Brief

Powering Up the Customer Experience in Utilities

Understanding what matters most to customers helps identify areas for improvement.

By Corrie Carrigan, Chris Jarrett, Pratap Mukharji and Michael Short

Published on 六月 21, 2019
min read


At a Glance Utilities are developing capabilities to improve the customer experience, in response to new pressures that require them to think more about this aspect of their business. These are new muscles for many utility executives, but they can learn how to flex them from the examples set by leaders in their own and other industries. It will be critical for them to learn what matters most to customers: Some interactions pose a risk of disappointing, while others carry the potential to delight. A system that focuses both individual employees and the organization as a whole on responding to feedback from customers allows executives to identify and prioritize areas where focused action can improve customer experience. Utility executives in the US may have come late to the customer experience revolution, but many now are embracing it with the fervor of converts. Until a few years ago, most utility customers had no alternatives for buying electricity, and utility leaders didn’t view customer satisfaction or loyalty as among their most important issues. All that has changed rapidly as utilities race to deliver the levels of customer experience that their customers have grown accustomed to expect. In a digital era in which customers expect a seamless one-click experience, the sense of urgency for utility leaders is fueled by three factors. In an environment of low or zero load growth, they need to reduce unnecessary spending, especially on service recovery work that can be eliminated by doing things right the first time. Many utilities are working to boost revenue and profits by selling energy-related products and services to customers, but start-ups with a better brand image are gaining market share, leaving many utility executives surprised that their monopoly status does not translate to guaranteed incremental revenue. They need public service commissions to work with them and approve plans for cost recovery—whether for capital investments, early retirement of assets or environmental cleanup costs. Here, too, many are surprised by how vocal some of their communities and activist groups are in opposing plans for investment and cost recovery. Utility executives know that they are very good at large capital projects, such as building power plants to meet the electricity needs of a growing community and operating a complex grid on a 24/7 basis. But many tell us that they are less confident when it comes to the “software” of their organizations, such as developing a customer-centric organization focused on measurably improving customer experience on a continuous basis and going beyond purely organizational structure to policy and process redesign, changes in accountabilities, governance, metrics and ways of working. To be sure, these may be new muscles for many utility executives. They can learn, however, from the examples set by industry leaders in the utility space and beyond who have shown how to focus on consumer needs to drive superior economic performance. What do utility customers want? The first step is finding your starting point. What is your customer experience today? How does it compare with other utility players? More important, how does it compare with customers' expectations? For years, utility executives have talked about the need to become more customer centric, but the average Net Promoter Score^® in the utility sector is about the same as the US Postal Service—and well below that of potential disrupters. Indeed, for some large US utilities, these scores actually declined after they launched programs to improve the customer experience, underscoring the need for such metrics to feed into a larger system that focuses every part of the company on earning customer loyalty—like those in place at customer experience leaders such as American Express, Amazon, USAA, JetBlue and others. Similar to these firms, utilities can develop a clear understanding of the factors that leave their customers happy or frustrated and find ways to act to improve them. Not all customers or customer episodes are created equally, so a fine-grained analysis of customer interactions can deliver insights about which ones companies can address (see Figure 1). For example, one US utility found that it was able to increase revenue and improve customer experience by allowing customers greater choice in how they pay their bills—for instance, picking their own due dates, installment billing, flat-rate billing and so on. The efforts have paid off with measurable improvements in cost, better revenue, fewer write-offs and increased customer satisfaction. Additionally, the utility enhanced the employee experience and made it easier and more enjoyable for the frontline team to meet their customers’ needs. Figure 1 Different aspects of the customer experience score differently in terms of their ability to delight or disappoint With a better understanding of what customers want and reliable metrics on how well they are delivering against it, utilities can set out to improve the customer experience. Many, however, make a few common mistakes along the way. Common causes of failure The easiest way to miss the mark on customer experience is to talk a lot and do little. Too many senior executives across industries pay only lip service when they need a real commitment that is backed by measurement and programmatic changes to the operating model. Executive teams falter in other ways, too. Leaders talk to investors and regulators about customers but then leave deployment to a small, underfunded team that doesn’t have the authority or resources to embed the new ethos throughout the company, from the front line to the executive suite. Even among companies that