Customer engagement: three things you gotta know
Pepco, Portland and Connecticut L & P offer insights
A webcast we held last week on "Lessons in Smart Customer Engagement," offered up some insights into how three leading utilities are going about this task. Here are some highlights. (Slide decks and the audio replay are available by clicking on the title above.)
I queried the panel on three basic questions and a fourth was touched upon in passing:
- Portland General Electric emphasized listening to customers to understand their needs and expectations, before a smart meter rollout. Are focus groups typically conducted by third parties? How expensive is it to listen?
- How much do utility customers really need or want to know about meters and associated service offerings? How far should customer education go?
- Is it imperative to immediately link tangible customer benefits to the installation of smart meters? Or do utilities have leeway to rollout meters, then offer related benefits?
- Is the essential value proposition to customers: "save money" or "control energy usage"?
Both Portland General Electric and Pepco conducted focus groups in advance of their program implementations. Charles Dickerson, vice president for customer care at Pepco, confirmed that it used a third party for the process, did not regard it as prohibitively expensive and cautioned that focus group results offer good insights, if taken in context.
Stan Sittser, customer communications supervisor for Portland General Electric, said that PGE talked about smart meters in terms of utility-side efficiencies first, holding off on tangible customer benefits until those were teed up. (Programs are rolling out later this year.)
Connecticut Light & Power piloted smart meters and, concurrently, dynamic pricing offers and a Home Energy Report, but is delaying its smart meter rollout until it satisfies itself and regulators that the business case is solid and standards in place. Thus, its customer programs can be implemented as meters roll out.
In Pepco's case, it is proceeding with an AMI (advanced metering infrastructure) and dynamic pricing pilot through its Delmarva Power subsidiary in Delaware, while awaiting regulatory approval for a different AMI-dynamic pricing program through Pepco-DC in the nation's capital. Another AMI-dynamic pricing program proposed by Pepco-MD in Maryland has been approved for Standard Offer Service customers in that state and regulators are mulling approval for it across the service territory.
The contrasts among the three utilities seem to underscore the unique nature of every utility's circumstances, as much as they reflect differing philosophies on linking technology deployments to customer programs.
At Connecticut Light & Power, according to Rebecca Meyer, a senior program administrator, the mantra to customers can legitimately include the message that they can "save money" by participating in its dynamic pricing programs. That's because active participation in those programs, energy efficiency measures and CL&P's encouragement to shop for competitively priced energy indeed make actual savings possible. In contrast, Dickerson at Pepco said that his utility's message focused on "controlling energy use," as it could not guarantee fuel prices, weather and other volatile factors affecting the actual cost of energy to its customers.
For more, see two recent articles that delved into the participants' programs prior to the webcast. Those articles: "Portland General Electric's Smart Meter Opportunity" and "Connecticut Light & Power." Another, by my colleague, Christopher Perdue, last week focused on Pepco's interest in critical peak rebates: "CPR for Electric Utility Customers?"
Phil Carson
Editor-in-chief
Intelligent Utility Daily
pcarson@energycentral.com
303-228-4757
Comments
We are getting there
I know every journey starts with the first step, and the utility industry is moving in the right direction, but we have a ways to go. I know this may seem counter, but customer engagement begins within the organization and not with the customer. It must be part of the utility culture, a fundamental strategic directive that starts with how utilities view themselves relative to the customer, and the level of rigor they put forth to understand the customer. It is about putting the customer needs before the utilities needs, and although this cannot always occur, the argument or discussion should be why the utility's needs should be placed before the customers, rather than the contrary. This is a subtle point, but a common one among customer centric companies. They regularly tradeoff short run company benefits for the longer run customer needs.
My experiences with utilities is they are listening and talking to customers but it is disconnected from the strategy and the utility culture. It is the cart before the horse because without the strategy and process, the information is often not acted upon optimally because it is weakly connected to the overall goals and objectives. Moreover, if the utility is truly customer driven and performing the necessary marketing rigor, then it becomes a continual learning process that starts with research and analysis, feeds into the strategic plan, is implemented, and then metrics evaluate the results.
This process occurs annually, in most cases, allowing organizations to learn, grow and adapt with an ever changing customer base. Jumping into "engagement" at this point makes interpreting results difficult because there is not a strong baseline. As a result, it is difficult to interpret, implement, and have confidence in the results.
Listening and talking to customers is a great start, but to truly drive engagement, it must become central to the utility culture, central to the strategic planning process, and become an ongoing process (not a stand alone event). This is the level of effort of some of the most successful customer centered companies - Zappos, Amazon, or Apple.
http://rubbervines.com
Where's Jack when you need him?
