A couple years ago I facilitated a day-long “chief customer officer” summit for about 25 senior utility leaders. Dozens of utilities have chief customer officers and many more are doing the learning and work needed to compete in today’s dynamic, digitally disrupted, customer-empowered world that is upending many industries.
Why are some utilities embracing the customer experience pivot?
- Digital disruption upends relationships. Like other industries, the embedding of an internet connected operating system in core products and services change the relationship between provider and customer. Smart meters and appliances, home and building automation, and distributed generation all challenge the traditional utility operating model…just as software as a service, connected cars and the smart phone have done to their respective industries. Many utilities are not equipped for the real-time servicing, information, communications, and scheduling expectations customers have now thanks to firms like USAA and Amazon.com. During last winter’s storms, customers and regulators complained as much about the lack of transparent communications as the duration of the outages themselves.
- Amplified customer voices impact regulator perception. As customer and commercial buyer expectations rise, social media amplifies their voices. The problem is that direct marketing has an uphill battle to change these opinions. American Marketing Association research shows that 90% of customers trust peer reviews, while about a third say they trust what marketers or advertisers say about their products and services. Furthermore, customers are more likely to publish negative comments than positive comments. Negative customer sentiment about a utility makes it harder to convince regulators to change fee structures.
- New competition. Like many industries, traditional boundaries of competition are changing. Firms like Google, Apple and Verizon are competing for customer attention around energy monitoring and usage in the world of home automation. Tesla’s CTO views his firm as an “energy innovation company as much as a car company.” And, Solar City and Bloom Energy look to disintermediate traditional firms with localized production. Firms that deliver the best customer experiences create a “trust platform” that gives them credibility in buyers’ eyes to enter new markets, just as USAA has shifted to helping its patrons through the car buying and home buying processes.
Four Steps To Make The Customer Experience Pivot For Utilities
The reality is that utilities remain far behind others in making the pivot. In a recent West Monroe Partners study of utilities, we found that utilities lagged far behind banks in terms of ease of doing business. In a heuristic exam of 105 common tasks across four channels, the top utilities scored around 3.6, compared to the top bank that scored around 4.9 on a 5-point scale.
What will utilities need to do to succeed in making the customer experience pivot? It’ll take more than either the marketing organization increasing its messaging or the contact center putting on a friendly face. Utilities will need to embed a customer-perspective across people, process, technology and data. What does this mean?
Just as the telecommunications industry has undergone profound changes, ten years from now utilities will look very different than they do today. To stay relevant, utilities will need to do four things:
1) Re-think why the business exists. As long as utilities imagine themselves as a provider of energy services, they’ll remain stuck in an outmoded way of doing business, in the same way that Kodak and Blockbuster stuck to their guns all the way to the grave.
Instead, utilities need a broader description of why they exist. Great companies look beyond the products or services they provide to the larger picture of what customers are trying to achieve with those products or services. Thus, while Pampers sells diapers, it “helps mothers care for their babies’ healthy, happy development.” As Nest’s Marketing head puts it: “we’re obsessed with homes and everything in them. Home is where our products live. So naturally, we want them to fit in – be part of the family.” It’s this kind of outside-in thinking that helped firms like Apple transform the phone, Dyson transform the vacuum cleaner and Uber transform taxi services.
2) Move beyond customer satisfaction metrics. It’s no longer sufficient to merely satisfy the basic needs of customers…good companies seek to turn customers into brand advocates. Newer metrics like Net Promoter Score force companies to think about what actually constitutes an advocate. Other metrics like the Tempkin Experience Ratings consider the emotional aspects that have a significant impact on loyalty. If the emotional stuff is too hard to swallow in your company, start with West Monroe Partners Customer Effort Index for Utilities, which looks at how easy it is for customers to do business with you.
3) Evolve continuous improvement to focus on customer processes. Utilities that have strong continuous improvement efforts focused on operational efficiency and cost savings should evolve these efforts towards improving customer experience metrics. This starts with building a rich understanding of the “customer operating model.” What do we mean by the “customer operating model”? The customer’s contexts, scenarios, processes, devices and measurements of success.
A customer’s operating model can often differ dramatically from a company’s internal operating model. When the giant food distributor, Sysco, researched the experience it delivered to identify pain points, the company discovered that “delivery” was the cause of significant aggravation. This came as a surprise, since the company prided itself as being a great logistics company and had a super track record for on-time delivery. But, it was other policies, such as payment requirements, that created anxiety and frustration.
Tools like West Monroe’s Customer Experience (CX) Blueprints help firms map customer processes to the people, process, technology and data responsible for delivering experiences. They create ownership and accountability, as well as break down organizational silos, to better align internal operations to customer needs. Having evolved from traditional “value stream mapping,” a by-product of CX Blueprints firms is cost savings. By doing what customers want, companies can eliminate unnecessary steps that take staff time and missteps that result in customer inquiries to contact centers.
4) Use big data to engage customers to achieve their goals. The real power of the big data exhaust is that companies for the first time have the ability to not only understand intimately how customers use their products and services, but, in the process, to also help them succeed using those products. Unfortunately, most firms today see big data as a powerful tool to do the same thing they’ve done for decades: direct marketing product pitches broadcast at customers. That’s a shame!
Smart firms will build data visualization and gamification capabilities to turn their big data into services that engage customers around their own success. Several firms illustrate this different paradigm. For years, Salesforce.com, which has a President of Customer Success on its executive management team, leverages behavioral data to suggest how users could make better use of its CRM platform. The more success they have using the platform, the more dependent on the platform they become and the more services they use. AirBnB uses data to coach apartment owners on aspects of hospitality, from how to book their space more frequently and to delivering good experiences as a host. OkCupid uses customer behavior data to help its subscribers successfully land dates through the kinds of photos they post and messages they write.
Ultimately, customer experience is a lens through which companies can view and run their business, it’s a continuous improvement process, and it’s a way of delivering more value to customers and driving up revenue while eliminating activities that undermine value and drive up costs. It requires firms to engage in systems thinking with a customer lens rather than seeing improvement as a one-off activity in a particular department. Firms that will win – indeed survive – in this age of rapidly evolving capabilities will use customer experience insights as signals to adapt their operations to changing needs. It’s time to move beyond tweaks to transformation and build a customer-driven modern operating model.
For more information, please visit our Customer Experience page.