commit, executives often focus too much on measuring performance without taking action to improve performance. In some cases, they share customer feedback at the executive level, but neglect to push it out to frontline employees where it might spur positive change. Executives might declare victory after putting someone in charge of the customer experience, yet miss the opportunity to redesign the operating model in ways that drive continuous improvement. Finally, several utilities have opted for big bang solutions, such as modernizing or upgrading their grid or transforming IT, with the belief that those actions alone will change the experience. Certainly, those are key inputs; however, they are only one piece of a much more complex and comprehensive strategy required to deliver what customers want. How leaders become customer centric A handful of forward-looking utilities, however, are making real progress by putting their customers at the center of their strategies. Our analysis reveals that these leaders adopted the following four principles to ensure a customer-centric approach. Understanding what matters most to customers. Leaders use data to gain a clear understanding of what really matters to their customers. For example, one utility found that up to two momentary outages over a three-month period are acceptable to their electricity customers; after the second momentary outage, however, customer satisfaction begins to decline. (See the Bain Brief “Grid Modernization: Invest Where It Matters Most.”) Performance measurement that enables change. Once companies understand what’s important to customers in individual interactions and ongoing relationships, they know where to focus their efforts to improve customer experience. Finding the right metric or set of metrics, whether that’s Net Promoter Score or customer satisfaction or something else, gives the company a common language to talk about customer loyalty and allows executives to identify and prioritize opportunities to improve both customer experience and economics for the utility. A systematic approach to continuous improvement. Leaders commit management attention and resources to continuous improvement, and they implement repeatable processes that change behaviors at the front line to improve customer experience. For example, one leading utility uses real-time customer feedback on a daily basis to coach its contact center reps on how they can improve the way that they work with customers. Prioritize customer experience at every level. It’s not easy to alter the DNA of an industry that has not had to think much about customer satisfaction, and it won’t happen unless it’s a top priority for the CEO and the entire executive team. Senior executives become champions of change, setting an example for everyone else in the organization, right up to the front line. Changes in the mindset are reinforced by changes in the operating model and shifts in the way people work with their customers. While they’re at it, these companies also look for ways to improve the experience of their employees who interact with customers. Following a broad improvement program that adheres to these principles can have dramatic effects. One integrated utility in the US that previously focused on cost reduction had to broaden its agenda after regulators took it to task for poor reliability. Senior executives revived the company’s historic emphasis on customer service, spearheaded by a performance improvement program that set targets for reliability and service operations. This program relied heavily on data analytics to identify potential areas of weakness in the grid, and to measure customers’ tolerance for minor outages. Over time, the company has become one of the highest ranked utilities in terms of customer satisfaction, cost and economic value creation. Accelerating the journey Challengers that promise a better product and better customer experience are disrupting the utilities business. There is real risk to both the top and bottom lines of many players in this sector. Unhappy customers will become lobby groups that petition to deny utilities the ability to invest new capital in infrastructure and instead support policy changes that preserve the economics of their regulated utility. Unhappy customers also cost more to serve. Set against these threats, some leaders are showing how to improve the experience of their customers. But it’s clear that everyone in the industry will need to follow in their footsteps. Any utility executive embarking on this journey can begin by considering a few questions. Do you have a compelling reason for embarking on this journey that is based on what your customers expect, potential competitive threats, better economics and potentially better regulatory outcomes? Do you know your starting point? Do you know the details governing customer loyalty, such as when to take action and who is accountable? Do you have the correct information and the necessary feedback loops? Have you committed people, resources and time to this journey? Does your operating model (organization, skills, metrics, ways of working, accountabilities) deliver on a customer promise, or does it create and sustain silos that perpetuate the status quo? Assuming steadfast intent, armed with the right data and enabled by the right operating model, utility leaders can approach this journey with greater confidence than they have in the past. Corrie Carrigan and Chris Jarrett are partners with Bain & Company’s Customer Strategy & Marketing practice; they are based in Chicago and Atlanta, respectively. Pratap Mukharji is a partner with Bain’s Utilities and Renewables practice. He is also based in Atlanta. Michael Short is a Bain principal with the Energy & Natural Resources practice, and he is based in Houston. Net Promoter^®, Net Promoter System^®, Net Promoter Score^® and NPS^® are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.

