Why the Utilities industry must address service quality in customer relations
Service quality of customer relations provided by utilities is still perceived to lag some way behind that delivered by other sectors - and consumers know it. Surveys regularly pinpoint the relatively poor performance of customer service within utilities when benchmarked against other comparable sectors, including, internet service providers, cable and satellite TV, phone companies, hotels, airlines, and life insurance providers.
In a recent survey, nearly 1 in 4 customers who had contacted a utility company in the preceding 12 months said that they were dissatisfied with the way in which they had been dealt with. This compares to 16% for those who had contacted a financial services company and 17% for those who had contacted a retailer. This poor customer service can be further illustrated by many other surveys - the point is that there is quite a gap to fill.
Now we can argue that the industry has made some significant strides in improving, including greater focus on customers from the regulators, but the reality is that in many ways companies are starting from a long way back, and other industries are accelerating away.
So why is it this way?
It's important to remember that within the sector a focus on efficient asset management has long been seen as the real key to success. Inevitably, in an 'engineering first' culture, other challenges - including customer service - tend to be a lower priority, only perhaps really rising up the agenda when issues such as debt or customer churn exceeds acceptable levels.
Whether this assessment is fair or not is really not the issue; but I think that to a certain extent, this gloomy view is accurate - so how can utility companies bridge this gap?
An experienced data analytics company, such as a credit card company, lives or dies by getting its customers to evaluate, enrol and participate in programs, products and services. To do this, the company deploys activities such as customer segmentation, collection of data, targeted offers, proactive reach and incentives for program enrolment. It's probably fair to say that utility industry managers know less about individual customers than do their retail or financial services counterparts.
This lack of understanding exists because until now, it wasn't necessary to know any more about the customer; universal obligations to serve each equally have ensured that customer specific data has been, at least in some part, irrelevant. In the eyes of the utility company, one residential customer is essentially the same as another in terms of delivery of the utility commodity and engagement of the customer.
Smart-metering and new technologies
The process of energetic and proactive customer engagement will no longer be a nice to have. Engagement is rapidly becoming a necessary skill that all utilities must acquire. As companies start to collect data at a more granular level through smart metering and new technologies, this capability will allow companies to access and overlay other data sources to better match the right programs with the right people. Smart-meter technology has the potential to create new billing paradigms that aren't encumbered by constraints such as meter-read cycles. Programs can be developed that allow customers to select bill dates and bill frequency.
Some will present objections regarding such constraints as batch billing windows, data privacy and concerns about the complexity of deploying these campaigns. But if other sectors are deploying technologies to overcome the exact same issues, utilities have to ask, "why can't we?"
In a utility industry with smart meters and accompanying infrastructure, there will be no need to wait until the end of the month to receive a bill. Customers could gain access to their usage information when they want, and enjoy services that in many ways are closer to those they currently have with mobile phone companies. Beyond this, they could set alerts to tell them when certain spending thresholds are met or even perform "what if" analyses. In time, companies even could let customers decide for themselves the frequency and timing of their bills, allowing them to synchronize the delivery of bills with their ability to pay. This ultimately could reduce time-consuming arrears collections and should improve positive customer experiences as a result of better-managed consumption.
In the energy sector a recognised part of the smart-meter business case involves better understanding of outages and restoration of services - surely this can also apply to the water sector with for example leakages - will leakage notifications grow more sophisticated and indicate the nature of the issue and estimated restoration times? Will customers be able to nominate third parties to receive this information so, for example, neighbours can turn off the water to prevent pipes from freezing when the customer is away during a leakage? As with any vision, achieving it requires work, but it's best to start with an appreciation of what's possible.
As a broader option of rates and programs becomes available, how will utility customers know which are right for them? How will they select the rates and that are appropriate for them? Customers will surely look to their utilities for the tools to make data driven, informed decisions. In turn, utilities can look for lessons from those industries where success depends on understanding everything about the customers and exceeding their needs and expectations.
The good news is other industries including mobile phone operators, credit card providers and online retailers have demonstrated that rich and plentiful data can be analysed to better understand customer behaviour. And as they have shown, once you understand that behaviour you can improve the customer experience still further.
You can tailor services, better manage yields, and perhaps cross sell or bundle other products and services making the customer more profitable and less likely to leave you for a competitor.
If this sounds far-fetched then just look at your mobile phone bill, or your credit card statement - when you bought them you were carefully segmented to ensure that the product best met your needs - and in the process you became more profitable for your provider. Try to leave your contract and the chances are you will be offered a new tariff that better meets your needs. And, as with financial services, data analysis can provide a water company with a more accurate picture of their exposure to debt which in turn helps to optimise recovery strategies and can also help to filter acquisition targets so that more profitable, lower risk groups are pursued.
A smarter approach is the way of the future, not only for metering technologies but also customer-engagement strategies.