Rubbervines,
Thanks for the comment. I think the contrast between the companies you cite and the utility industry is that the profit motive has a way of making the mind focus on the customer.
The regulated utility suddenly finds itself between a rock and a hard place with society demanding cleaner generation -- thus few if any new coal plants, coal-to-natural gas conversions and more renewables -- while looking to connect RE resource centers to loads via new transmission lines, rolling out smart meters, all in an effort to deliver what society demands while wringing efficiencies out of their system and deferring capital investment. All while the nation dithers over energy policy.
I'd say the utilities' history is well known, present constraints under-appreciated and future unclear. Now that they have to engage their customers, they are slowly moving in the direction of customer-focused programs.
If they're heading in the right direction, it's perhaps only because they belatedly must. This is a bit of hot air from me, as I agree with your points. I think more incentive to follow your points in pursuit of the customer would be effective.
Where's Jack Ellis on the free market drivers that would propel this effort?
Regards, Phil Carson
I would agree that profit
I would agree that profit is a factor and competition is even a bigger factor. However, I do think that the processes and thinking behind a for profit competitive company are not that different than a monopoly utility. Those utilities that get closest to this customer centered thinking, both in culture, process, and action will be best positioned for the uncertain future, which will likely be more competitive through influence or even direct retail competition. My point, which I did not make very clear, is there is more to engagement than a focus group and communications. It really needs to be a core utility value, which you can start to see in the latest JD Power scores. These utilities at the top are those with the most customer centered cultures. They need to continue to evolve, however, but they are currently moving down this learning curve because of their desire to become more customer centered.
"Customer Engagement:"
It is interesting that these presentations on "customer engagement" are being made by three utilities that have yet to engage customers in any "smart grid" or "smart meter" activities. Pepco is installing meters and has yet to offer a program to actually allow customers to use the new metering system, which is not yet fully deployed in DC, Delaware, or Maryland. Pepco's consumer education to date focuses on the deployment and isntallation process so the true test of "engagement" in actually viewing the detailed usage data on a website (not yet available) or participating in future pricing programs has not yet occurred. Not much in the way of lessons at this point. Portland General Electric is also in the midst of deployment and has not offered any programs. Their earlier promise to design and implement a large scale dynamic pricing program has yet to be proposed. Connecticut Light and Power is not even installed smart meters, yet they talk about their future plans but that is just talk.
Not sure of what lessons can be learned from these inchoate experiences to date. The real test will come when the utilities want to obtain cost recovery and must document that their promised benefits have actually occurred; that is the true test of engagement.
Barbara Alexander
Consumer Affairs Consultant
To be fair
Actually, these three utilities are not engaged in "just talk." They have done pilot programs that form the basis for regulatory filings and in Pepco's case, one program is indeed moving forward, while two await regulatory approval. In CL&P's case, pilots of smart meters with dynamic pricing as well as a pilot on home energy reports have been completed or are well underway.
Yes, delivery of benefits is the true test. But "engagement" does just burst out of the sky with spectacular benefits offered and utilized, it's a process by which to achieve customer benefits. In my view, these utilities have begun that process in earnest and they are in fact well-qualified to discuss engagement.
Did you have an alternative program that you can describe on how to engage customers under these financial and regulatory constraints?
The floor is yours.
Regards, Phil Carson
WHAT TO DO WITH THE END CUSTOMER!
Thus the dilemma, "what to do with the END customer!" sounds strange but it is at the core of the issue that faces the industry. Most electricity in the US is supplied by IOU utilities, and their bottom line is value to the shareholders. Yet as "Oligopolies", they have an obligation to serve the public and have state PUC's as overseers to ensure they carry out that obligation fairly.
The "differing philosophies" comes from the executive leadership's position on the issue. How do you grow the business while reducing the revenue source? It sounds similar to other issues we face today.
To provide my input to your questions:
Richard G. Pate
Pate & Associates, Principal
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Thanks Richard
Good points. On the last one, however, I understand that the "save money" mantra would be attractive. The question is, is it true and sustainably so?
I'm not sure that the lack of cachet in "controlling energy use" led to Google and Microsoft's withdrawals. Other vendors seem to be making headway in the same area with more sophisticated offerings.
It's probably possible (and desirable) to link "saving money" to "controlling energy use" in some credible way. Recent research shows that cell phone users with data plans tend to pay for far more data than they consume, if only to avoid onerous charges that kick in when they exceed their chosen bucket.. Carrots and sticks work.
As for customer education, see tomorrow's column about an effort to provide a messaging platform for the nation's utilities, which can be tailored to an individual utility's service territory and customer preferences.
Regards, Phil Carson