Economic Shock Can Catch Consumers Unaware

Energy consumers want engagement and for utilities to provide solutions. As the industry goes through a rebranding period, many energy providers are looking to utilize their own expertise and resources to expand their offerings in synergistic ways.

Position Yourself as a Trusted Partner

Home energy analysis and energy efficient rebates programs are great ways to position your utility as a trusted partner, but they lack human touch and nothing makes them stand out from what every other energy provider offers. This is why utilities are turning to affinity partnerships to expand their service offerings.

You can differentiate yourself by offering education about electrical safety and energy efficiency – something of which 88 percent of homeowners approve – while simultaneously offering an optional emergency home repair plan to protect them from economic shock, or a large, unexpected expense.

Many Homeowners Are Unprepared

More than one-third of Americans have $500 or less in savings in the case of an economic shock, and that increases to 54 percent of those who have a total annual income of $50,000. A Charles Schwab study showed 60 percent of American live paycheck to paycheck, and The Pew Trust found 60 percent had an economic shock in the previous twelve months.

Economic shock threatens about one-third of Americans.

The Biannual State of the Home Survey, conducted by The Harris Poll, reports the financial impact of home repairs, the state of the American home and researches home ownership trends. In the fall edition, the survey found more than one-third of homeowners would prefer a deductible-free emergency home repair plan like HomeServe’s offerings. The number was double that of those homeowners who would prefer to pay a rider on their home insurance offering a deductible. In addition, 69 percent of homeowners would prefer their local utility to offer an optional emergency home repair plan from a third party.

Homeowners Are Worried About HVAC

In addition, the HomeServe Biannual State of the Home Fall 2019 survey shows 50 percent of homeowners had an economic shock within the past 12 months. HVAC systems accounted for the most needed repairs, about one-in-five, and nearly half of homeowners are worried about the state of their HVAC system. Many homeowners are shocked by the cost of HVAC repairs, despite the size and complexity of most systems and safety requirements.

One-in-four homeowners had an HVAC repair in the past year and nearly 50 percent are concerned about their systems.

In the past year, HomeServe has sought to address our customers’ concerns about HVAC breakdowns by purchase HVAC repair companies in Washington, D.C.; Cleveland, Ohio; and Grand Prairie, Texas. These hubs will enable us to better serve our – and our partners’ – HVAC customers.

Educating Customers is Key

Education about improving energy efficiency and safety is key, but HomeServe also offers education about service connection responsibilities. In a previous State of the Home survey, more than 40 percent of homeowners surveyed didn’t know they were responsible for maintaining their service connections.  A total of 18 percent were unsure who was responsible, while another 11 percent thought their homeowner’s insurance would cover the repair expense and 13 percent believed the utility was responsible.

Customers want utilities to offer optional emergency home repair plans.

If homeowners don’t know who is responsible for service connection maintenance, they will likely contact the utility if there is an issue. Then you will have the unenviable task of letting them know they are on the hook for thousands of dollars in an emergency home repair they may not be able to afford.

To learn how you can educate homeowners about their responsibilities and help them avoid economic shock, contact us.

Your ACSI Score: Four Ways to Boost It

Investor-owned energy utilities have slid nearly three percentage points in the American Customer Satisfaction Index report for 2018-2019, primarily because of higher prices and outages caused by severe weather.  This is called the ASCI Score.

Natural gas providers have seen a higher score – 78 to electric’s 72 – possibly because gas transmission lines largely aren’t exposed to the vagaries of weather. This was after the industry overall saw a slight jump in the prior year’s report. IOUs saw hits around goodwill or support of the community and support of renewable energy programs, which didn’t meet customers’ expectations.

You already know the country’s aging infrastructure needs to be addressed, and many utilities already have plans in place to address it, but infrastructure isn’t quick or flashy. There are other things you can do to improve customer perception and loyalty, and by doing so, improve your ACSI score.

Corporate Social Responsibility

Your ASCI score could be affected by your community outreach efforts.

Corporate Social Responsibility is one of the places where the industry didn’t meet customer expectations, and that’s a shame, because positive customer perception in this area can show up on the balance sheet.

