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How Utilities Can Address Customer Churn

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Karen Marcus's picture
Freelance Researcher and Writer Final Draft Communications, LLC

In addition to serving as an Energy Central Community Manager, Karen Marcus has nearly 25 years of experience as a content developer within the energy and technology industries. She has worked...

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This item is part of the Special Issue - 2019-05 - Customer Care, click here for more

Within the last few years, power utilities across the globe have begun struggling with a new issue: customer churn. Increased competition is one big factor contributing to this situation. However, the availability of similar service providers alone doesn’t cause customers to leave a company. According to a LinkedIn article authored by utility industry consultant Sanjivrao Katakam, a variety of conditions prompt them to do so, including weak customer service, an indistinct value proposition, and poorly set customer expectations.

Customer experience (CX) is also a factor, and many sources state “perceived indifference” on the part of the company as a reason customers leave. Because utility companies are increasingly no longer the only game in town, they must compete more like companies in other industries, in terms of providing added value and developing a relationship rather than merely facilitating a string of transactions.

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Customer churn is no small problem. Katakam notes, “Losing customers has many implications for utilities like loss of revenue, loss of market share, decline in brand image and threat of acquisitions to name a few. Moreover, it costs 6-7 times more to acquire a new customer than to retain an existing one.”

Churn Management

Utilities are smart to take customer churn seriously, and to view it as a problem that needs to be solved. There are many ways to address customer churn. Here are a few:

Use analytics. Utilities can use analytics tools to identify top customers and develop programs to retain them. Conversely, these tools can be used to create a model of customers likely to leave based on the energy consumption, property type, etc. of previous defectors; separate programs can be developed to keep them on board.

Track retention. In addition to knowing how many customers leave your company, it’s important to know how many stay – and why. Understand your retention rate, and survey customers to learn what they like best about your services. Then keep doing and improving on those things.

Build trust. Breaking promises is one big way to send customers running. Utilities should be careful not to overpromise during the initial stages of the customer relationship. Letting customers know what to expect and then delivering on it to the best of the company’s ability — and communicating clearly when it’s not possible — is critical.

Improve services. Utilities can bundle services together, offer proactive consultations, introduce new products such as smart home devices (and make it easy for customers to purchase them), and so on. In addition, they can continuously upgrade infrastructure, adopt new service-based technologies, improve employee performance, and other actions that upgrade the core services customers receive.

Offer top-notch support. Excellent customer care includes a wide variety of methods, such as a 24/7 omnichannel system for reaching representatives, useful technology options, consistency, and a commitment to truly resolving all customer issues.

Provide personalization. As customers get used to greater personalization from other companies they do business with (as one example, Amazon’s recommendations for products to consider based on past purchases), they come to expect this level of service. Utilities can track preferences of and interactions with each customer and use this information to suggest changes in service, and to turn customer service interactions into opportunities to gain greater loyalty.

Reducing churn isn’t a simple or straightforward process. Katakam states that churn management is not a once-and-done activity, but rather something that should be done “through multiple waves of implementation.” But it’s something utilities will need to consider more and more as the power landscape continues to evolve.

Does your utility track churn? If so, do you have any programs in place to address it? Which are most effective? Please share in the comments.

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