Customer Experience is transforming the utilities industry but there is still a long way to go
image credit: Customer Experience is transforming the utilities industry
- Aug 5, 2019 2:47 pm GMT
- 974 views
A new generation of proactive consumers are changing the way the utilities industry is known to function. Gone are the days when the industry’s main concern was running operations efficiently. Going by this report, which states that customer engagement will be one of the most impactful trends by 2020 in the utilities industry, it is clear that businesses are now turning their attention towards the customer and customer choice.
While many utilities are taking important steps to improve the experience, many customers are expecting even more from their utilities. On one hand, consumers highly rate the customer service provided by their utilities, yet there have been significant declines from last year in how customers view utility customer service, as per DEFG’s Annual State of the Customer Survey report.
Customers today are more aware of what excellent service entails, and given the presence of large customer-friendly retailers, are less willing to tolerate poor service. In 2016, for instance, Scottish Power had to pay £18M for "poor customer service." In an article published by The Guardian, the regulator Ofgem, who issued the fine, said that Scottish Power had failed to provide even the basic level of service required, attracting more than one million customer complaints between June 2013 and December 2015.
One of the unwanted outcomes of bad service is customer churn. In other words, loss of revenue. According to this article, 33% of customers leave because of poor customer service. A study published on the Harvard Business Review blog reveals less than half (43%) of utilities’ customers who have had a negative experience are still members after a year, compared to 74% of those who’ve had a positive experience.
The conclusion is that the better the experience, the longer a utility will retain its customers. Industry leaders have taken notice and are now fully focused on the customer. According to Forrester, nearly 95% of leaders say that providing a good customer experience is their top strategic priority, while 75% of them want to use customer experience as a competitive advantage.
Results due to customer retention focus are found to be very encouraging. The Aberdeen Group has found that the top 20% of companies, in terms of CX performance, have a 51% greater customer retention rate than the remaining 80%.
However, customer retention is not an easy game. But the latest technological advances have managed to simplify customer retention programs. The encouraging results have led to energy and utility retailers doubling their AI investments in 2019 to boost customer experience. According to this report, companies that embrace continuous improvement and digital innovation as a single integrated business process will outperform peers, in terms of profitability, up to 20% by 2021
As can be seen, these trends underscore the importance of improving the customer experience in the utilities industry. Customer experience will not only drive customer satisfaction but will also improve customer retention, leading to improved financials. Here, the investment in AI will deliver double benefits: it will enable better customer experiences, as well as significant savings and efficiencies on the operational side. And cutting supply costs will be essential to cutting prices and winning customer loyalty in an increasingly crowded marketplace.
But integrating technology into day-to-day customer centric activities is critical to effectively enhance customer retention. Fortunately, modern AI-enabled customer retention solutions with explainable AI features enable utilities to do so without a big IT lift - in a matter of weeks, not years.