Happy Customers Equals Happy Utilities - How utilities can leverage AI for customer satisfaction and engagement
- Oct 30, 2019 9:15 pm GMTOct 29, 2019 9:54 pm GMT
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Every company in every industry cares deeply about cultivating highly satisfied and engaged customers. It’s the sort of statement that seems so obviously self-evident that it’s not worth uttering.
In the utility industry, though, the importance of customer satisfaction has not always been recognized. Case in point: A few years ago PricewaterhouseCoopers (PWC) released a research report titled “Beyond the hype: What is the value of customer satisfaction to a regulated utility?” Far from just assuming everybody knew the answer, PWC deemed it a question worthy of research.
PWC ultimately delivered a host of answers about why customer satisfaction should be a top priority for regulated utilities. For example, PWC’s researchers found that customer satisfaction is an important factor influencing the outcomes of regulatory initiatives. Though they didn’t claim a one-to-one correlation between high customer satisfaction and the approval of rate increases, PWC’s researchers did argue that a minimum level of customer satisfaction was vital.
As the energy system has undergone dramatic change in recent years with the influx of distributed energy resources (DER) and the potential threat of competition from non-utility energy providers, the importance of customer satisfaction and engagement has only increased. In fact, the PWC report also found that a focus on customer satisfaction is a way for utilities to protect their core business from disruptive entrants.
It’s also important to remember that utilities and the customers they serve do not exist in a vacuum. Consumer expectations about how their utility should engage with them are heavily influenced by their experiences with other companies, especially those delivering a fully digital experience like Netflix, Google, and Instagram, all three of which engage customers with highly personalized offers and instant responses.
Though utilities may be starting from a shortfall when it comes to engaging and satisfying customers, they also have significant advantages compared to companies in other industries. In particular, utilities have access to massive amounts of data about their customers - data that can be used to improve customer engagement and satisfaction.
And the recipe for improving customer satisfaction is not exactly a guarded secret. In fact, J.D. Power conducted research that highlights the importance of pursuing a strategy of proactive customer engagement. For these efforts to be successful, J.D. Power says they must be personalized, actionable and timely.
For utilities, the ability to do this rests on the robust, precise data and insights that artificial intelligence (AI) can deliver. “It’s the ability to process massive amounts of data in an intelligent way and learn from that data,” said Josh Gleason, Head of Product Marketing for Bidgely, a Mountain View, California-based software company that uses AI to help utilities improve customer satisfaction and engagement.
But what kinds of data can actually be translated into tangible actions that utilities can take in order to improve customer engagement and satisfaction? The answer to that question begins by being clear-eyed about how people actually engage with energy. While it’s true customers depend on the grid, the grid is at least one step removed from their actual experience with energy – a distinction that is very important if the aim is to genuinely understand what customers will value.
“Engagement at the consumer level and education at the consumer level has to start with appliances,” said Gleason. “People don’t interact with the grid, they interact with their light switch, and they interact with the start button on their washing machine. If you, as a utility, don’t know what those interactions are, how do you know how people are using your service? How can you personalize that? You can’t.” It’s similar to asking people to cut down their expenses even though they have no idea how much they spend on travel, groceries, eating out and other monthly bills. Only awareness and education about their individual circumstances can begin to change behavior.
AI provides a highly personalized view of those household interactions with different appliances through sophisticated energy disaggregation and customer segmentation. It’s an approach that leverages lessons learned from a few homes around behaviors and preferences and projected bill amounts and the propensity people have to call a utility’s customer service line.
It’s not easy to pull off. To achieve this appliance-level view of energy usage, data scientists must have massive amounts of data that can inform the algorithms they or computers write to identify which distinct usage patterns equate to an air conditioning unit, a pool pump or an electric heater, for example. While us humans tend to get less efficient at picking out patterns and performing well as the volume of information increases, AI is just the opposite. “It’s coming to conclusions humans cannot make because it’s processing so much data,” said Gleason. “And the beauty is that it gets more powerful and more accurate the more data it obtains.”
The more significant point here is that AI can provide utilities with the highly personalized, actionable and timely information they need to communicate with customers in a way that drives enhanced engagement and satisfaction.
Here’s what that looks like in action: One large utility recently used energy disaggregation data in bill alerts it sent digitally to customers. “We are sending everyone in the program what we call a mid-cycle alert that says, ‘Hi, John Doe, it looks like your bill is going to be $20 higher this month and here are the likely culprits,’” said Gleason.
In this particular scenario, not only was the alert sent about a bill that was projected to be higher than usual, it also includes actions customers can take to address the problem. Millions of these alerts have been sent, and over 90% of customer reviews about them have been positive. This is just one example of how AI can be used to improve customer engagement.
It’s also just the beginning. Utilities can leverage the power of AI in much the same way as Amazon and Netflix. For example, Netflix eschews the use of traditional demographics and instead replaces them with so-called “taste clusters.” These clusters are based on the actual viewing habits of Netflix customers, which becomes the data that allows the company to do such a good job of recommending movies and TV shows its customers might enjoy. Not only is the use of clusters scalable, it becomes more precise, relevant and powerful with every extra piece of information it can harness.
A similar clustering approach is possible in the utility industry. Data provided via clusters and energy disaggregation becomes like the viewing habits Netflix uses to deliver personalized suggestions. Utilities can use the data to not only present their customers with programs and information that is relevant and useful, but clustering also can help utilities present that information in a way that is more likely to elicit a response.
In a relatively short period of time, many utilities have made improving customer engagement and satisfaction a higher priority - don’t expect too many more research reports investigating the value of customer satisfaction to regulated utilities. It’s more likely, thanks to the improved use of utility data with AI, to see researchers probe this question: Which utility is most like Netflix?