At a Glance

Utilities are developing capabilities to improve the customer experience, in response to new pressures that require them to think more about this aspect of their business.
These are new muscles for many utility executives, but they can learn how to flex them from the examples set by leaders in their own and other industries. It will be critical for them to learn what matters most to customers: Some interactions pose a risk of disappointing, while others carry the potential to delight.
A system that focuses both individual employees and the organization as a whole on responding to feedback from customers allows executives to identify and prioritize areas where focused action can improve customer experience.

Utility executives in the US may have come late to the customer experience revolution, but many now are embracing it with the fervor of converts. Until a few years ago, most utility customers had no alternatives for buying electricity, and utility leaders didn’t view customer satisfaction or loyalty as among their most important issues.

All that has changed rapidly as utilities race to deliver the levels of customer experience that their customers have grown accustomed to expect. In a digital era in which customers expect a seamless one-click experience, the sense of urgency for utility leaders is fueled by three factors.

In an environment of low or zero load growth, they need to reduce unnecessary spending, especially on service recovery work that can be eliminated by doing things right the first time.
Many utilities are working to boost revenue and profits by selling energy-related products and services to customers, but start-ups with a better brand image are gaining market share, leaving many utility executives surprised that their monopoly status does not translate to guaranteed incremental revenue.
They need public service commissions to work with them and approve plans for cost recovery—whether for capital investments, early retirement of assets or environmental cleanup costs. Here, too, many are surprised by how vocal some of their communities and activist groups are in opposing plans for investment and cost recovery.

Utility executives know that they are very good at large capital projects, such as building power plants to meet the electricity needs of a growing community and operating a complex grid on a 24/7 basis. But many tell us that they are less confident when it comes to the “software” of their organizations, such as developing a customer-centric organization focused on measurably improving customer experience on a continuous basis and going beyond purely organizational structure to policy and process redesign, changes in accountabilities, governance, metrics and ways of working.

To be sure, these may be new muscles for many utility executives. They can learn, however, from the examples set by industry leaders in the utility space and beyond who have shown how to focus on consumer needs to drive superior economic performance.

What do utility customers want?

The first step is finding your starting point. What is your customer experience today? How does it compare with other utility players? More important, how does it compare with customers' expectations? For years, utility executives have talked about the need to become more customer centric, but the average Net Promoter Score^® in the utility sector is about the same as the US Postal Service—and well below that of potential disrupters. Indeed, for some large US utilities, these scores actually declined after they launched programs to improve the customer experience, underscoring the need for such metrics to feed into a larger system that focuses every part of the company on earning customer loyalty—like those in place at customer experience leaders such as American Express, Amazon, USAA, JetBlue and others.

Similar to these firms, utilities can develop a clear understanding of the factors that leave their customers happy or frustrated and find ways to act to improve them. Not all customers or customer episodes are created equally, so a fine-grained analysis of customer interactions can deliver insights about which ones companies can address (see Figure 1). For example, one US utility found that it was able to increase revenue and improve customer experience by allowing customers greater choice in how they pay their bills—for instance, picking their own due dates, installment billing, flat-rate billing and so on. The efforts have paid off with measurable improvements in cost, better revenue, fewer write-offs and increased customer satisfaction. Additionally, the utility enhanced the employee experience and made it easier and more enjoyable for the frontline team to meet their customers’ needs.

Different aspects of the customer experience score differently in terms of their ability to delight or disappoint

With a better understanding of what customers want and reliable metrics on how well they are delivering against it, utilities can set out to improve the customer experience. Many, however, make a few common mistakes along the way.

Common causes of failure

The easiest way to miss the mark on customer experience is to talk a lot and do little. Too many senior executives across industries pay only lip service when they need a real commitment that is backed by measurement and programmatic changes to the operating model. Executive teams falter in other ways, too.