In a survey, 94 percent of consumers said they would switch to a company that supports a cause, and 20 percent would pay more to a company that does so. Among U.S. consumers, 52 percent factor whether a company’s values align with their own, 87 percent will make a purchase from a company that supported a cause important to them, and 65 percent research companies’ CSR programs to determine whether they are sincere or “greenwashing,” putting on the appearance of social responsibility without the accompanying cultural changes.

Socially conscious Millennials spend their money with companies whose values align with their own, and Millennials have been dubbed Green Champions, those concerned with environmentalism – another area where the industry didn’t meet customer expectations.

In short, being a good corporate citizen can not only improve customer loyalty (and your ASCI Score!), but encourage them to spend more with you.

Perceived Value and Quality

Perceived value and quality, along with customer expectations, are important benchmarks the ACSI takes into account when calculating and ASCI score.

While energy reliability is an important part of the services that you deliver to your customers, you can boost this rating by offering energy services, energy efficiency products and other offerings through affinity partnerships. Offering a range of products or services can improve perceptions of success and quality

It’s reported that customer experience will be the most important factor, above price and features, by 2020, meaning that your customer’s perception of their relationship with your utility and the quality of your service will be more important to them than cost. As noted above, customers will pay more for products and services if they can be linked to a cause that they care about.

A customer who perceives your service to be of superior quality or value, is likely to become a loyal customer. They will not only purchase your services over a comparable competitor’s, but recommend them to others. 

Customer Service

Seventy-nine percent of utilities believe themselves to be customer-centric, when only 7 percent of customers believe the same thin, according to research. As the energy industry evolves, customer service is becoming an area where utilities can differentiate themselves from the competition. Customer service also has an impact on your bottom line with JD Power finding that improved customer satisfaction means an increased return on equity for energy providers.

Improving the customer journey can improve satisfaction. We have entered the digital age, and customers want a multichannel experience, and you can use this to your benefit. Something as simple as a push notification when a service technician is on their way to a customer’s home can improve satisfaction. 

Customers want to speak to an empathetic agent at your call center, who understands their problem and provides a smooth transition between self-service to assisted service. Information can’t be siloed – your customers will be less frustrated when your agents have access to the big picture.

Partnership

Partnerships with third party providers are enabling utilities to offer value-added services and new products to help strengthen customer relationships, because a utility’s core business of delivering power and maintaining infrastructure requires vast resources.

Value-added services can fall under three main categories: energy services, such as surge protection, lighting, weatherproofing and electric vehicle storage; information services, such as home energy management systems, energy reports and real-time usage information; and home services, a developing market that includes home inspection, landscaping, emergency home repair plans and bundled services, such as home security systems.

According to research conducted by HomeServe, those customers who received an emergency home repair plan through their utility rated their provider higher than those who didn’t have policies. This is just one more offering that could lead to a better ASCI Score.

Utilities are looking for opportunities to connect more deeply with customers. HomeServe helps to improve customer engagement for our utility partners through the integration of complementary home repair programs with utility initiatives such as energy efficiency and safety, offering customers greater access and choice. Partnership allows the utility to leverage HomeServe’s marketing and communications expertise to educate their customers through a variety of channels. For more information, contact us.

Consumer Engagement Strategy Required for Selectively Engaged

The flattening load growth and search for new revenue channels is old news to utilities – the question now is: What is required of your consumer engagement strategy?

The retail and service markets already exist, but products like smart thermostats and electrical vehicle charging stations are expected to be a billion-dollar market by 2030 for utilities and third-party vendors, according to a July 2018 study.

Selective Engagement

The first hurdle is engaging energy consumers. Forty percent are “selectively engaged,” and the old messaging standbys are as old news to them as the changing face of the industry is to you. They can be lured in with energy efficiency offerings, because saving money is a strong motivator for them.

It makes sense that these consumers usually have average or below average incomes and some can’t afford the upfront costs of energy efficiency, opening up an opportunity to offer on-bill financing, a little-used approach, or a web-based marketplace offering energy-efficient products.

Pain Points

Speaking of the bill, many selectively engaged consumers are frustrated by what they see as confusing and opaque billing practices. Lower those frustrations by making it easier to redeem rebates. Even simply educating consumers in already available rate-savings plans and how to better manage their bill or usage can improve your engagement strategy.

