March’s dazzling, multi-million dollar Oscar ceremony in Los Angeles celebrating film industry success marks a stark contrast to the state of the utility supply in California, and serves as a timely reminder to us all of the immense changes facing utility businesses the world over.

Parallels can also be drawn with the complex challenges utility businesses face in creating clear product differentials and developing sustainable customer relationships. The predictable world of traditional utilities has gone forever.

While the Utility Week Industry Achievement Awards recognize all aspects of success, the only real “Oscar” for this industry is being recognized as ‘the best utility company,' with customers as the judges. In our case, all utility services deliver the same product (water, gas, electricity). So, the ‘film’ is essentially the same. However, to a large extent the customer doesn’t care about the ‘film’ - their expectations are that it will be delivered as a matter of course. To get the customer to care enough to present us with the top award, we have to manage our relationship carefully. Having a clear customer relationship management (CRM) strategy is one way for utility companies to differentiate themselves in the minds of their customers, and help drive their business forward.

So how do the utility companies get the judges- their customers - to vote for them?

First: they have to get the environment right. Look how the major cinemas have repositioned their product offering over the last five years, revitalizing customer demand by offering easier ways to purchase tickets, more movie choice and modern, multi-screen theaters. Utility companies can learn a lot from this example. They, too, need to provide an environment for their customers that is simple to use and more accessible, with less waiting for support, and more convenient ways to pay via phone, online or in person at the ‘box-office.’

Getting the environment right requires expertise, investment and understanding, but it is the only way to create any loyalty and reduce customer churn. We also need an awareness of what we shouldn’t do, as much as what we should do, in order to avoid those things that simply irritate the judge and do more damage than good.

Take sales calls for instance. Xansa recently commissioned a MORI Survey to understand more about the dynamics of utility customer relationships. One of the key findings was that 36% of customers rate sales calls as highly annoying, and only 18% thought they were at all helpful. Any sales call strategy therefore has to be carefully thought through, and highly targeted.

Utility providers also need to give thought to the ‘package’ around the product. Walk into any movie theatre today and you’ll be met with a host of ‘value-added’ selling opportunities, all of which enhance the customer experience - everything from new snacks and drinks, to film merchandise and even products with the theatre’s own branding. The opportunity for value-added selling to build a positive image with the customer is one yet to be exploited fully, and needs further development and careful implementation.

In fact, any communication with the customer has to be in the context of differentiation, and to create a clear and meaningful brand image. There are signs of a growing reaction to even the best targeted direct sales campaigns, and as such utility companies should recognize the need to communicate in different ways to different audiences. It is about the concept of customer managed relations, and we need to change the message for the matinee performance, the early evening and late night shows and again for special interest groups, so the consumer can choose the best one for him.

When examining the market, it could be viewed as having segmented into three core groups of customers, each demanding a different customer strategy. The first are the habitual ‘churners;’ people who like to continuously change suppliers, and do so frequently. They view the product as a commodity, and enjoy playing the game of finding the best deal, and actively seeking out alternative suppliers. For this group, utilities are important; they are most likely to be tempted by sales calls. The issue, of course, is to keep these people profitable while you have them as customers. So, for example, they need to be encouraged to use the lowest cost methods of service.

The second group is made up of people who might move if you give them the right offer at the right time. The real skill here lies in getting the timing right and being available for them when they want. Cultivating this group will reap rewards for utility companies - but it first requires investment in the highest quality information, as well as a carefully designed CRM strategy.

The third group is the most challenging: those people for whom the perceived hassle of switching supplier simply isn’t worth the cost benefit. This group is likely to be older, more affluent and cynical about the benefits of change. The recent MORI survey indicated that only offers worth in excess of $55 a year or more will get this group’s attention, let alone persuade them to make the decision to switch. There is potential with this group to be maximized, but it will require very subtle communication and encouragement. One of the only ways to get these customers to switch may be through a powerful ‘shop window’ image. Companies need to have the right offering, in the right place, to be available when and if these people start to take an interest.

Utility companies need to benefit from stimulating and challenging thought in order to develop CRM strategies that will help them get the most out of their existing and potential customers. We know this is complex, and that it will require new skill in gathering and interpreting customer data and effectively managing the multiple channels to the market. The information is not readily available, and finding reliable data, even by asking the customers directly, is fraught with difficulty. But with the right approach, companies can win customers over, and take home the Oscar.

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