Leaders talk to investors and regulators about customers but then leave deployment to a small, underfunded team that doesn’t have the authority or resources to embed the new ethos throughout the company, from the front line to the executive suite.
Even among companies that commit, executives often focus too much on measuring performance without taking action to improve performance.
In some cases, they share customer feedback at the executive level, but neglect to push it out to frontline employees where it might spur positive change.
Executives might declare victory after putting someone in charge of the customer experience, yet miss the opportunity to redesign the operating model in ways that drive continuous improvement.
Finally, several utilities have opted for big bang solutions, such as modernizing or upgrading their grid or transforming IT, with the belief that those actions alone will change the experience. Certainly, those are key inputs; however, they are only one piece of a much more complex and comprehensive strategy required to deliver what customers want.

How leaders become customer centric

A handful of forward-looking utilities, however, are making real progress by putting their customers at the center of their strategies. Our analysis reveals that these leaders adopted the following four principles to ensure a customer-centric approach.

Understanding what matters most to customers. Leaders use data to gain a clear understanding of what really matters to their customers. For example, one utility found that up to two momentary outages over a three-month period are acceptable to their electricity customers; after the second momentary outage, however, customer satisfaction begins to decline. (See the Bain Brief “Grid Modernization: Invest Where It Matters Most.”)
Performance measurement that enables change. Once companies understand what’s important to customers in individual interactions and ongoing relationships, they know where to focus their efforts to improve customer experience. Finding the right metric or set of metrics, whether that’s Net Promoter Score or customer satisfaction or something else, gives the company a common language to talk about customer loyalty and allows executives to identify and prioritize opportunities to improve both customer experience and economics for the utility.
A systematic approach to continuous improvement. Leaders commit management attention and resources to continuous improvement, and they implement repeatable processes that change behaviors at the front line to improve customer experience. For example, one leading utility uses real-time customer feedback on a daily basis to coach its contact center reps on how they can improve the way that they work with customers.
Prioritize customer experience at every level. It’s not easy to alter the DNA of an industry that has not had to think much about customer satisfaction, and it won’t happen unless it’s a top priority for the CEO and the entire executive team. Senior executives become champions of change, setting an example for everyone else in the organization, right up to the front line. Changes in the mindset are reinforced by changes in the operating model and shifts in the way people work with their customers. While they’re at it, these companies also look for ways to improve the experience of their employees who interact with customers.

Following a broad improvement program that adheres to these principles can have dramatic effects. One integrated utility in the US that previously focused on cost reduction had to broaden its agenda after regulators took it to task for poor reliability. Senior executives revived the company’s historic emphasis on customer service, spearheaded by a performance improvement program that set targets for reliability and service operations. This program relied heavily on data analytics to identify potential areas of weakness in the grid, and to measure customers’ tolerance for minor outages. Over time, the company has become one of the highest ranked utilities in terms of customer satisfaction, cost and economic value creation.

Accelerating the journey

Challengers that promise a better product and better customer experience are disrupting the utilities business. There is real risk to both the top and bottom lines of many players in this sector. Unhappy customers will become lobby groups that petition to deny utilities the ability to invest new capital in infrastructure and instead support policy changes that preserve the economics of their regulated utility. Unhappy customers also cost more to serve.

Set against these threats, some leaders are showing how to improve the experience of their customers. But it’s clear that everyone in the industry will need to follow in their footsteps. Any utility executive embarking on this journey can begin by considering a few questions.

Do you have a compelling reason for embarking on this journey that is based on what your customers expect, potential competitive threats, better economics and potentially better regulatory outcomes?
Do you know your starting point? Do you know the details governing customer loyalty, such as when to take action and who is accountable? Do you have the correct information and the necessary feedback loops?
Have you committed people, resources and time to this journey? Does your operating model (organization, skills, metrics, ways of working, accountabilities) deliver on a customer promise, or does it create and sustain silos that perpetuate the status quo?

Assuming steadfast intent, armed with the right data and enabled by the right operating model, utility leaders can approach this journey with greater confidence than they have in the past.

Corrie Carrigan and Chris Jarrett are partners with Bain & Company’s Customer Strategy & Marketing practice; they are based in Chicago and Atlanta, respectively. Pratap Mukharji is a partner with Bain’s Utilities and Renewables practice. He is also based in Atlanta. Michael Short is a Bain principal with the Energy & Natural Resources practice, and he is based in Houston.

Net Promoter^®, Net Promoter System^®, Net Promoter Score^® and NPS^® are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.