Reconnecting with customers
Utilities Unbundled - Issue 14
Utilities must improve their relationship with customers to survive, or risk losing out to opportunistic new competitors.
The last decade has seen a steady decline in customers' perception of the value that utilities offer, with customer relationships characterized by a lack of trust.1
Further challenges will test the strength of relationships between utilities and customers, from rising energy prices to smart metering and stronger brands from other sectors with better customer, innovation and marketing skills entering the market.
There's danger to the bottom line here, either through loss of valuable customers in competitive markets, or erosion of the rate case in monopoly markets. Utilities must win back trust by:
- Rebuilding relationships with customers
- Offering new, innovative services around the core energy product
- Building capabilities to survive in a “smarter” world
1. Rebuilding relationships with customers
The factors related to customer dissatisfaction are ones that utilities can get right:
- Clear tariffs
- Accurate billing
- Better customer service
These fundamentals must be done right to rebuild trust, but utilities need to be honest about current failings, act on feedback, invest in their employees and educate customers. Cristian Acquistapace, Director of Marketing and Customer Interaction at E.ON Italy, says, “Based on feedback from customers, we have redefined our vision for the future based on two key elements, 'being trusted' and 'exploring new solutions'.”
Investing in employees is key, says Paul Clark of EY's Advisory Services. “This is an area where utilities are still falling down. It can be hard to find a customer service agent who seems engaged with what they are doing. The big telcos only saw the customer experience change when they put as much time into their employees as they did into their customers.”
Lynda Clayton, Customer Service Director at UK supplier ScottishPower, overhauled training at customer service centers to put the emphasis on problem solving. “Our agents have the autonomy to make decisions and 'own' a query through to resolution,” she says, “and our agents use a 'promise tracker' to keep commitments they make to customers.”
2. Offering new, innovative services around the core energy product
Utilities have three main choices in the products and services they offer:
- Play the scale game and be the lowest cost supplier (accepting margins are likely to drop)
- Play the scope game and offer a wide choice of services to their customers (from green energy and renewables to smart appliances, electric vehicles and home security)
- Do both
To compete, utilities will need to consider creating new options and channels for customers to buy power, cross-selling and up-selling new energy services and forming alliances with new entrants.
E.ON Italy is expanding beyond energy and energy services, to develop new communication and customer care channels for mobile and smart TV, and bundle the sales of power and gas with efficient energy solutions such as rooftop solar photovoltaic (PV) installation.
3. Building capabilities to survive in a “smarter” world
Smart metering brings a constant stream of data, so most utilities will need enhanced analytical capabilities. Customers will expect utilities to be “smarter” – if not, they will switch to new technology players.
Leading utilities will use:
- Data and technology to anticipate customer behaviors
- Analytics for targeting and retention
- Social media to get closer to customers
“Rather than starting from the data and trying to work out what to do with it, my advice is to start with your business goals,” says Clark. “Concentrate on segmentation and targeting. Some of the best exponents are the big supermarkets: utilities could learn from the way they 'slice and dice' information on consumer purchasing.”
At ScottishPower, consolidating down to one platform is making it easier to use analytics to improve accuracy, target products correctly and minimize churn. Clayton also sees the potential of the utility's Twitter and Facebook presence: “If you react at speed, you can even turn a complaint into a positive interaction, which might then touch hundreds of thousands of people.”
Restoring customer relationships to secure the future
Now more than ever, utilities need to invest in their customer capabilities. Given their expertise in wholesale energy trading, pricing, running large scale businesses and managing metering and billing, utilities are still in many ways the most credible owners of energy customers.
But the chinks in their armor are the existing loss of trust, slow adoption of digital technology and lack of investment in building up “smarter” capabilities. Utilities need to act now, to give customers what they need and secure the future.
1In Utilities we Trust? EY, Franklin Covey, YouGov Survey (UK), March 2013; The rise of smart customers, EY worldwide survey reports 2010 and 2011- available via www.ey.com/smart.