Customer Engagement Strategy can help attract the attention of millennial shoppers.

One of your most useful tools in engaging consumers is data – analyzing your already available data will provide insights that will enable you to personalize your messaging, and provide information that is of interest to that consumer. As more of them plug-in to smart home appliances such as thermostats, HVAC systems and water heaters, even more data will be available, allowing you to further target and offer additional products and services.

The “Always Engaged”

Another segment of energy consumers is the “always engaged,” and many are digital natives who want options and know where to look for them. Millennials, the largest generation in the country, are already part of the “subscription culture,” paying monthly fees for everything from entertainment to clothing. However, these services are highly accessible, personalized and available over multiple channels, expectations utilities need to meet.

Utilities have been slow to adapt to this digital tribe, but it’s not impossible to master if you look at the customer/member experience holistically, paying special attention to billing and payments, managing usage and reporting outages – all bread-and-butter issues that have a large impact on satisfaction.

Millennials often are “green champions,” having shown an interest in solar technology and electric vehicles. In suggesting products and services that help save energy and money, utilities can play the role of the trusted advisor, framing product and service offerings as an opportunity for choice. Offering value-added services through predictive and proactive apps and websites from which a customer can monitor their usage, purchase energy-efficient products or share energy-saving tips offers another avenue for engagement.

What’s Important to Your Engagement Strategy?

You know that engagement is important, but how much of your resources do you dedicate to it when your primary goal is to maintain a safe, reliable source of electricity even as the grid is aging and evolving? Consider entering into an affinity partnership instead of managing everything yourself. You can’t do it all, but you don’t need to – there are companies that specialize in the technology and services energy consumers want with very little risk to you.

Customer Engagement in the New Utility Era

There’s a major trend happening in energy that is not measured in barrels or BTUs.  Utilities are becoming much more focused on deepening their customer relationships.  As state after state deregulates electricity, forcing utilities to compete with retail providers, and more efficient homes and emerging green technology flatten load growth, energy utilities have had to look within and figure out strategies to improve customer engagement.

And this customer base is changing. By 2025, Millennials will make up to 75 percent of the work force, as the next largest generation, the Baby Boomers, retire in droves. This means their buying power will only increase in the next decade. The 80 million Millennials in the U.S. currently spend $600 billion per year, a figure expected to increase to $1.4 trillion by 2020.

A Brookings Institute study identified key values of this generation that must be considered by companies wishing to successfully engage with them. These include an emphasis on corporate social responsibility, ethical causes, and stronger brand loyalty for companies offering solutions to specific social problems; a greater reverence for the environment, even in the absence of major environmental disaster; and higher worth placed on experiences over acquisition of material things. These can all make for better customer engagement.

The first truly “digital generation,” Millennials spend 90 hours a month using smartphone apps, and they have the greatest interest in smart homes, with 86 percent willing to pay up to 20 percent more in mortgage or rental payments for smart home technology, such as smart thermostats, according to a Wakefield Research study. They are also are interested in green energy, with 56 percent indicating a desire to incorporate solar panels, according to an Accenture consumer survey.

Digital Tools for Customer Engagement

Utilities are benefiting from offering tools for digital engagement including smartphone apps for bill paying and usage management, text and email messages, and a secure and accessible website experience. For example, offering an app that enables residential customers to view energy consumption in their homes results in better informed and more engaged customers who can help make grid operations more efficient. 

As a utility’s core business of delivering power and maintaining infrastructure requires vast resources, partnerships with third party providers are enabling utilities to offer value added services and new products to help strengthen customer relationships.

Value-added services can fall under three main categories: energy services, home services and information services. Energy services can include items as simple as surge protection, lighting, weatherproofing or as complex as energy storage and electric vehicle charging.

Home Energy Management

Information services include home energy management systems, energy reports and real-time usage information that enable customers to manage consumption and costs through real-time data. Millennials, in particular, want their utilities to increase smart technology and renewable energy options. The above-referenced Accenture study also indicates that over 60% of millennials within the next 5 years want to sign up for a digital application to track energy usage and control home elements.

