Energy companies are subject to continually changing regulatory and market requirements, relatively low profit margins, few cross- or up-selling opportunities, and difficulty in differentiating their own customer service from that of others. As deregulation spreads nationally and globally, utilities established in the regulated era will be competing against newly formed energy companies for the loyalty of the most profitable customers.
Yesterday’s traditional, regulated utility market did not require providers to know or analyze customers on an individual basis. But now, according to results from a recent global consumer survey commissioned by NCR Corp., one of the biggest challenges facing energy providers is how to develop a two-way customer-business relationship based on trust. This means moving toward a one-on-one relationship with customers that meets individual needs and safeguards personal information.
At the same time, today’s energy companies will need to comply with certain-inevitably changing-regulations. Given this shifting marketing landscape, it is critical that utilities establish a successful customer relationship management (CRM) solution. Implementing a well-devised CRM plan can better position savvy energy providers to retain and acquire the most profitable customers, build strong brand identity, keep information technology (IT) costs in line, and streamline operational efficiency. A well-chosen CRM solution will enable utilities to succeed in their short- and long-term IT goals and stay within budget constraints.
The key enabler for building and maintaining these closer, more personal customer relationships is a complete view of each consumer. An integrated CRM solution built on the foundation of a customer-centric data warehouse can provide a customer view that focuses on improved communication and individuality.
To achieve these goals, energy companies should select a CRM solution from a data warehouse vendor who can provide an industry-specific system that can grow-or scale-for future needs. With a CRM data warehouse solution that has been customized with data models and valuations specific to the energy industry, utilities can avoid costly and lengthy system customizations and reap the rewards of rapid implementation. With the appropriate CRM solution, businesses can receive a measurable return-on-investment (ROI) in as little as 90 to 120 days.
Short- and Long-Term Returns
For utilities that operate in regulated markets, an industry-specific customer-centric data warehouse will allow for short-term gains in operational efficiency, as well as allow them to leverage their incumbent status. And, as the entire market becomes deregulated, utility companies that already have made the CRM investment will be ready to increase the functionality of their solutions and scale to meet the demands of long-term goals. These goals include keeping high-profit customers, bundling services and sharing customer billing and usage data across multiple vendors.
For newly formed energy companies based on deregulated market conditions, the CRM investment will allow these businesses to determine early in the process which accounts can be most profitable and aim at acquiring those desirable customers. The long-term goal will be retention and growing profitability of customers.
As utilities more keenly focus their efforts around customer acquisition, retention and profitability, a well-designed CRM solution will provide the tools and processes for targeted, intelligent marketing campaigns. The CRM system allows utilities to target the right customer with the right offer, at the right time, through the right communication channel.
At their heart, CRM tools and solutions based on a customer-centric data warehouse leverage the information gleaned from every interaction to quantify each customer’s profitability/lifetime value, based on behavior and activity records. This can enable energy providers to forecast which customers hold the most profit value, then acquire or maintain relationships with those most valuable customers. Depending on their value, customers can be served at the appropriate level, whether through selected queue times at a call center, movement to pre-paid status or personalized service.
A well-designed CRM solution can help a utility company build and maintain relationships with the right customers. Such a solution enables the utility to determine the most effective means to initiate interest, target marketing campaigns to individuals, and provide for customer satisfaction at every touch point-including marketing, sales, customer support and field operations. A utility can use the CRM solution to forecast which customers are likely to buy bundled products and services, and which are likely to jump to a competitor or be open to leaving a competitor if offered the right package. All this can be executed automatically with pop-up customer information screens and direct marketing campaigns that run on a continual basis.
Deregulating markets also introduce new and varying, compliance rules and customer information sharing requirements. For an energy provider that does business in multiple states, just keeping track of the regulations can be a full-time job, let alone the increased complexity of billing customers. At least three to six vendors could be involved in compiling customer billing and usage data just to get out a monthly bill. With a powerful data warehouse engine behind the CRM solution, keeping track of regulations and rates on an individual customer level is easy.
