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Digital Innovation for Utility Customer Engagement

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Andrew Cope's picture
Vice President - Energy and Utilities Practice

20 year history of working in the regulated and deregulated utility industry. I have extensive experience in senior management and consulting in the areas of: call centers, CX, credit and...

  • Member since 2020
  • 3 items added with 5,877 views
  • Feb 7, 2020

Typically, regulated utility customers view their electric and gas providers in only a few simple ways:

  • My lights are on and my house is heated – great!
  • My power and gas services are out – when is my service going to come back on?
  • I can auto pay or regulate my monthly spend – beautiful, I can set it and forget it!

Really, and it’s a fair question to ask, what other value or as the Harvard Business Review explains in their white paper, “emotional connection” do your customers truly have toward you? Your answer might be, “Not much, other than possible negative local press when their rates go up every two or three years.”  It’s the old notion that most regulated utilities still maintain of “managing the government’s franchise.”  When providing energy in a tariffed area, you know that you are the only consumer choice for energy delivery and strictly adhere to what was promised to State regulatory bodies within your last rate case. 

In the new economy and in the era of fast-moving digital transformation, the smart utility executive needs to transform their thought process to keep in step with what their regulated consumers expect from their service beyond commodity delivery. Failure to make an emotional connection to your captive audience, just because it is captive, could prove to be a costly missed opportunity in the future. Other industries are quickly causing innovative disruption and are making connections to your customers that inherently you should have. 

It may be helpful to look at what your utility cousins on the deregulated energy front are doing in making brand loyalty relationship mean something. Why? Because they have to in order to survive. In most States currently (Texas being the largest exception), these energy marketers are just a line item on your regulated bill that you send to your collective customer. But they typically go out of their way to provide visible products, services and value to be more than just that. They partner with local businesses to promote value added concepts. They partner with technology companies that make their customer’s lives easier and more affordable. They push consumer choice. Most regulated utilities still believe that quickly answered calls, great CSAT scores and easily read monthly bills mean great customer service, which is partly true, but they do nothing to promote any emotional connection.       

So, what are the latest digital trends that are changing the utilities industry? My own focus is on the customer experience (CX) that utilities offer, but this is often very closely linked to the digital trends in the industry.  As we head into 2020, what should anyone with an interest in utilities be looking out for on the road ahead?

Cities, buildings and customers are getting smarter. Smart meters are now fairly common with 107 million expected to be deployed by the end of 2020 in the US. And with even more rapid consumer-based deployment, 120 million smart speakers are in US homes. Most regulated utilities should now know how much easier it is to control any device that can connect to a home’s WiFi. Customers are expecting more from utility companies as digital trends in other industries (such as retail) have already become normalized.

In a summary of several CX research papers that focus on “digital trends in utilities” over the last 6 months that I have researched, all of the analysists agree on three important utilities industry trends that you ought to pay attention to:

  • Rising expectations of active consumers - Those passive consumers who used to just pay the bill every month now have a variety of devices in the home that help them to actively monitor their energy use. Smart utilities will tap into this interest to create loyalty and even new products and services.
  • Customer value is essential - Utility companies can boost innovation and seek inefficiencies using digital tools, but it helps if innovation can be seen by the customer to help with creating an emotional connection.
  • The birth of the hybrid - Who would have predicted that Google would now be managing a service like Nest? Your 2020 competition may not even come from the energy sector and new entrants may sometimes need to integrate their service alongside your own. Look at Tesla with their Megapack battery for example.

These are more than just industry trends; they could redefine how existing utilities operate. You need to rapidly increase your digital maturity, so you are ready for the inevitable industry shifts and changes in customer expectations. So, what are the most important strategies you can deploy to be ready? 

1. Improve your Customer Support 

Think carefully about how your customer experiences your brand and how they seek help when they need it. You may want to consider making useful FAQ information available for Google and smart speaker systems like the Amazon Echo, because often customers will use search for help before ever asking you directly. Make sure they can easily find content that is helpful.

Think about how smart chatbots offer a 24/7 helpline, but always ensure that the bot hands over to a real person when it doesn’t understand the problem. Getting stuck with a bot unable to transfer to a person is an enormous source of customer dissatisfaction at present.

Think carefully about the conversations you are having with customers. They don’t need to always be complaints.  Even if some are complaints, then focus on resolving issues so the customer stays on board. Metrics such as Average Handle Time (AHT) may need to be rethought, because the time needed to delight a customer may be longer.

2. Use Digital Technologies to Boost Customer Insight

If a customer has invested in a tool like Nest, then they don’t want it just so they can turn on the heating ten minutes before arriving home. They want outcomes. They are equipping their homes with all these devices that are capturing data, but to fully leverage these devices you need to offer discounts or extra services tied to the insight these devices can create.

