marketing buzz: what does it take to be a J.D. Power award winner?

I attended a customer service and marketing conference last fall featuring a speaker from SRP, a large municipal utility in Phoenix which has consistently won the J.D. Power award for customer satisfaction. I got to thinking about how J.D. Power benchmarks customer satisfaction across the utility industry, and what are some of the key attributes an award-winning utility should possess to be “J.D. Power worthy.”

I interviewed Al Destribats, executive director of J.D. Power’s utility group, to ask what lessons can be learned from their award winners.

MM: When did J.D. Power expand into the utility industry?

AD: We’re in our seventh year with our electric residential study and in our sixth year for the electric business study. On the natural gas side of the business, we have been conducting the residential study for three years and will kick off a gas business study this year. We now work with over 40 utilities.

MM: So seven years ago this all started. Why did J.D. Power get into customer satisfaction studies for the energy industry? Was it an offshoot of deregulation?

AD: Certainly that was one of the key factors. As we explored the idea to do these studies, we talked to several utilities across the industry, and they told us that they would like to see national benchmarking in the utility industry on customer satisfaction. This is even more important as utilities adopt a back-to-the-basics strategy and focus on customer service, reliability and customer-centric programs. All of these factors have some relationship to customer satisfaction, and customer satisfaction is a critical metric in the utility industry.

MM: Since this national benchmarking began, have you seen satisfaction increase or decrease in recent years?

AD: J.D. Power surveys 25,000 residential customers throughout the country. We saw a definite rise in electric residential satisfaction from a national index of 97 in 1999 to 101 in 2003. That increase was principally due to utilities focusing on the operating side of the business and making improvements in power quality and reliability, billing and payment, and customer service. Substantial improvements were made in call center practices and new bill formats, and customers’ perceptions of power quality and reliability.

MM: And, in 2004? Did utilities see their brand image suffer due to blackouts and Enron?

AD: We certainly saw a drop in overall satisfaction which was primarily associated with the blackout in the Northeast and Midwest. In fact, customer satisfaction dipped three points. The public image of the industry also took a hit, dropping four points in 2004, as a result of continued negative national headlines about Enron’s financial situation, the California energy crisis and price volatility associated with different types of fuel.

MM: While well-run utilities can’t always control the headlines, they can work to continuously improve customer satisfaction. In your experience, what are the top three actions utilities should take to improve satisfaction?

AD: When I think about the future, I think about price and value, which is one of the most heavily weighted factors in our study. Many utilities haven’t had a rate increase in years, but bills are going up because of increased usage. Customers need to understand the value of energy, and that’s difficult because they take it for granted in their purchasing decisions. Utilities should invest in educating their customers as to why recent rate filings are needed to improve generation, transmission and distribution.

But, most importantly, customers want options to deal with their monthly bill, and the “guaranteed bill” is one example of a new program that is gaining traction across the country.

The second area of focus is power quality and reliability. Customers have high expectations of their utility companies, and, while they may forgive a storm- related outage, they don’t understand outages related to non-storm events.

MM: And, when the lights go out, calls flood the service center.

AD: That’s right. We live in an information age, and customers expect their utility to be able to tell them what caused the outage and when service will be restored. If they don’t get that information on the first call, they become critical. So the second action item is to invest in upgrading distribution systems to provide the power quality customers have come to expect and information technology related to outage information.

The last key area is the general perception of the image of the utility. Enron, blackouts, the energy crisis and problems with retail choice all have affected the image of America’s utilities. Customers rely on their local utility. They want to know what their utility is doing to help the local community. What are they doing to operate more efficiently? And many care about the utility’s concern for the environment and how it plans for the future.

MM: How do utilities benefit by winning a J.D. Power award?

AD: Winners, or those rated with a very high score, often see a positive impact with the financial community. Additionally, it’s an affirmation of a job well done that resonates with local stakeholders and customers. And several utilities, most notably APS and SRP, have used it as a valuable way to rally their employees.

MM: Thanks for your time. I think this is a powerful tool to help utilities improve customer satisfaction across the board, and I know we are all looking forward to the results of the next study.

Matt is founder and principal of The Matt Group, an integrated marketing communications firm specializing in the energy industry. Her areas of focus include brand strategy, customer communications, competitive assessments and marketing. She can be reached at 480-704-0897 or at meg@themattgroup.com.

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