Last month, I argued that the length of time customers spend interacting with their utility company is not -- on its own -- a sufficient measure of “customer engagement.” Customers care more about getting things done than they do about minutes of mindshare. If utilities can help their customers accomplish their goals in less time, they can also encourage the customer to become more engaged in energy decision-making and improve overall satisfaction with their service.
In this column, I’d like to take that argument a few steps further by addressing two questions. First, if minutes of interaction isn’t the “right” metric for customer engagement, what is? Second, as public utilities commissions across the country consider the merits of performance-based regulation, can customer engagement metrics become a basis for future utility earnings?
To measure engagement, listen to customers
Customer engagement is a broad concept. It’s no wonder that many utilities and regulators wonder how best to measure it. Given the range of customer engagement initiatives, there is no single universal metric for success. Instead, the best approach is to listen to customers to find out what matters to them. Then, measure that.
For example, many utilities focus on reducing the time that customers spend on hold before speaking to a customer service representative. While hold time is surely an important metric for customers who dial into the call center, many customers may actually prefer not to pick up the phone in the first place. According to J.D. Power and Associates’ annual customer satisfaction survey, speaking with a customer service rep is the lowest-rated utility customer service channel in terms of customer experience.
Self-service via mobile app, social media, chat, text and web are all preferred to being helped over the phone by a living, breathing human being. Why? The most likely explanation is that online interactions are more efficient -- and less awkward -- for customers. There’s no asking to “speak to a supervisor” online.
Utilities are not ignoring these trends. Instead, they are working hard to improve phone-based service by using customer insights and intelligence to develop rich customer profiles, predictive responses, and “next best actions” that are at the rep’s fingertips when customers call. Through these analytics-driven tools, service reps can offer customers a personalized experience by diagnosing the drivers of a higher-than-expected bill and offering personalized recommendations on ways to save energy, for example.
By turning the phone experience into a conversation with a knowledgeable, trusted adviser, utilities can transform the least-loved channel into the best reminder of the value that the utility brings. It could also change the metric of success. Customers might be willing to devote more of their time -- or even wait on hold -- if they’re receiving top-notch advice.
The metrics for phone-based engagement are of course different than those for an online initiative. For example, Alliant Energy’s freshly redesigned homepage clearly announces its intent: “Find what you’re looking for faster and easier.” With a helpful left-hand tool bar and state-by-state customization, the focus is speed, ease and personalization. Each click offers an opportunity to measure not just the level of a customer’s engagement, but also their ability to complete specific tasks like reporting outages or enrolling in energy efficiency programs.
Digital metrics can drive performance regulation
By providing customers the service they expect and offering utilities a range of quantifiable performance metrics, the digital service transition has the potential to be a win-win for customers and utilities alike. The key is aligning customer engagement goals with the requirements of the utility business model. That may necessitate a new focus on utility performance by utility regulators, and perhaps the creation of new incentives for enhanced customer engagement.
Utilities operating under “cost of service” regulations have not traditionally been rewarded for providing an outstanding customer experience. The regulatory incentive model has typically prioritized reliability and infrastructure improvement over customer satisfaction. This model of utility regulation worked very well to build out the grid and ensure equitable, reliable service; however, as the energy industry shifts from a centralized model to an increasingly distributed one, regulators in as many as a dozen states are now recognizing the need to move to a different model -- one that measures performance on specific desired outcomes.
For example, the Public Utilities Commission of Ohio’s PowerForward grid modernization proceeding began in April with a focus on customer-centric technologies and regulatory innovation. Similar investigations of performance-based regulation are currently underway in Michigan and Illinois, with both states committing to consumer-focused processes. As regulators look for new measures of utility performance, digital customer service channels offer a wealth of options.
Some utilities, like ComEd, have already begun sharing digital service milestones like website transactions and mobile app downloads as part of annual smart grid progress reporting. By sharing these metrics with stakeholders, utilities and regulators can identify the outcomes that matter most to customers, policymakers, and the grid and create corresponding incentives for high performance.
A framework for measuring engagement
To guide the process of metric selection, AEE Institute has developed a “Reach, Usage, Effectiveness, and Feedback” framework for utility customer engagement. “Reach” refers to the measure of customer access to information and general awareness. “Usage” indicates the level of customer interaction, such as email opens or website clicks. Are customers making use of the tools available to them? “Effectiveness” measures customer actions toward utility goals, like enrollment in energy efficiency programs, and “Feedback” refers to customer involvement in developing future products and services. AEE suggests that this framework could provide the basis for picking the metrics that are used to calculate utility performance incentives.
It is crucial that customer engagement should be a means to an end, not an end in itself. A performance-based model should focus regulators’ attention on metrics that generate desired actions. For example, metrics could include:
- Quantifiable reductions in energy usage or demand attributed to utility customer engagement efforts
- Percent or number of customers who are accessing utility web portals or apps
- Timeliness of meter data access or data sharing requests
When engagement drives meaningful progress on energy efficiency, distributed generation, operational improvements, or affordability -- and that progress can be reliably measured -- regulators, utilities and customers will know that they have found the right metrics for success.
What gets measured gets rewarded
The digital world lends itself naturally to metrics tracking. Every website login, click, email open, or service call tells a story about a customer’s level of engagement with their utility, as well as their interest in specific service offerings. Each of these interactions can inform utilities and their regulators about which customer engagement investments generate the most customer value.
If utilities want to invest in modern customer experiences, they will need to advocate for simple, clear and outcome-oriented frameworks to track their impact. By sharing their own metrics of success with stakeholders and regulators, utilities will reach quicker decisions about where to invest. Finally, by tying clear financial incentives to measurable engagement outcomes, regulators will provide utilities with the fuel for real organization change to occur, from the call center to the boardroom.
As the old business adage says, “What gets measured, gets managed.” With the right incentive structures through performance-based regulation, what gets measured in utility customer engagement can also get rewarded.