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Customer 4.0: Reimaging the operating model so utilities can deliver exceptional experiences

This article first appeared in Electric Light & Power.

Throughout the past few months we have discussed the Customer 4.0 realm–a world in which consumers expect their service providers to enter their universe and fulfill their aspirations and dreams. To enter that world, service providers must fundamentally rethink how they deliver value. For utilities, this means creating capabilities that allow consumers to manage their energy consumption on their own terms, where and when they want to, and by providing new services and solutions that fulfill the customers’ expectations and aspirations.

The traditional utility business model is built around providing its product–electricity, gas or water–through a complex, rigid delivery system. Customer satisfaction and experience efforts have been aimed at making delivery of this product more palatable, and the experience associated with the transaction and consumption of the product satisfactory, or even enjoyable. When the delivery system fails, utilities do all they can to make that experience less painful. But fundamentally, utilities are still working to “push” their product to the end customer, on the utility’s terms.

In a Customer 4.0 world, utilities have to reimagine a model that delivers value on the customer’s terms. But most utilities are not currently set up to handle this new reality. They are neither agile nor nimble enough, and often not structured, in a way that allows them to rapidly respond to shifting customer expectations and aspirations.

Fundamentally, utilities need to reimagine their place in this customer empowered world. It is not enough to build incremental capabilities or offerings to meet Customer 4.0. Utilities will need to rethink their operating model, from the ground up. And that thinking must cut across functional and structural boundaries, and be redesigned to align and enable the capabilities, processes, and technologies required to deliver value in new ways.

In the previous articles in this series, we introduced a fictional residential utility customer, Jane. After leaving work to go out to dinner on a hot evening, Jane receives a personalized text message on her smartphone from her utility, offering a rebate to cut back her air conditioning five degrees for two hours, because at this time, energy usage is high and clean energy cannot be secured. Jane clicks on a link to the utility’s app and accepts the offer. While there, Jane receives a second message asking if she would be interested in a plan to regularly reduce her energy usage. Jane clicks yes, and then receives one more notification indicating there might be a problem with her meter. A technician will have to come out and take a look while Jane is home. The app provides Jane with several schedule windows and Jane picks one that is convenient for her. Jane closes the utility app, selects a restaurant using a reservation app and then uses her ride share app to arrange transportation.

Certainly a myriad of technologies have to some together for Jane to be able to manage her energy usage so easily, in a way that meets her needs and expectations. But those technologies are only a part of the solution. Most likely, the utility’s operating model–how the utility’s people, processes, and technologies work together to deliver a seamless experience–needs to be completely reimagined, and in a way that may shake the utility’s traditional operating model to its core.

But the concept of Customer 4.0 isn’t relegated only to residential customers. Industrial and commercial customers also have rapidly evolving expectations and aspirations related to energy consumption and sustainability goals. Consider a large national retailer with 42 locations in a certain utility’s service territory. The retailer is the utility’s 4th largest customer in terms of energy consumption, has a corporate directive to operate with 80% renewable energy by 2030, and is looking to invest in rooftop solar and other distributed resources. Moreover, the retailer operates in a highly competitive market and is constantly looking for ways to cut operating costs.

To address this customer’s 4.0 aspirations, the utility could take a number of approaches to meet this customer in its own universe and proactively look to partner in the conception and realization of their renewable strategy. The utility could also partner to deliver a data-driven energy management capability to help the retailer meet its operating cost goals. As in Jane’s case, the utility cannot simply deliver a series of point solutions, but will have to create a new target operating model to align and enable the utility’s people, processes and technologies to deliver the lasting value that the retailer seeks.

Consider the case of a west coast multi-service utility, serving about 1.5 million customers, currently going through this exact business redesign challenge. The utility is working to dramatically transform the customer experience it delivers to its customers, and has introduced a number of new customer-facing capabilities and features. But to really make this transformation work the utility had assess its operating framework to determine how their customer operations was structured. It needed to redesign its operations to full achieve its vision. This yielded a new operating structure the utility is implementing, including new roles and functions that will put the customer experience at the center of everything they do.

The path to reimaging an operating model to meet the needs of 4.0 customers is not easy, but can be summarized in four key steps:

  1. Take a Customer 4.0 view of your customers – put yourself inside their universe, and segment by goals and aspirations rather than traditional demographics
  2. Develop solutions and associated capabilities that will help you deliver on your customers’ 4.0 aspirations
  3. Design a target operating model – that reimagined alignment of people, process and technologies – that will best enable you to deliver on the Customer 4.0 promise
  4. Think big, start small, and scale fast

Utilities need to start their journey to Customer 4.0, because quite frankly, your customers are already there.

Jonida Regi and Andy McKenna are energy and utilities experts at PA Consulting

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