It goes without saying that a positive customer relationship enhances both tangible and intangible values—from driving operating outcomes that translate into rates and financial performance, to the brand reputation that resonates through communities and follows company employees home. To become a customer led (4.0) organization (see Figure 1), utilities have the good fortune of being able to turn to other industries to derive lesson learned from their ideas and concepts.
Figure 1 – the journey to Customer 4.0
In his latest (2016) letter to shareholders, Jeff Bezos, CEO of Amazon refers to living in Day 1 (being “vital, responsive, a true customer obsession”) and being very aware of never moving into Day 2 as “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.” For utilities, it’s been a very long Day 1. It was not until deregulation happened, an event which almost toppled the industry that any real change came into effect.
Now, disruptive change in the sector is having a significant impact on how utilities operate. There is a very definite realization that change is inevitable and becoming customer led is central. New energy options and connected technologies are providing customers with more information and choices, allowing them to consider grid defection, raise expectations of what a utility should provide due to digitization, voice satisfaction/dissatisfaction over social media, and place new demands on customer service stemming from value-added energy services. All of these have an impact on customer retention and loyalty; employee satisfaction; and ties to regulatory/rate case outcomes. It is recognized that utilities with the highest customer satisfaction also report the highest rates of net operating margin to FERC and in numerous deregulated environments those that flourish are those that have risen to the customer challenge, successfully diversifying or partnering on new products and services to serve the customer in the way the customer wants to be served.
Are you ready for the customer 4.0 revolution?
To answer that, it is important to consider the voyage from today into the customer led organization of tomorrow, the transformation of the customer experience, and ensuring high levels of customer satisfaction at a reasonable cost. Utilities are also faced with figuring out how to prioritize and where to invest—whether that be in new technologies (self-service, mobile, social media, etc.) or through a much closer customer interaction, such as the model employed by Salt River Project, a perennial leader in JD Power. Ultimately, utilities will need to convince executives and the Board that this is the right area to deploy resources.
The overarching answer is to determine holistically the changes required to the business model to create a “customer obsessed culture” and the operating model to deliver it. This can be broken down into the following steps:
Major transformation programs can often lose themselves—the common phrase “can’t see the forest for the trees”—without a clear, top down and tangible goal. Setting this out and communicating it as the overriding goal of all efforts that follow will help to focus various functional areas around a common purpose.
This includes identifying where the company is, and where it needs to be, on the spectrum of being customer led and its maturity, from identifying major pain points impacting the customer to understanding the individual so well that their needs can be anticipated without them ever having to contact the company. Once understood, the high level benefits that would be delivered need to be identified, as well as what the indicative business case looks like. In this way, the problem can be structured in a way that garners executive attention.
The next step is building the delivery strategy, roadmap and refining the business case and the associated ROI to demonstrate how the transformation will be delivered and the benefits of investment.
In some cases, this could simply be putting a wrapper around a set of existing activities to create a cohesive platform with a clear purpose and structure. In other cases, the need may be greater, all the way to saving a company from extinction by leveraging technology advancements that genuinely transforms, leapfrogging competition into a previously unimagined bright future. In all cases, this means understanding not just customer segments, but the actual individual customers: what drives them, what are their goals, what are their possible futures that they may not yet be aware of (i.e. Uber, Amazon, Airbnb, Apple) and how can we prepare for them.
The final piece of the puzzle is to mobilize a program to successfully deliver the roadmap. In addition to the typical program mobilization (PMO, change management, governance and decision frameworks, architecture, sourcing, infrastructure, location/logistics, etc.), it is essential to ensure that a utility has the right resources to deliver a customer led program. Depending on scope, this could impact just customer call agents or possibly all customer touch points: customer front and back office; field staff and the back end schedulers, mappers and operations; energy efficiency; non-consumption products and services and nearly always IT. For a large-scale customer transformation, simply having a PMO and a track record for delivery will not suffice, as this type of transformation is complex reaching across functional areas. By comparison, if a company’s existing operation is geared toward the production of a Ford Model T, it does not just need more factory floor space to build a Tesla Model S—the company needs a new factory. Thus, new tools, new automation, new capabilities and competency will be essential for success.
Many utilities execute a broad range of activities that are designed to treat the symptoms rather than understanding the cause, resulting in a siloed approach based simply on meeting internal objectives. This classic approach leads to clashes and/or unintended negative impacts to the customer, the converse of what is trying to be achieved. For example, the finance department may want to reduce bad debt and the customer team may want to reduce call volume. There is a direct link, fewer disconnects equal fewer calls, but less revenue. Such a disjointed approach can quickly lead to a chaotic, disjointed customer experience, with that frustration now becoming public and echoed on social media.
A big priority—and something often easier said than done—is to keep program vision and goals front and center, and avoid getting lost in the details.
Lastly, change management—in the deepest sense. It is important for leadership to recognize customer experience transformation as the priority within the organization. The cultural change required is significant and will not be overcome without significant direction from the top. At the same time, employees are subject to a broad range of changes and some are fundamentally changing the way they work. It is beneficial for change management to start early, starting with leadership and continuing throughout at all levels of the organization.
Figuring out where to begin may seem daunting, but transitioning to Customer 4.0 will be an essential journey to embark on. The alternative choice—the dawn of Day 2.