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.
A 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.
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.
A 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.