Why customer engagement is the most disruptive force in the utility industry
It’s no easy task for electricity providers to implement customer engagement into their overall strategy
These days, customer engagement is more than just a buzzword — companies that have truly focused on improving their customer engagement strategy have seen real returns on their investment. But while the impact of customer engagement transcends industry and customer type, many utility companies face an uphill battle when it comes to customer engagement.
This is mainly due to one glaring fact: According to one study, the average customer spends just nine minutes a year interacting with his electricity provider. And most of these interactions revolve around outages, billing problems, or other issues with a negative connotation.
It’s no easy task for electricity providers to implement customer engagement into their overall strategy. But if you don’t find a way, you may soon find yourself losing market share to those that do.
The Disconnected Customer
Many companies across all industries are guilty of not putting customers first, and the utility industry is no exception. We’ve practically ignored customers for more than 50 years. It wasn’t until recently that we began referring to them as “customers” instead of “ratepayers.”
On the other hand, customers view most utility companies as simply a bill that comes in the mail every month. The relationship is strictly transactional. Such a shallow (and negative) relationship leads to little interaction. Any strategy based on enforcing these already existing avenues is a waste of time. The current setup in place isn’t working, but there’s hope. The few companies that have actually challenged the status quo have found great success.
San Diego Gas & Electric was one of the first utilities to embrace a customer-centric strategy. The company launched a broad communication campaign to address potential concerns with the rollout of its new smart meters. A combination of community announcements, conservation-based incentive programs, and face-to-face customer service offerings effectively led to just 1,200 complaints from the 2.3 million people who received smart meters — that’s 0.16 percent.
Another great example of this is when Infinite Energy, a fast-growing electricity provider, partnered with us at MeterGenius to launch an engagement program for 3,000 of its clients. We created a point system that rewarded customers for reduced power consumption and engagement with an app we built for Infinite Energy. Users could use the points they earned to redeem Amazon gift cards. This immediately impacted Infinite Energy’s customer engagement statistics.
Suddenly, the company’s monthly emails had a 75 percent open rate (compared to an industry average of 12 percent), and customers in the test program had a 27 percent higher retention rate than customers in the control group. This, in turn, increased Infinite Energy’s average customer lifetime value by more than $300.
Implementing a Customer-Centric Program
After executing these customer-first programs, both SDG&E and Infinite Energy experienced an influx of customers who set up online profiles, elected to receive email and text alerts, and engaged with the company much more often via social media.
Here are four ways you can engage your customers:
1. Customize the Bill-Paying Experience
Traditionally, the only content individualized for a customer was the amount due on the bill. However, the bill is still an effective medium for convincing customers to read your message, and you should use this opportunity to create value.
First, segment customers by home type, home features, behaviors, motivations, or participation in other programs. Then, you can send tailored messages to specific customers based on their segmentation. By creating relevant messaging, you’ll forge an emotional bond with your customers through your shared values.
For example, if a customer rents an apartment and has shown interest in the environment, a utility company could promote its hybrid car-sharing program by explaining the environmental benefits. If this same customer received a bill with a broad message promoting the utility’s new refrigerator trade-in program, the customer would probably discard the irrelevant message and be less likely to read the next bill.
2. Increase Social Media Engagement
Still, engagement goes beyond the bill. Most of today’s companies use social media for customer service. This can be helpful because these interactions occur in a public forum, but these are mainly conversations with negative overtones. Customers rarely rave about how great a utility company’s service is. More often than not, they turn to the Internet to complain about high bills or outages.
However, it’s possible to flip the conversation. Let’s revisit the example of Infinite Energy’s point system. Customers flocked to the company’s social media accounts to brag about their high scores and refer their friends to the company (they could earn extra points for every friend who signed up).
The benefits of increased positive social media interactions are obvious. Think about it: Would you rather sign on with a company whose Google search yields purely vitriolic comments or a company that has a Facebook page full of happy customers? Try adopting a similar loyalty program to engage customers, and watch what happens!
3. Use Technology to Interact With Your Customers
Smart meters and smartphones have the capability to turn energy consumption into a fascinating and interactive customer experience. Don’t just use smart meters as a device to help electricity providers remotely monitor usage, detect fraud, and connect or disconnect services. Look at them as a valuable data hub and an enabler of interactive tools that can benefit customers, too.
In today’s tech-centric world, people are much more attracted to interactive, real-time data visualization than the old-school graphs, charts, and meticulously analytical numbers that company executives like to see. By creating engaging, easy-to-understand customer portals that leverage the data from smart meters, you can give your customers more than just a bill — you can give them knowledge and, more importantly, a fun way for them to consume it.
4. Stay Future-Minded
Always look for ways to enhance your customers’ experience and knowledge. By creating programs that leverage the capabilities of the connected home with data acquired from smart meters, electricity providers can accomplish their goal of a smooth load curve and deliver even more value to their customers.
There’s still a long road ahead. It will be at least another decade before connected homes are as ubiquitous as smartphones. But while we wait for that, let’s focus on shifting electric companies away from traditional models of customer interaction. The bill-centric model is outdated — it’s time to keep up with the rest of the world.
Customer engagement programs are a great way to stir positive emotions in clients who mostly only talk to utility companies when they’re upset. If enough providers buy into this, those who choose not to adapt will find themselves left behind.
Ty Benefiel is co-founder and CEO of MeterGenius, a free website and mobile app that helps residential users engage with and lower their electricity usage. It provides electricity providers a modern and effective way to increase customer satisfaction and retention, reduce overall electricity consumption, and manage peak demand usage.