Most industries target affluent segments or those showing future promise such as millennials, to increase wallet share, achieve higher retention rates and grow profits. Yet, mobile technologies and predictive analytics offer significant value for regulated industries to target lower income households profitably and offer an intentional, designed experience for these customers, while better managing utility support costs.
Utilities today have low levels of satisfaction and disproportionately high costs in serving income-challenged customers. Struggling customers are under duress and often challenged with having the right amount of money to pay on time. Most can't take advantage of many of the industry’s “big” energy efficiency recommendations, are poorly educated on how to reduce consumption, and thus, ill-equipped to manage their own usage.
What's worse, by some of the research we've completed, they can pay upwards of $350 or more per year than a comparable, non-struggling household due to higher energy costs per square foot (poor conservation behavior in energy inefficient domiciles) and extra fees charged (late fees, cash convenience fees, additional deposits, etc.) due to their financial circumstances.
The industry has struggled to serve this growing group of customers with any solution beyond making power more affordable through rate discounts, relaxed payment terms, or arrearage forgiveness. Even public assistance programs from governmental and local agencies have had money available for help, drastically reduced.
While these tactics are much needed when customers face situational crises due to loss of job, health, or chronic poverty, this approach doesn’t enable the persistent income-challenged customer to manage what they can pay and what power they use on a monthly basis. As an industry, whether regulated or deregulated, there is little to no help provided in building self-sufficiency or personal responsibility for usage. The research shown above, reinforces that customers want to feel in control of their situation: in control of the power they use and in control of making payments on a timely basis.
Thinking differently about these customers and their struggles leads to innovative solutions designed specifically for their situations. It’s uneconomic and insensitive to treat all customers the same.
Taking advantage of breakthroughs from other industries offers rapid value to struggling customers, relief for utility operating expenses, and more equity to the rest of the customer base. Three elements need to be addressed for any solution to overcome the downward spiral and growth in numbers of struggling customers.
Beyond affordability, changing behavior – Complement affordability tactics by giving customers more control through flexibility in payments to match their cash flow, clearer bill presentation, and personalized messages alerting customers of upcoming high bills.
Income-challenged centric design - Design the experience from unique customer points of view, even micro-segmenting groups of customers that are income-challenged. Conducting a review of these segments and their interactional and transactional behavior with the utility leads to deep insights into what's important for them.
Trusted engagement - Provide timely (real-time) and proactive education and/or nudges that build trust, leading customers to gain more control over their energy usage by providing actionable usage outcomes in dollarized terms relevant to their home.
Helping income-challenged customers use less energy and pay their bills in a timelier manner is achievable. For decades, struggling customers have been unhappy with their utility, anxious about keeping the power on and the ultimate impact on utilities and other customer groups has been material. The situation is only going to get worse as the economy has weakened for lower income groups and governmental assistance has been reduced. Continuing to address this, in the same manner, will only get more costly and more dissatisfying.
I work with diverse group of clients, especially in power industries, looking to change the relationship they have with their customers through innovative and customer-collaborative designs that are validated through data-driven customer behavior analytics. Please connect with me here or LinkedIn.