Through electronic data transfer-which could require ad hoc queries, new data field additions and other technical tweaks-and even allowing vendor/partners access to the data warehouse, providers can expedite billing and resolution of customer service issues and do so at reduced costs.
What to Look for in a CRM Solution
A CRM solution that is equipped for an energy company’s present and future IT needs has specific components: an industry-specific data model; a powerful customer-centric data warehouse; integration links to other enterprise software and hardware; customer interaction tools; and information sharing capabilities. These will allow them to analyze and optimize customer relationships.
The appropriate data model will help energy companies in simple and complex matters. For example, being able to differentiate between home and billing address in customer records is a simple way to minimize customer data redundancy. At its most basic level, the data model is a map that ensures all the data is there to address customer acquisition, retention and growth strategies. Model subject areas and sub-sets should include individual customer information that can be used across the organization. This critical customer information is organized into a variety of subject matter areas, including:
- customer account information (about cycle history, frequency, credit class risk, etc.), contract information (about rate offerings, services, payment plan and terms) and profile information (about profitability, lifetime value and usage analysis);
- location information about geographic markets, census data and equipment location;
- network information about the hardware, service, and specific information about billing usage, meters and premises;
- advertising data on campaign targets and effectiveness.
All of this information should reside in a powerful customer-centric data warehouse. The right data warehouse engine will give utilities the ability to collect and manage detailed information from all customer touch points within the organization. This data warehouse engine will provide a cross-functional business view of different data, model the customer, conduct nightly updates, scale for business growth or added functionality, and perform ad hoc and complex queries. At the same time, the data warehouse should have the bandwidth to handle high transaction volumes without compromising efficiency.
Some companies already have some detailed information, although it may be trapped within different databases that have not been integrated for organization-wide data sharing. To turn data into a competitive advantage, utilities must make that data accessible to all business units within an organization-from accounting to customer support to sales. The data warehouse, CRM software, other enterprise software and hardware, and all customer communication channels-web and call centers, in particular-need to be tightly integrated so all business units can use customer interactions as relationship- and revenue-building opportunities.
The right CRM solution will automatically load and update each interaction from a customer or prospect whether through a call center contact, alliance partner or a competitor’s website. Regardless of how a customer prefers to interact with an energy provider, the CRM solution should provide real-time information on an individual customer to all members of the provider organization in a manner that presents intelligent prompts for optimizing the customer relationship.
Another feature that distinguishes a leading CRM solution is the ability to analyze and prioritize customer interactions and then respond quickly to changes in customer behavior. This means that a company is always working on its most important opportunities. Such a solution will allow development of communications based on individual opportunities that have the highest potential for success.
Last of all, the right CRM solution will include user-friendly, real-time, energy-specific standardized reports and drill down capabilities with desktop access. These provide a “single version of the truth” for companies to develop long-term strategies and take quick action on short-fuse situations.
Now Is the Time to Begin
For now, many consumers and businesses in deregulated markets are choosing not to switch from their incumbent provider. Utilities that invest in a CRM solution now will be positioned to take advantage of profitable opportunities as deregulation proceeds and customers become more market savvy and interested in switching.
For energy providers working under regulated market conditions, a CRM solution will provide short-term profitability in areas of operational and customer service efficiency and long-term profitability in terms of retaining valuable customers. The right CRM solution built around a customer-centric data warehouse will improve overall competitiveness and provide the agility to navigate under changing market conditions. For providers operating in deregulated conditions, a CRM solution will help identify valuable customers who are appropriate acquisition targets as well as the marketing techniques to target them. This is in addition to the obvious efficiency benefits.
Customer-focused utilities who choose the right CRM solution today will ultimately be the ones customers choose tomorrow.
Sherri Carswell is the director of NCR Corporation’s Energy Solutions Group. NCR has helped many of the world’s most successful companies capture and analyze customer data, enabling them to maximize customer profitability.