Home services is a developing market that includes home inspection, landscaping, emergency home repair plans and bundled services, such as home security systems. According to research conducted by HomeServe, those customers who received an emergency home repair plan through their utility rated their provider higher than those who didn’t have policies. In addition, 59% of utility customers surveyed who don’t currently have a policy responded that their opinion of the utility would be improved if they offered repair plans.

The time for utilities to raise the bar on engaging with Millennials is now. As technology continues to evolve and customers are looking for more than power, utilities have a great opportunity to deeply connect with this generation. 

HomeServe, a leading provider of home repair service plans, partners with utilities across the nation to offer utility customers affordable protection from potentially expensive repairs of electrical lines, water heaters, HVAC systems and water and sewer lines. To learn more about a partnership with HomeServe, contact us.

Customer Satisfaction: Why it Matters to You

There is a strong relationship between customer satisfaction and return on equity in the energy industry, and, although the industry has seen year-over-year positive progress, the needle is only being nudged.

Customer satisfaction increases when companies provide easy communication paths with the company.

JD Power white paper shows a link between customer satisfaction and ROE, finding a half a percent increase in ROE for those companies in the top quartile of customer satisfaction the year prior to a rate case. More interestingly, JD Power also found that utilities with high CSAT ratings received larger rate increases than those that had poorer ratings, suggesting that investment in customer satisfaction is as important as investment in assets. The study also showed a positive impact on net operating margins and credit ratings.

Six Benchmarks of Customer Satisfaction

In the J.D. Power 2018 Electric Utility Residential Customer Satisfaction Study, overall customer satisfaction has increased for the seventh consecutive year. The study measures CSAT through six benchmarks: power quality and reliability, price, billing and payment, corporate citizenship, communications and customer service.

The American Customer Satisfaction Index has also shown a year-over-year increase, going up 0.4 percent to 75.2 overall on a 100 point scale. Municipal utilities saw the biggest jump with 4.2 percent to 75, while investor-owned stayed at 75 and cooperatives slipped 1.3 percent to 77. Municipal utilities saw their increase because of lower rates, more investment in renewables, reliable service and faster restoration after outages. Across all utilities, customers want bills that are easier to understand, more courteous staff, more energy efficiency information and renewable programs.

PricewaterhouseCoopers also has published a white paper on the importance of customer satisfaction, also finding a link between a positive CSAT rating and regulatory outcomes. PwC also found that CSAT gives a competitive edge to those utilities looking to diversify into unregulated services and products or to protect the core energy business from new entrants. 

Online Technology

With renewables disrupting the industry and customers looking for a better value for their dollar, customer service will be the next battleground for attracting and retaining customers, according to Forbes. Using social media to listen and respond to feedback – especially from internet-savvy Millennials – and sharing your brand story and testimonials will position you as a trusted advisor, the first place they look to for value-added services that will solidify customer loyalty.  

Technology, including advanced metering infrastructure and smart appliances, such as thermostats, gives utilities access to more customer data than ever before. This allows a personalized customer service experience and the opportunity to offer new services that increase CSAT.

McKinsey study recommends looking at customer “journeys,” or what process a customer goes through in order to complete a task, such as signing up for a new service or paying a bill, paying attention to whether a customer receives contradictory information, encounters a lack of communication within the utility and how much time it takes. These will often expose pain points or other areas where improvement is needed.

Call Centers Key to Progress

Customers are demanding multichannel access through call centers, the web and mobile apps, and 60 percent of those surveyed by McKinsey said they were not fully satisfied with the channels available. Approximately 45 percent would prefer to use digital only, but only 22 percent were doing so. Beefing up digital channels will not only improve CSAT, but can also produce savings – and valuable customer data.

Applying advanced analytics to the data gleaned through customer interaction will allow utilities to discover both individual customer preferences and general trends. Utilities should use this data to offer “value-added” services, becoming a “go-to” resource for meeting customers’ energy needs – and this may require affinity partners for services such as solar panel and water heater installation and energy efficiency products.

The success of energy efficiency has flattened load growth, meaning that value-added services has become more important than ever to profits. This is occurring even as customers are faced with a dizzying array of green energy choices – ones that are popular with the Millennial market. Customers have more control of their energy use and a better ability to monitor it.

