Generally speaking, utility companies have done a mediocre job at all of those little things that help drive a favorable customer experience. In today’s marketplace, though, mediocre does not cut it. Fortunately, more utility companies seem to be getting the message.
“Some service industries like banks and retailers score much better than the utility industry when it comes to customer satisfaction,” says Andrew Heath, managing director of utilities intelligence for J.D. Power, a global market research company. “In fact, historically speaking, the utility industry always scored the lowest. But over the past five years or so, the idea that a utility company should be just about engineering and processes is pretty much gone. Utility companies now understand that they need to communicate with their customers better, not just keep the water or electricity flowing.”
J.D. Power surveys the customers of every electric utility serving more than 100,000 customers. From the data generated, J.D. Power is able to construct a model that identifies what matters most to utility customers across the country. “From there we can start looking at things a utility company can do to help bring its customer satisfaction scores up,” Heath explains.
Examples include services that allow customers to manage their accounts through a website, make payments over the phone, or do everything through a dedicated app. Steps can also be taken to improve the types of things being communicated to customers, such as power outages and energy usage.
“Another positive development is that utility companies are getting much better at being proactive,” Heath adds. “For example, it used to be that if there was an outage, the customer had to call the utility company to ask what was going on. Now utility companies are learning that the customer’s expectation is much higher. If a bank can send a message telling a customer they are overdrawn, a utility company should be able to notify customers when there’s an outage. The utility company can also take that opportunity to apologize, offer an explanation, and provide its best estimate as to when power will be restored.”
3 often overlooked benefits of improving customer engagement
Beyond an improvement in customer satisfaction, Heath says there are a few other reasons why a utility company should improve customer engagement.
1. Reduce cost of customer service. “Providing customers with the ability to perform self-service and answer their own questions online is far more cost-effective than maintaining a call center staff,” Heath points out.
2. Improve return on equity. Sometimes a regulated electric utility is allowed a better return on equity if its customer satisfaction scores from the previous year are strong. Depending on the size of the utility, that could equate to a tremendous amount of additional revenue.
3. Save energy. Utilities have ambitious economic, climate and energy-saving goals. “Energy efficiency programs or rebates can support these targets, but consumer participation is critical for these initiatives to succeed,” says Aaron Berndt, head of energy industry partnerships at Google. “Utilities must find new ways to proactively reach their customers and clearly communicate about energy-saving programs, smart devices, and other resources that provide immediate value to both the user and the grid.”
Utilities customer engagement technology driving the future of the industry
Personalization. Utility companies are making better use of today’s technologies to enhance personalization and the overall customer experience.
For example, customers can visit the utility company’s website and indicate how they want to be contacted, whether that’s via email, text, etc. Customers are also given the opportunity to indicate what they’d like to be contacted about, i.e. to learn about new products and programs, alerts for high energy consumption, etc.
“Personalization is all about giving consumers choices,” Heath says. “For some of the more progressive utility companies, it’s also about a broader vision for the business. It’s no longer just about delivering electricity, natural gas or water. It’s also about a range of products and services such as green energy and energy efficiency that could be a good match for the customer’s home or business.”
As Google’s Berndt points out, many utilities have developed their own online marketplaces that deliver on consumers’ modern expectations for digital experiences and online shopping. These marketplaces offer smart thermostats and other energy-saving technologies that support ongoing communication through alerts, demand response (DR) program participation and more.
Usage analysis. Utility companies can also leverage technology to look at things like usage rates. “Companies can continue to get better at sharing usage information, such as when a consumer is using power at different times of the day,” Heath says. “In some markets, the standard rate is the time-of-use rate. That changes the way utility companies must communicate with customers.”
Another important strategy is to create communication channels through devices that are already in homes.
For example, Google Assistant can provide customers with tips from their utility on how to reduce energy use. “A few small changes, such as installing smart LED lights, can have a collectively significant impact,” Berndt points out. “Connected devices can also go into ‘eco mode’ to minimize energy consumption and disconnect from inactive appliances that may be plugged in.”
It’s important to recognize that any technology is only going to be valuable if it is widely accessible and easy to use.
“Smart thermostats check those boxes through utility program rebates that greatly reduce or eliminate upfront costs, and because they provide automated, ongoing energy savings,” Berndt says. “With the incentive structure of DR rebate programs, they also become incredibly valuable resources for utilities.”
In order to get these technologies into the hands of more consumers and expand their reach as grid resources, it’s important to educate customers on available rebates.
“Google has worked with many utility partners to offer these incentives and increase their visibility,” Berndt points out. “A key trend from 2020 that Google helped accelerate with its partners was the stacking of energy efficiency incentives with DR enrollment incentives during the checkout experience of utility marketplaces; many utilities have a marketplace with an energy efficiency incentive as well as a separate BYOT thermostat DR program.
“By enabling DR program pre-enrollment directly on their marketplace, a utility will often have the best offer in the market on smart thermostats and can dramatically scale enrollments into their DR program,” Berndt continues. “Consumers Energy in Michigan used this approach to enroll over 11,000 smart thermostats in their DR program through pre-enroll — just during their summer campaign last year, enrolling 85% of eligible customers that purchased a smart thermostat on their site.”
Now is the time to engage and save
One factor driving increased interest in consumer engagement is the fact that millennials are becoming a bigger piece of the homeowner pie. Millennials are obviously more tech-savvy and generally have a higher expectation when it comes to customer service.
But as J.D. Power’s Heath points out, an interesting trend has emerged over the past seven years. Utility customer satisfaction has flipped, to some degree.
Satisfaction among older consumers has remained relatively stable; these consumers are content with doing the same old, same old. But the younger demographics are showing an uptick in customer satisfaction. “These customers are interacting more and using self-service features through websites and apps,” Heath points out.
Now is the time for utility companies to improve customer engagement, because now is the time for utilities and consumers to work together to reduce energy consumption.
“Cities, states and utilities across the country have been setting 20-year net-zero (carbon emissions) targets — and some are even hoping to get there in 15 years,” Berndt says. “In a race to meet these goals, municipalities are looking to policymakers, technology and energy providers, and residents of their communities to help. With the increasing threat of the climate crisis, it is a crucial time to deploy distributed energy resources like smart thermostats. These devices provide customers with simple, sustainable solutions. They are also a critical tool for utilities to meet the DR targets required to deploy additional renewable energy resources, and to ultimately achieve their low-carbon plans.”
More readily accessible, zero-cost thermostats are being deployed through utilities’ DR programs. They are also being supported through initiatives like the Nest Power Project. That is why adoption rates extend well beyond a specific demographic. Smarter energy consumption is smart for everyone, and so is better utility customer engagement.
Subscribe to The Utility Expo monthly newsletter to receive more industry insights like this.