Utilities and Customer Engagement: An Unorthodox Marriage

Nearly all utilities, by design, are natural monopolies. While they are designed to have an overall benefit to society, they are still monopolies. Meaning they have control of the market with no competitors. If you want water – and I assume you do – you have to pay your water utility at the rates that have been set.

So that brings us to the next point – why should utilities care about improving customer service, decreasing customer effort, or increasing customer engagement? Spending money to improve any of those doesn’t mean customers will use more water or drive more revenue. So where is the business case? Why has an industry that has historically treated customers as invisible rate payers now jumping on the customer experience bandwagon?

It all stems from customer expectation. If the customer expects it, even in the case of utilities, organizations should meet or exceed those expectations. Unhappy customers have ways of getting their way – contacting local news channels, complaining to public officials, out lashing on social media, or bombarding customer service reps with calls and complaints. The emergence of a “convenient society” means utilities need to change the ways they’ve historically treated customers and match service achieved in free market industries. These three points, all driven by customer expectation, are pushing utilities to address their customer experience.

1. Political Pressure
Utilities are closely tied with politics, and in many cases, run by municipalities. When customers have issues or complaints, the utility is the first one to hear about it but they certainly might not be the only one. Citizens air their grievances with their local government and political pressure is placed on the city to improve the customer service of a utility. This is often backed by city funding. In some cases, those running for public office include improving utility customer service as part of their platform to secure constituents.

2. Happy Customers Make Happy Employees
By nature, employees want to satisfy customers’ needs and help solve their problems. A customer service representative’s sentiment on the job comes from interactions with others and a sense of success or failure. Employees that are not equipped with training or tools to address customer needs can feel helpless – especially when dealing with disgruntled customers and problems they have no way of solving.

The most tangible example is the utility call center. Turnover can be disastrous – sometimes upwards of 40% per year. With costs of hiring and training a new employee ranging from $5000 – $10,000, the business case for customer service adds up quick. Customer service representatives are the first line of defense with customers – enabling them to solve problems, act as advisors, and inform and educate customers will concurrently increase customer service and employee tenure.

3. Customers Want to Serve Themselves…
…and it only makes sense that a utility should let them do so. The shift towards self-service eliminates work that the utility must undertake and mutually benefits the customer. Let’s take online bill-pay for example – a popular option customers are demanding.

  • Utility benefits may include: a decrease in mail received and processed, a decrease in amount of resources required to handle and process “walk up” payments, a higher propensity for both payments and on-time payments reducing collections costs, a decrease in payment calls into the contact center, an increase in paperless billing (and decrease in postage).
  • Customer benefits may include: on-demand management of bills, access to historical billing and usage data, reduced effort to pay a bill, reduced postage costs and effort, recurring payments to eliminate both late payments and effort required to pay a bill.

Investing in self-service by enabling customer to conduct business through their preferred channel pays off – especially a continually growing population of “digital first” customers.
The bottom line – utilities should invest in customer service because it makes sense. The once operationally focused industry now has good reason to start paying attention to their customers.
Ben Snyder is an Experienced Consultant in West Monroe Partners’ Customer Experience Practice. For information on how West Monroe is transforming utility customer experience contact him at bsnyder@westmonroepartners.com.

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