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Why Customer Loyalty Still Matters to Utilities

image credit: Photo by Esperanza Doronila on Unsplash
Mark Wilkinson's picture
SVP Products, Ibex Digital

Helping utilities and their customer experience teams transform customer journeys,  decode customer insights  and enhance revenues for nearly 15 years.  At Ibex, I lead the teams delivering...

  • Member since 2019
  • 131 items added with 19,825 views
  • Feb 28, 2023

When companies compete customer loyalty has direct and powerful payoffs.  According to Fivestar, loyal customers visit their favorite brands twice as often and spend 4x as much money.  For utilities in regulated markets without competition, though, the benefits of customer loyalty may not be as obvious.

Just like in competitive environments, loyal customers are often the best evangelists for their favored brands.  For utilities, that means your loyal customers will be the most likely to promote your value on social media, respond positively to CSAT and JD Power surveys, and give you the benefit of the doubt during outage situations.

And, utilities shouldn’t discount the power of customer loyalty and customer engagement.  If loyal customers are twice as likely to visit your website that extra traffic makes it more likely that your most loyal customers will be engaging with your content, enrolling in programs like energy efficiency, and participating in “extras” like your mobile app or Beyond the Meter marketplace.

Customer loyalty pays big dividends for Beyond the Meter.  We’ve written extensively about the importance of repeat traffic for marketplace success.  Customers don’t always buy on the first visit, and loyal customers are most likely to visit often, so investments in loyalty programs will benefit in marketplace traffic and Beyond the Meter enrollments for higher customer lifetime value.

I talk a lot about a simple formula for Customer Loyalty for utilities: CL = E + A + T; loyalty equals engagement plus affinity plus trust.  Utilities build loyalty by being great at engaging customers, demonstrating affinity for their needs and interests, and enhancing trust.

Utilities already benefit from an enormous investment among their customers in trust. Utilities can generally depend on their most loyal customers to give them the benefit of the doubt during outages, but also promote the utility brand on their social media.  That’s a particular benefit with sensitive topics like emergency notifications or rate increases.  Imagine the help that your most loyal customers can offer by spreading the word with weather notices or critical load announcements on their social media accounts.

Engagement really comes down to connecting more frequently on a more personalized level with your customers in their channel of choice.  Be sure to send emails with a personal greeting and avoid sending 1:All emails, even when programs may apply to every customer.  Think past email into new digital channels including chat and self-service on your website, and social media for your communication and customer service programs.  Utilities’ next generation of customers don’t care for legacy channels like mail and voice to interact, so stay engaged by embracing their new digital channels of choice and making your business as easy as possible for them to interact with.

Utilities build loyalty by showing customers that they are aligned with their needs and interests and demonstrating that the company has affinity for the community and its customers.  Spread the word about your philanthropy, special events and renewable & efficiency initiatives.  Be sure customers know about the range of the programs available to them so that they can find their needs and interests reflected by the utility.  Loyal customers will be more likely to find affinity in those programs, as well as enroll in them.  Customer loyalty investments should deliver increases in adoption rates of efficiency programs and rebates, time of use plans with EV owners, and online bill payment or participation in available payment assistance programs because those customers know how the utility aligns with their lifestyle and goals.

Most utilities haven’t really had to think much about customer loyalty until recently.  With the rapid proliferation of digital communications and the inevitability of rooftop solar and micro-grids, it's past time to consider the benefits of having a lot of loyal customers. Utilities making modest investments in customer loyalty today will reap the benefits as our next generation of customers comes to scale.  Just remember CL = E + A + T, and amp up engagement, affinity and trust to build the loyal customers who will be evangelists to your customers and regulators across all of the new digital communication channels in the future. 

Matt Chester's picture
Matt Chester on Feb 28, 2023

Customer loyalty is even more important in utilities because good impression or bad impression, so many customers will remain in the same service area for years, maybe even decades. Good will is lasting impact!

Mark Wilkinson's picture
Mark Wilkinson on Mar 1, 2023

Good point, Matt.  When a bad experience can be broadcast as quickly as someone can find their mobile phone, companies have to take notice.  Utilities have been a bit reluctant to embrace social reputation management and customer loyalty, but the upcoming generation of customers is so well tuned that the industry shouldn't wait any longer. Small loyalty investments pay off across the entire utility, too, if you know where to make the right changes.

Mark Wilkinson's picture
Thank Mark for the Post!
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