhance customer satisfaction, drive differentiation and establish a competitive advantage? Following are three powerful ways to make it happen.
Embrace Different Customer Segments
Not all customers have the same needs and preferences. As a result, utilities must incorporate customer segmentation to understand how different customers react to changes in the utility space. Customers should be segmented by variables including attitudes, emotions, key drivers and behaviors—not just usage data. New methodologies, such as adaptive conjoint techniques, can help utilities get a more detailed, in-depth understanding about who these segments are and what they want. With this segmentation data, utilities can gain the comprehensive insight necessary to roll out successful customer programs.
Optimize Each Customer Touch Point
Because there are stages of a customer’s journey, there are points of gathering and
analyzing customer data. Each touch point should gather insight about customer motivations, needs, concerns, doubts and perceptions about energy products, providers and consumption. Primary insight from these touch points will inform utilities’ decisions for customer program development and help ensure the adoption of new initiatives.
Leverage Latest Approaches to ID Benefits Customers Want
To develop successful business strategies while fulfilling customer expectations, utilities must collect the best insights possible about their customers. The best way to gain a holistic understanding of customer motivations and needs is through direct customer engagement. Surveys, customer interviews and other approaches are key tools, and like smart grid technology, they are evolving and becoming more powerful and sophisticated. As deregulation brings new competition, advanced approaches for customer insight can bring a competitive advantage to utilities.
Using these strategies, utilities can understand customer needs better and meet their expectations, said R. Sukumar, president and CEO of Optimal Strategix Group.
“With all the changes occurring in the energy sector, the path to driving growth is through building differentiation by understanding customer needs and delivering higher levels of satisfied customers,” Sukumar said. “This can only occur when utilities use customer insights to build competitive advantage. Such superior customer insight must assist senior management to prioritize their efforts, marshal the right resources and create a culture that is customer-centered.”
Jordan Bayless is vice president of client experience at Optimal Strategix Group. Reach him at email@example.com.