The importance of digitizing the Customer Base in the Utility Industry, and how to do it quickly

Digitizing the customer base must be a priority for utility companies. But there is still a long way to go. Here are some opportunities, best practices, and successful examples. Even before the current global health emergency, the Utility industry was already experiencing a period of tumultuous change. 

We believe that this crisis, unforeseen and unpredictable, will accelerate some transformations that were already underway, of course, but at this point, they can no longer be postponed. 

Therefore, as always, the most reactive, dynamic, and intelligent companies can (and must) not limit themselves to just rolling with the changes. Instead, they must be proactive in order to take advantage of the opportunities behind every crisis, not just reacting to immediate emergencies, but positioning themselves to be at pace, and even ahead of, future trends. 

The changes that have affected the Utility Industry are many and complex, but we can summarize them in two key points: digitization and the opening of the market. One of the most evident results of the joint push of these two factors is crystal clear: users, customers, and individuals have assumed a central role in this sector. 

Companies (from international giants to local entities) must keep all of this in mind: instead of thinking in terms of “numbers,” they must start thinking in terms of individuals. This is a huge difference and one that is essential for any company to grasp. Attention: all of this is even more urgent in these difficult times.

 

Customers as first assets

Digital Transformation, therefore, has put individuals at the heart of the business. It may sound like a slogan, but don’t make the mistake of considering it as such, especially if you’re involved in marketing and customer service in the Utility sector. Today, in fact, it’s easy to switch from one company to another: all it takes is just a few clicks (or taps).

By the same token, it’s also very simple to unleash real storms that can damage the company’s reputation, starting from even a single piece of negative feedback or a poorly managed issue on social networks (this is what happened, for example, at Scottish Power; learn more about it here in this article from The Guardian).

On the other hand, it has become easier than ever to establish a closer and more tailored dialog with users, even when we talk about extremely large audiences (we’ll come back to this later in the post). So, people are at the center of things, and, for companies in the utility industry (and many other industries), they are, in reality, its most important asset. 

That’s why the main enemy is Customer Churn, that is, the loss of customers. It is precisely on this point that you have to focus maximum attention and ask this simple question: “why does a person decide to change his supplier of light, gas, or water?

The answer is not obvious, and it has less and less to do with purely economic parameters. This is not where the real competition is focused. The pivotal point, according to industry data, is around the dialog between company and customers.

The “Customer Experience Impact Report” found that 89% of Utility users move to a competitor as a result of problems in the Customer Experience. This percentage is also reflected in the results of another study, this time conducted by Groove, which showed that, among the customers who moved to a competitor, 9 out of 10 did so because of an unsatisfactory Customer Experience.

Yet there is still a lot of resistance, partly due to the very nature of the sector. According to a study by J.D. Power, the Utility sector is still among the worst performing in terms of digital Customer Experience.

In short, there is still a long way to go. But the starting point is clear: the digitization of all the processes that concern users, starting from personal data and inventories. Next, it’s about learning how to communicate with customers in the most fluid, effective, and personalized way.

To do so, you have to answer an important question.

 

Who are your customers?

Today, with the analysis of Big Data, it is possible to create a very detailed profile of your customers. Unfortunately, many companies lack the raw material, the data, because much of the personal data are still not fully digitized.

According to the latest research, the largest companies have “digital control” on less than 70% of their users. In addition, to date, about 80% of the time invested in the data is spent in often manual operations aimed at creating order for inaccurate inventories, identifying errors, inaccuracies, inefficiencies (see here). 

It is on this point that we must act. And it must be done decisively and quickly. Of course, the best companies in the industry know this well. It is no coincidence that, according to a study by GTM Research, economic investment in data analysis by companies in the industry will reach around $3 billion by the end of 2020. In 2012 it was “only” $700 million dollars. The increase, therefore, is over 400%.

These are investments with secure returns. Suffice it to say that McKinsey & Company has calculated that complete digitization can result in up to 25% savings on operating expenses for companies in the Utility sector. This corresponds to performance improvement that can range from 20% up to 40% (for this interesting study, see here).

At this point, we just have to ask ourselves one question: how is it possible to accelerate the process of digitizing Customer Service?

 

Accelerating digital transformation – 3 successful examples

We have seen the enormous advantages and opportunities of a Digital Customer Service in the world of Utilities. We have identified the current shortcomings and the great margins that are just waiting to be filled. But how to do it faster?

First of all, you have to put dematerialization operations on track, making archives and records digital, according to legislative criteria, but also in a way that is functional for your type of business. In the initial phase, this starts inside the company.

Then there are operations that, instead, involve users right from the start. This includes “cross-media” operations, for example, that aim to move the Customer Base to digital, such as QR codes that can take customers from the paper bill to digital.

It is important to recognize that these types of operations win when they are based on a logic of incentives and benefits for the customer. Instead, they are counterproductive when, instead, the logic is coercive. Try not to “force,” but to “persuade.”

Then there are the possibilities to collect data and insight through the administration of questionnaires (digital, of course) and feedback requests.

But you can go much further, aiming at an omnichannel perspective. This is what Alabama Power has done, an American company that is positioned in first place in the Customer Experience ranking by J.D. Power. So: maximum optimization and integration between website, mobile applications, and social networks. And maximum transparency: Alabama Power focuses on providing individual consumption data in the most user-friendly way possible, showing where users are consuming the most and how it can be reduced. This is a personalized operation that is greatly appreciated by customers.

The final stage of the Customer Journey, which is also the most slippery one, is the moment of payment. Moving this stage further and further into the digital world is crucial. 

How can companies do this? Again, by communicating the advantages of this choice (learn about the advantages, opportunities, and strategies for digital payments in this post), by offering incentives, but also by building simple, intuitive, tailor-made platforms.

That’s what New York’s Central Hudson Gas & Electric did, with its  CenHud app, launched at the end of 2017, and tailored to each user. In this way, in just one year, the company saw a 12% increase in digital payments (see here).

Companies such as Engie, A2A, and Enel focused on billing; they did so by relying on Doxee, who designed and built personalized (based on the characteristics of each individual user) and interactive bills for them. In this way, several objectives can be achieved simultaneously: transform an annoying and “dangerous” touchpoint into a marketing tool and dialog with the user; improve the Customer Experience and consequently the Engagement and Loyalty rate; collect an increasingly important amount of digital, in-depth data on their Customer Base.

In the final analysis, it is a matter of triggering a real virtuous circle, with advantages on all fronts. And it is from here, from this type of win-win dynamic, that all companies in the sector must start again.