Why not design extra rewards or loyalty programs for users of smart devices and even offer help installing and configuring these systems? Many customers will buy these products on Amazon and have no knowledge of how to install them. Be a part of the smart home solution.

3. Embrace the Green Revolution

The green energy movement and a general shift towards more sustainable energy use can be good for business if you embrace it and genuinely try to make a difference. Customers can tell the difference between “greenwash,” such as posting green friendly messages on your website, and a real commitment to the environment.

Build an ecosystem of green energy partners and home-based products, so you can be a hub of green activity for your own customers - encouraging greater loyalty - and all those green startups can access your customer base. The startups get more customers, you create a more attractive and sticky service by sitting at the center of that green hub, and by proxy you create an emotional customer connection too.

4. Nudge Innovation 

It’s also worth thinking about how the increasingly open use of consumption data can stimulate customers, too. The use of ‘nudge’ concepts has been successful in several European countries. Telling a customer that their energy use is 20% higher than the average on their street can trigger different consumption patterns. It also tells them you have an interest, specifically in them, hence more emotional connection. 

This final point is an excellent example of combining innovation with the smart device’s customers are choosing to use. If it is possible, then utilities should even be able to allow customers an option to define who they are compared to - a company or house of a similar size, or just the average for their neighborhood. Many customers already have the devices and the willingness to try to create genuine outcomes from the data that is being gathered. This approach just steers them in the right direction, but it starts with you. 

These are the four most important approaches I would advise for any regulated utility that wants to stay on top of their customer’s experience in 2020 and create emotional connections. I’d be happy to see your comments on this article. 

Andrew Cope's picture
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Matt Chester's picture
Matt Chester on Feb 7, 2020

Andrew-- I definitely agree with your opening about the status quo of customers and interactions with utilities. It's usually out of sight out of mind until something negative happens (an outage, a high bill, etc.). This makes the industry somewhat unique-- but with the trends and technologies you highlight you show that the customers relationship can start to change. One question on that though-- does it appear that the customers want that to change? Are they happy to be blissfully unaware of their utility, or will the opportunity for savings or even a carbon footprint reduction be enough to bring them into the fold as more 'active' consumers?

Andrew Cope's picture
Andrew Cope on Feb 10, 2020

Thanks for the question Matt and it’s a fair one. The thought that the energy consumer is blissfully unaware is, by most measures, accurate. Then again - only three years ago (other than to see what time it was) I didn’t pay this much attention to my watch. Apple absolutely disrupted the Swiss watch market (with other secondary concept followers)

Or 5 short years ago, it was Chinese or Pizza as the main go to’s for take out, now the vast majority of restaurants sell more to their food delivery services than they do in their brick and mortar restaurants.

What’s more is that the Grub Hub’s of the world basically set their menu prices and placement in the SEO. 

So here’s the answer to your question: given a smart and desirable choice, consumers will flock and are less loyal to a brand as they were in the past without alternative options.

Energy commodity choice, in all the deregulated choice states, has shown that migration already. But, If you look at your utility bill you’ll see that the delivery portion most likely is the largest part of the total owed and it’s where a regulated utility makes nearly 90-95% of their profitability. It’s also that closed market that is primed for a disruptive innovation to threaten it. It will likely require very reactive protections by their government regulators - but only after mass adoption and multiple innovative players are taking their customers away. Think about the taxi industry versus Uber and Lyft. 

Can I tell you right now what that disruptive energy delivery innovation is or when it will happen? Wow, I wish I could! But what can tell you now is that it will come, it will likely deploy rapidly, and often times be financed by the same investor profile that makes up the utility’s current shareholder profile. 

The main point of my piece is that while regulated utilities have their captive monthly audience - that they should do more with their current CX model, offer more choices and create emotional connections based on being innovative themselves. Possibly disrupting, the disruptive attractiveness of the energy delivery business, prior to it looking like a yellow taxi cab company!

Matt Chester's picture
Matt Chester on Feb 10, 2020

So here’s the answer to your question: given a smart and desirable choice, consumers will flock and are less loyal to a brand as they were in the past without alternative options.

Your examples definitely resonate with this. And I'll say that I definitely prefer to be plugged into my energy use and look at the data and trends, but I tend to think that I'm more the exception than the rule with that based on conversations I have with family and friends on the topic. That said, perhaps you're right that the real Uber/GrubHub/Apple Watch of home energy monitoring really hasn't broken the ground that's needed in order for people to really perk up and start listening anew. So, I'm hoping you're right! The question is who will step up 

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