Most utilities don’t have to compete to gain and keep their customers, giving them little reason to invest heavily in customer engagement -- or the back-office staffing, strategy and technology to provide it.
For many power providers, it’s largely a cost to be reduced by moving customers from call centers to self-service online, an area where utilities score behind comparable industries like banking.
But a new survey from GTM Research and EnergySavvy found that utilities engaging in a broader range of “customer experience” efforts also ranked themselves higher in hitting key measures of value for any utility -- lowering customer cost-to-serve scores, and improving the outcomes of rate cases and other regulatory proceedings.
Utilities with the best cost-to-serve ratio scored nearly 60 percent higher in customer engagement best practices, while those that reported the best regulatory outcomes scored more than 30 percent higher in customer engagement. While this doesn’t show whether one causes the other, it’s a correlation worth noting, according to Fei Wang, a senior grid edge analyst at GTM Research.
This correlation emerged from an 18-question survey of more than 60 electric and gas utility executives and staff, along with several direct interviews with key executives. Each was asked to rank their own organization across a spectrum of customer experience focus areas. These "lenses" covered a range of utility efforts central to customer relations, from maintaining and marketing their safety and regulatory compliance to investing in customer engagement IT and cloud computing.
Each respondent's results were then collected to provide a utility ranking on a four-category scale of progress -- “opportunistic," “emerging," “optimizing” and “strategic."
The survey results indicate that utilities are furthest along in the “people and organization” and “brand and marketing management” categories, including high scores for workplace diversity, safety and corporate responsibility. Meanwhile, systems, data and analytics efforts are in earlier stages -- not surprising, given the relative novelty and institutional barriers for utility IT adoption, Wang noted.
The correlation between better regulatory and cost performance and more advanced customer engagement was consistent across all six lenses of the report, Wang added.
But the two lenses most strongly correlated with better regulatory and cost-cutting results -- investment in customer engagement and creating customer-focused performance indicators to track progress -- are both areas where the industry reports below-average performance.
The survey also found a disconnect between executives' stated priorities and actions.
"Every utility executive interviewed 'unequivocally stated customer engagement is an executive-level priority,'" noted the report. But this view was not reflected nearly as strongly in survey results, indicating a gap between rhetoric and performance in the c-suite.
Cloud computing is another issue. Survey respondents noted both the challenge of getting utility IT departments on board, and the fact that most cloud investments today are considered operational expenses in a business that rewards capital spending.
Utilities also reported below-average performance on creating and executing key performance indicators (KPIs). While some have implemented this ubiquitous management tool within customer-facing parts of the utility business, they have yet to be adopted for the rest of the organization, noted respondents.
This disconnect between utility departments is hampering efforts to build support for customer engagement efforts outside their traditional silos, survey data indicated. “Having uniform KPIs would be a key step to improve cross-functional support for customer engagement teams.”
Wang highlighted the fact that lenses with lower-ranked correlations still showed a strong relationship to success in the data. “Just because they’re not in the top three doesn’t mean they’re not important.”
For example, utilities with the highest rankings for investment in customer management systems, data analytics tools and cloud computing also correlated with being twice as likely to have a better customer cost-to-serve than industry average.
Utilities are well aware of the advantages of investing in customer engagement and analytics, as GTM Research pointed out in its recent Grid Edge Customer Utility Analytics Ecosystems report. U.S. utilities are expected to spend $16 billion over the next four years on platform-as-a-service ecosystems, large back-office IT systems, and IOT devices such as utility-owned AMI, sensors and customer-owned equipment and smart home devices.
Join Seth Kiner, former VP of programs and services at Southern California Edison, and Fei Wang, a senior analyst for grid edge at GTM Research, for a Nov. 30 webinar discussion on the results of this survey and its usefulness for utilities seeking to improve their own maturity. Register here.