New metrics for customer service?
- Posted on May 25, 2012
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WE ALL KNOW-OR SHOULD-THAT "CONVENTIONAL WISDOM" often means hearsay repeated too often. Actual, bona fide research, of course, can cut through the fog of conventional wisdom, but only if the audience is receptive and willing to examine the facts.
Thus we offer some insights into customer behavior from "SMUD's Residential Summer Solutions Study," conducted last summer by Karen Herter of Herter Energy Research Solutions, in conjunction with (and funded by) the Sacramento Municipal Utility District (SMUD) and the Lawrence Berkeley National Laboratory.
Responses and perceptions tested
Herter worked with 265 residential customers in the SMUD service territory last summer in an effort to test responses to (and perceptions of) an integrated energy efficiency and demand response program with real-time energy information, a dynamic rate and thermostat automation.
The study's main purpose was to test the effect of three different "information treatments" on summer energy use, peak load and event loads for a group of customers exposed to dynamic pricing, traditional direct load control, or both-all with automated thermostats.
Under an experimental, dynamic rate, participants in the study controlled their own automated response to events through a menu option in the thermostat. In contrast, participants on the direct load control program-the Automated Temperature Control option (ATC)-did not have thermostat menu options. They could override only one event of 12 in a summer.
Here are a few findings:
- Customers on the dynamic rate lowered their summer energy use by 10 percent, reduced weekday peak loads by more than 20 percent, shed more than 50 percent of their load during events, and lowered their bills by about 15 percent overall.
- Compared to those on the dynamic rate, customers on the direct load control option saved a similar amount of energy, but saved less energy during the weekday peak periods and events.
- Real-time energy information showed modest benefits. Real-time information at the home level enhanced energy savings by about 4 percent. Real-time energy information at the appliance level enhanced daily peak savings by about 7 percent. Neither information type affected event savings.
As for the findings on the initial objective-how does real-time energy data affect electricity use?-Herter said it depended on which energy treatment was delivered.
Being strategic in load management efforts
"The answer for feedback at the aggregate home level was that it seems to reduce energy consumption by a few percent overall," Herter told me. "Participants saved slightly more energy during the waking hours than did the participants without real-time information.
"The folks with appliance-level data did not save more energy across the day," she continued, "they only saved more energy during the peak."
"One possible explanation for this pattern is that those [participants] with only home information, being less aware of individual contributions to total energy use, employed a more general strategy for keeping energy use low all the time," according to Herter's report. "In contrast, those with appliance energy data may have the precise knowledge required to be more strategic in their load management efforts."
"It was one study, one summer, one group of customers," Herter said. "As far as I know that type of study has not been done anywhere else and one study is not enough to draw general conclusions. But it's a start."
Herter hopes to run the research again this summer to confirm her findings, which could give utilities several tools to apply, depending on their individual needs and goals. Reduce overall energy use? Reduce peak use? Curtail demand on "event" days? Find the customers who would like to participate and begin there. Build outward to a broader base of
participants as you can show how they save energy and money. It's cheaper to provide smart thermostats and price signals than to build more power plants. That's the logic, anyway.
What's just as important as the findings on customer behavior under the various treatments is that 90 percent of the participants in the study chose to participate again this year.
New consumer metrics needed?
A new white paper, "The Crossroads of Customer Metrics and Strategy in the Utility Sector: A Case for Alternative Metrics", was written by Jamie Wimberly, CEO of DEFG and EcoAlign.
Customer service is evolving to accommodate changes wrought by smarter grids and "utility industry stakeholders are questioning traditional customer service metrics as indicators of performance," the paper begins.
Under traditional metrics, a utility could be providing excellent customer service, yet see its scores drop due to rising energy prices or storm-related outages-i.e., external factors. Or a utility may sacrifice customer service resources (due to budget constraints) without seeing a dip in scores.
Some traditional metrics are at odds with each other, Wimberly argues. While some metrics focus on speed, others-such as first-contact resolution-may contribute to deepening the customer relationship. Surveys by DEFG have shown that utility customers prefer to spend more time on the phone with a customer service representative than to make repeated calls.
"If utilities cannot impact the outcome, how relevant is the metric?" the paper asked, rhetorically. "There's an expectation that elevated levels of customer engagement will be required to meet regulatory mandates and utility business objectives in the future. Customers are expected to become an integral part of the resource portfolio. Engagement is built and earned through trust. How, then, is trust in the utility to be measured?"
No need to reinvent the wheel
First, utilities don't have to reinvent the wheel, because the cable television and telecommunications industries have found that customer engagement "begins with accountability, trust and passion (emotional ties), as well as the functional requirements of the interaction."
That said, the paper zeroes in on the first contact resolution (FCR) as "becoming the single most important measure." Another metric-a measure of a customer's "ease of doing business"-is gaining ground in the form of a customer effort score or CES.
While traditional metrics have focused internally on the effectiveness, including cost-effectiveness, of utility efforts at various touch points, the new trend focuses on measuring how well one meets customer expectations.
Aligning traditional measures with these new ones could provide utilities with a view of the overall "customer experience," the paper argues-though making that transition may be difficult while utilities "remain rooted in a regulatory structure that treats the utility's customer service costs as operating expenses with limited to no opportunity to earn a return."
"Right time metrics" used in other service sectors are designed to align "the right option with the right customer through the right channel at the right time," the paper continues. "Through this prism, customer metrics need to be more forward-looking, even predictive and tied increasingly to a customer of one rather than the traditional view of treating all customers the same."
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