Utilities must provide personalization, as well as customer analytics to reach out to those most likely to be interested in efficiency, taking on an advisory role and offering more services. Customers want choices, and being offered a choice of services, whether home, energy or information services, increases customer satisfaction. 

Emergency Home Repair Plans

HomeServe partners with utility providers to offer emergency home repair plans, complementing a utility’s own offerings in an affinity partnership. “Before and after” survey results show customer satisfaction with a utility increases significantly after partnering with HomeServe.

One year after the launch of a HomeServe partnership with a large energy utility 65 percent of customers said the utility offers valuable services and programs beyond the core commodity, a 38 percent increase from the prior year; and 72 percent of customers had a “favorable” or “very favorable” opinion of the utility, a 13 percent increase year over year.  In addition, our utility partners typically experience an average increase of 7 percent in JD Power scores after offering a HomeServe program to their customers, according to JD Power studies of residential utility customer satisfaction.

HomeServe provides reliable and convenient repair services for home electric and gas lines, HVAC systems, water heaters, water and sewer lines and more. To find out how HomeServe can expand your services offerings, contact us.

Value-Added Services Are the Future for Utilities

State after state is deregulating electricity, forcing utilities to offer lower prices to be competitive with retail providers. Homes boasting more energy efficiency and a growing interest in green technology flattens load growth, and many energy utilities have sought new revenue through value-added services.

Utilities are offering value-added services to continue future sustainability.

Utilities that are recognizable, trusted brands with broad consumer relationships are in a unique position to offer services that will improve customer satisfaction and retention. Studies show customers want choice, so offering services customers can choose to participate in increases their satisfaction, and J.D. Power has found increased customer satisfaction means improved ROE.

Innovative Energy Sources

The proliferation of electric-hungry devices and smart home technology has increased demand for energy, but emerging technologies make it easier and cheaper than ever for homeowners to incorporate green energy. Solar panel prices have dropped more than 70 percent since 2009, and saw an increase in global implementation by 50 percent in 2016.

Device-addicted Millennials, who spend 90 hours a month using smartphone apps – also have the greatest interest in smart homes. Eighty-six percent are willing to pay up to 20 percent more in mortgage or rental payments for smart home technology, such as smart thermostats, according to a Wakefield Research study. Millennials have also passed Baby Boomers as the largest component of the U.S. workforce, and are interested in green energy. Fifty-six percent indicated a desire to incorporate solar panels, according to an Accenture consumer survey.

The stage has been set for partnerships between utilities and affinity partners in offering new services to customers, between technological advances and grid modernization. Value-added services can fall under three main categories: energy services, home services and information services. Energy services can include items as simple as surge protection, lighting, weatherproofing or as complex as energy storage and electric vehicle charging.

Information Services

Energy services goes hand-in-hand with information services, such as home energy management systems, energy reports and real-time usage information through analysis of smart meter data. Customers can manage consumption and costs through real-time data. Fifty percent of Millennials will pay more for real-time information and 61 percent want an app that remotely monitors their energy usage and controls home elements.

Home services is a developing market that includes home inspection, landscaping, emergency home repair plans and bundled services, such as home security systems. Utilities can use collected data to anticipate customer needs and move into that space before startups.

Home Repair Plans Popular Value-Added Services

Customers who received an emergency home repair plan through their utility rated their provider higher than those who didn’t have policies. This was an increase of 40 percent for gas providers and 36 percent for electric providers, according to a HomeServe USA survey. In addition, 59 percent of those who don’t currently have policies would have an improved opinion of their utility provider if they did offer a repair plan, while more than half said it would be appropriate for their utility to offer one. More than 80 percent said a utility should inform customers what repairs won’t be covered by the utility.

Utility companies have a leg up on services in all of these areas through their connections to customers’ homes and the huge amount of data collected regularly. Investing in value-added services can increase operating margins and reduce attrition.

HomeServe USA partners with utility providers to offer home warranties, complementing other energy services offerings and providing reliable and convenient repair services for home electric, gas, water and sewer lines. To find out how HomeServe can expand your home services offerings, contact us.