Customers expect more from their utilities than just electricity service, and are more interested in understanding their energy consumption, reducing their use, and helping the environment. Meanwhile, utilities are interested in using energy efficiency and demand-side management measures to reduce load and to avoid constructing new and expensive supply, which requires customer participation. Engaging customers previously entailed sending a monthly energy bill, dealing with high bill complaints, and finding resolutions for customers experiencing power outages.
Today, utilities must find solutions for engaging customers through multiple channels — and for multiple purposes.
US utility spending on customer engagement solutions is likely to grow to meet these challenges. Navigant Research expects a modest rise in spending, growing from $636 million in 2016 to $774 million in 2022, at a compound annual growth rate of 3.3%.
Online customer engagement solutions are anticipated to represent the bulk of investments, as self-service tools via the web or mobile applications (apps) can help reduce traffic to call centres and customers often favour this method of communication. According to a study by Accenture, consumers prefer a do-it-yourself approach for 70% of their interactions with energy providers.
Solutions are emerging to address the needs of the modern utility, and these are largely based on consumer data and online tools. Opower, a leader in the utility-customer engagement space known for pioneering the home energy report, analyses smart meter data in a cloud-based platform to engage customers through better energy consumption information. Opower’s platform also includes online billing, behaviour demand response capabilities, high bill alerts, utility notifications, an online auditing tool, rewards programmes, and targeted recommendations and tips.
Other competitors in the space include companies like Bidgely, which offers a white-label platform to utilities called HomeBeat Energy Monitor. HomeBeat uses customer data to disaggregate energy use among household devices to help utility customers prioritize energy-savings efforts.
The platform includes a mobile app and web portal that has features for personalised energy-saving insights, neighborhood comparisons, alerts and notifications, and social media channels. Tendril, another competitor in the space, released its MyHome app last year, which has been used by utilities such as Duke Energy and American Electric Power. This platform pulls data from multiple disparate utility systems to unify utility messaging to customers.
Customers receive an energy identity that allows for more targeted messaging based on their preferences for cost, comfort, and environment. MyHome also offers in-app bill payments, as well as alerts of outages and unusually high bills.
Moving toward a customer centric business model
Despite the increase in comprehensive, data-driven solutions for engaging customers, utilities still face challenges in this market. While consumers have higher expectations for their utility providers, many still lack motivation to engage with their utilities due to relatively flat electricity prices. On the other hand, though some 50% of utilities are already moving to a more customer-centric business model, the traditional utility mindset has plagued many who are still slow to shift their thinking from end users as ratepayers to end users as customers, which has resulted in relatively low customer satisfaction and engagement.
Utilities motivated to engage customers face increasing competition for the customer relationship among other service providers, as depicted in Figure 1. Utility energy apps also face strong competition, especially in an age where 75% of app users across all industries churn within 90 days. With so many apps for so many different applications, energy apps that are not meaningful to consumers will get lost in the mix. To top it off, the increasing use of consumer data in these digital tools raises privacy and security concerns, which impedes the engagement and adoption of solutions.
In order to mitigate some of the issues that exist with engaging customers, Navigant Research’s recent research brief, Residential Customer Engagement, identifies several best practices for utilities. These include digital self-service tools, targeted programmes, personalisation, transparency, seamless integration, incentives, social media, and understandable, necessary content, and are described below:
• Customers prefer engagement through digital channels. Making greater use of these tools and driving communication in ways that customers prefer can help utilities successfully engage customers.
• Targeted utility programmes can increase programme participation. They can also reduce consumption, saving energy by finding the right customer to engage based on desired levels of participation, technology capabilities, and commitment.
• Personalisation goes beyond a better customer experience. User-specific information can drive willingness to engage.
• Transparency can emphasise the importance of individual participation in programmes. Customers that know programme goals are more likely to understand what is expected of them and how they are contributed.
• Seamless integration can avoid customer frustration and poor user experience. This is accomplished by having a mobile app, web portal, and backend system that all display consistent information.
• Incentives can help drive customer engagement. However, it is important for utilities to keep in mind that some incentives are better than others, and designing an incentive programme is as important as the incentive itself — if not more so.
• Social media is a comfortable way for customers to engage with their utility. It enables utilities to receive quick and valuable feedback.
• Understandable and necessary content means showing the customer information that is valuable to them. For example, information like dollars versus kilowatt-hours can be conveyed in a way that does not make the consumer feel like they are being bombarded with messaging. MI
ABOUT THE AUTHOR
Paige Leuschner is a research analyst with Navigant Research managing the Residential Energy Innovations research service within the Networked Buildings group. Paige specialises in smart home technology, home energy management, smart thermostats, demand side management, residential distributed energy resources, and utility-customer engagement.