October 22, 2020

It’s Time for Electric Utilities to Reinvent Their Customer Relationships

It's Time for Electric Utilities to Reinvent Their Customer Relationships




PHOTO:
fran hogan

Electric utilities have had a weak relationship with customers — whom they called customers “ratepayers” until recently — for years now. But like all other industries, they must now reinvent their relationship with customers due to several key factors placing enormous pressure upon them:

Digital customers have new expectations: Traditional utility business models didn’t necessitate high levels of interaction. Slower adoption of digital tools for self-service and attention to customer experience to build goodwill undermine the trust needed to encourage mutually beneficial customer behavior. But utilities can intentionally design new experiences as they roll out new products and services to build goodwill.

Clean energy regulation presents opportunity or threat: Regulatory bodies are setting aggressive clean energy targets and legislation (e.g., reducing carbon levels). This requires innovative demand-side tactics. A suite of resources collectively referred to as distributed energy resources (DERs) is transforming customers’ roles in the energy value chain (they are now ‘pro’suming — producing and consuming — energy). The utility’s ability to influence mutually beneficial DER adoption and behavior will dictate whether DERs serve as an opportunity or threat.

COVID-19 impact and shifting workforce requires focus on containing and reducing costs: To help customers through the COVID-19 pandemic and comply with legislation, utilities implemented moratoriums on payment collection and service shut-offs. The resulting impact on revenue is requiring utilities to identify ways to reduce costs and close budget gaps. Additionally, a generational workforce shift is driving natural attrition of employees. Organizations may choose to not fill these jobs, requiring employees to serve more customers over time.

New market entrants have narrow lens: Many new third parties have emerged to create a wide variety of DERs to serve customers. However, if customers and third-party DER providers aren’t properly engaged by the utility, many providers will focus on maximizing individual customer value at the detriment of the electric grid, which has a responsibility to serve everyone. Utilities must engage these customers and collaborate with third-party DER providers to shape mutually beneficial outcomes for all stakeholders.

5 Customer Success Lessons to Apply From the High-Tech Sector

The good news is utilities can reinvent business models and customer engagement within the rapidly changing landscape. The focus on customer success in the high-tech sector sets a great example for utilities to follow for their transformation. Why high-tech?

  • The industry transitioned from standalone, licensed software to always-on, digitally connected software-as-a-service (SaaS). Utilities are going through a similar transition from one-way delivery of energy to digitally connected two-way interactions.
  • With the transition to subscription-based services, companies had to rethink their business model, creating new recurring revenue opportunities. Utilities already have the advantage of being subscription-like. They can learn how to drive and grow value to earn monthly fees and renewals.
  • Customer success teams have been built to engage directly with customers across their journey to ensure they’re succeeding.

Below are five key customer success principles that utilities should borrow.

Related Article: The Great Restart: 3 Customer-Centric Steps to Building a Strong Offense

1. Redefine Customer Segments

Utilities must know their customers to understand how to deliver value to them. Tech-savvy consumers looking to connect their solar panels to the grid have vastly different needs than a laid-off worker who needs a payment arrangement.

Use data and analytics and ethnographic research to analyze and define customer segments. Utilities have more data than ever due to infrastructure modernization. Analytics go beyond operations and usage trends to understand which customers are most likely to engage with certain programs. Having this data gives utilities an inherent advantage over new entrants, but they must use it to avoid disruption and revenue erosion.

Related Article: 8 Ways to Segment Your Customer Data

2. Revisit the Business Model

Utilities will need to craft new value propositions beyond keeping the lights on and delivery models that serve different segments. Use tools like the Business Model Canvas and Value Proposition Canvas to rapidly bring cross-functional teams together on new product/service offerings. Rapidly prototype “minimal viable products/services” and get examples in front of customers as soon as possible to test ideas, fail fast and pivot toward better solutions. Customer journey maps and service blueprints will identify capability gaps and show how to bring parts of the organizations together to deliver on the new model(s).

3. Measure and Manage Customer Health

For utilities, loyalty means a customer’s willingness to engage with and shift behavior to deliver on the utility’s objectives, for example, shifting usage of major appliances to non-peak periods to help manage demand. To proactively manage engagement, a utility must measure the engagement strength, or “customer health.” If customer health is low, it will be more difficult to engage customers.

Customer health questions to ask:

  • How often does the customer contact the utility?
  • How many communication channels has the customer elected? Which channels?
  • Which programs and services does the customer currently use? Is usage high or low?
  • How satisfied is the customer with interactions? With services?
  • Has the customer opened the email? Clicked through to the website?

Related Article: Calculating Customer Lifetime Value Is Tricky

4. Establish a Customer Success Capability

Utilities will need someone to monitor and manage customer success. One option is converting today’s customer service reps into success managers who are trained to understand and respond to the indicators of customer health with targeted interventions or offers. For example, if an electric consumer wants to install solar panels for the home but doesn’t know how to start, the utility can have a set of “advisors” or “success managers” to help.

These success managers should focus on providing high-touch service to customers who have a high propensity to engage with a particular program that drives value for the utility.

5. Scale the Customer Success Capability Using Digital Tools and Data

It’s challenging for any organization to scale human interaction. Therefore, utilities will need to support people with digital tools that complement personal connections. The good news is digital evolution has made this possible. To reactively address customer needs, utilities can use digital self-service tools, like IVR, to answer easier servicing requests and reduce the number of inbound calls. For example, when a customer calls to report an outage, the IVR system can ask if they are reporting an outage by matching the phone number in the CRM or CIS with the Outage Management System based on address.

However, this can go beyond reactive engagement. Data should be used to proactively engage and nudge a customer to act. If a utility offers the opportunity for customers to prepay for their usage, they will need to proactively monitor and communicate usage to avoid overages. Think cell phone providers with their “75% of your data has been used” text alerts.

Many utilities are considering an upgrade cycle for their CIS. This is an ideal time to accelerate use of CRM solutions, cloud platforms, and data analytics to help drive customer success initiatives at scale.

The steps above will position utilities to deliver effective programs and outbound messaging to build customer success and create mutual value.

Paul Hagen is a senior principal with West Monroe Partners in San Francisco where he heads the firm’s customer experience and innovation strategy. He is an experienced strategy, customer experience, and marketing professional with over 20 years of market research, human-centered design, technology and digital strategy, facilitation and project management experience and a track record for creating solutions that enable business goals through innovative technology and systems.





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