Customer Satisfaction Pays

February 12, 2019 | Blog

Why does customer satisfaction (CSat) matter to utilities? Several of the leading experts in CSat have concluded that by having satisfied customers, utilities receive more favorable regulatory outcomes. In addition, CSat can be used as both an offensive and defensive strategy. From the offensive perspective, satisfied customers are more likely to buy more products and services. From a defensive perspective, they are less likely to adopt disruptive technologies.

In today’s world, customer experience standards have been redefined by leading companies, like Amazon. As a result, utilities benchmark themselves against those mainstream companies to keep pace with the changing market place. But, how do utilities compare to other industries in terms of customer experience? Based on Temkin Group’s 2018 study of Net Promoter Score (NPS), utilities scored the second to last with an average score of 15 among twenty industries. However, they are one out of only five industries that experienced an NPS increase between 2017 and 2018, suggesting that despite this lag in their customer experience, they definitely put an effort to follow this market transformation.

Utilities’ 10-year trend in CSat reveals this effort, too. Based on J.D. Power Electric Residential Studies, its overall score has increased for the sixth consecutive year. Specifically, they have experienced a 17% increase in their satisfaction score since 2009. The conclusion is that the whole industry has begun to realize impact of customer satisfaction on operating efficiency. If a utility wants to maintain its position relative to its peers, it should also improve in CSat.

Motivated by these findings, Apogee conducted an analysis, in an effort to examine if “J.D. Power Customer Satisfaction Scores” and “Operating Margins” are independent. The analysis showed that, with a degree of certainty greater than 95%, there is a statistically significant positive correlation between these two variables. In other words, as CSat increases so does the operating margin and vice versa.

There are several key index factors that drive customer experience. Utilities, however, are currently facing unique challenges regarding their rates and revenue. Therefore, investing in building a meaningful relationship with their customers is currently more necessary than ever; communications and customer service, with a focus on personalization, is the first step in this direction. Useful, timely and relevant messaging is undoubtedly the most powerful means of customer engagement and satisfaction.

Just think about this. Utility Dive’s utility of year 2018, Xcel Energy, started sending millions of Apogee’s personalized customer emails, regarding their energy bill. The results were outstanding. First, they determined that there was a 15% deflection of their high bill calls! Second, their NPS increased from 18 (baseline) to 32 for market-rate customers, while their NPS regarding low-income customers reached 39! And third, they were recognized at AESP’s National Conference for outstanding customer experience!  Still wondering if you should invest in your customer experience?

Want to learn more about how the energy industry is evolving?

Join us for a one hour webinar on  Feb. 20th at 2 PM Eastern for The Times They are a Changin

For more information, contact Karen Morris, 678-684-6801 or kmorris@apogee.net.

About The Author

Kate Panaousis, Marketing Analyst, Apogee Interactive

Kate Panaousis is a graduate of Panteion University of Athens, Greece with a master’s degree in Applied Economics and Management and a graduate of Aristotle University of Thessaloniki, Greece with a bachelor’s degree in Economics. Her professional background includes experience with statistical analyses, forecasting techniques and research. She is currently the Marketing Analyst at Apogee Interactive. Her role includes market research, statistical analysis and sales team support.

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