Utilities Can Increase Customer Satisfaction while Lowering Costs, Study Says

Electric utilities have it within their power to lower billing costs and increase residential customer satisfaction at the same time-a seeming paradox since it is widely believed that customers link such cost-cutting with poorer service.

That is one of the findings of a nationwide study by Primen, a Madison, Wis., based energy market intelligence company, which evaluated the impact on residential customer satisfaction of various changes in electric utility service. The study, called BASICS, or Balancing Service Investments and Customer Satisfaction, evaluated procedural changes in four key electric-service performance areas: billing, call centers, field services, and reliability; assessed the cost of each of those changes; and tracked the impact of each investment change on residential customer satisfaction levels.

“The conventional wisdom says that utilities that make aggressive moves to cut costs can expect to experience a sharp increase in the number of disgruntled customers,” said Shawn McNulty, the study’s director.

According to McNulty, the study shows that saving money and increasing customer satisfaction are not mutually exclusive goals. “In fact, utilities can adopt reasoned, selective approaches in many areas of customer service that generates significant savings while maintaining, or even increasing, customer satisfaction,” McNulty said.

For example, the study found that for a typical utility with 1 million residential customers:

  • Replacing select hard-to-read meters with automatic meter reading technology and improving billing accuracy would save nearly $800,000 annually and increase customer satisfaction 6 percentage points. This savings occurs because initial investments in automated technology are more than offset by fewer costly investigations of monthly billing estimates (and related declines in call center and field-work volumes).
  • Eliminating pay stations and local offices for bill payments would save utilities nearly $2.5 million annually, and result in only a 1 percent decline in satisfaction.

Primen developed the cost information for the study through a partnership with PA Consulting’s benchmarking program (formerly TB&A Benchmarking), which has a longstanding practice in developing these costs. The costs include the current levels of service provided by the typical U.S. electric utility, the average cost to provide the current levels of service, and the cost or savings associated with changing service performance. The comparisons between changes in service performance and customer satisfaction are based on a national survey of 1,925 households.

Companies may access the results of the national phase of this study by calling 877-976-4681 or e-mailing ask@primen.com.

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