Customer management, retention should be priorities for CRM funding

Guerry Waters, SPL WorldGroup

For electric utilities, the original and most compelling rationale for customer relationship management (CRM) was that this new technology application would provide the sophisticated marketing capabilities required to compete in deregulated environments. But the vision of deregulated markets that swept the country in the late 1990s hasn’t yet been realized. And neither have the returns on investments in ambitious CRM solutions.

Customer relationships and related CRM initiatives, however, remain important. And they will continue to receive top-level corporate support when they are viewed holistically, as part of the broader and more important business of customer management.

Start with operations

By far the most frequent contacts that utilities have with customers today concern billing, service and repair issues. Viewed in this light, the CRM capabilities that utilities need most are not really about marketing analytics. They’re more about the operational aspects of customer service, especially contact management.

Improvements in customer care and efficiencies in staffing the call center may seem far less glamorous than high-powered marketing algorithms, but they are critical to your success in satisfying and retaining customers. Remember that a cost dollar saved through improved operating efficiency hits the bottom line with the same impact as a revenue dollar generated by a new sale. So give priority to projects that will yield efficiencies in essential customer care functions without degrading customer satisfaction.

These projects could include development of low-cost electronic service channels, such as self-service web sites or e-mail centers. Or giving call center staff real-time access to comprehensive customer billing and service records, so they don’t have to pass so many customer inquires up to the next level. Better information access may even reduce call volumes, since customers won’t have to call back repeatedly to get the resolutions they need.

Enhanced services for commercial and industrial (C&I) customers deserve particular attention. These are the customers who will be at greatest risk to competition when deregulated markets arrive, and it is critical to maintain their satisfaction and loyalty. If you do not already have certain service capabilities in place for wholesale customers, you should implement them now. These should include the ability to identify C&I customers immediately upon contact and to provide priority routing to specially trained CSRs.

Initiatives like these will inevitably place a premium on applications integration. Most current CRM applications simply cannot stand alone. They don’t include sufficient history about the overall customer relationship to guide the customer management process. Much of this history is actually domiciled in the billing system, which may contain more information on the customer than any other source.

A major priority, then, is to integrate CRM applications with billing systems and other customer information sources. That’s not an easy assignment, because utility billing systems are often among the oldest and most inflexible legacy systems the company maintains. They are also among the most hardened “silos” in the firm’s IT infrastructure.

Future growth

Almost all growth strategies assume that the firm can generate additional business volumes by “cross-selling” or “up-selling” existing customers. No matter what CRM applications you have installed, you will find it nearly impossible to cross-sell or up-sell disaffected customers who plan to defect to competitors at the first realistic opportunity.

So the key to future profit growth is your success in satisfying customers today. CTOs must remember that it is almost always more profitable to retain existing customers than to acquire replacements. “Customer loyalty” is not a meaningless clichàƒ©; it translates directly into improved customer retention rates, and higher retention rates translate directly into future profit dollars.

If you will take care to align your development priorities with such fundamental aims as improving customer service and creating new efficiencies in customer care operations, you will necessarily be positioning your firm to maximize customer retention through the difficult market transitions that lie ahead.

Waters is chief technology officer for SPL WorldGroup.

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