The article was original written in EE Online’s Quarterly Issue by our CTO and Co-Founder, Alex Corneglio

The Rise of Data and Digital Customer Services

For the past decade, electric utilities have been busy upgrading their operations with advanced meter infrastructure. Although customer acceptance of “smart’” technology has been mixed, there is now overwhelming evidence that technology is transforming how customers expect to be engaged. It should come as no surprise that technology is also redefining how utilities can engage with their customers. Moving beyond online bill pay, real-time consumption charting and a digital presence across social media platforms, utilities must now also consider an expanding array of digital customer services, often driven by artificial intelligence, to better communicate with their customers on an individual le vel and generally improve operations.

This new-wave of digital communication and personalization is not a moment too soon. Today’s customers expect that digital tools and processes will provide them with personalized access to information and services through their laptop, tablet, mobile device and even conventionally printed formats. These modern customer expectations are being provided for across virtually all industries today, and customers now expect the same level of interconnectivity and congruence from their utility services. Utilities must augment traditional customer communication methods with innovative technology solutions that help to personalize the customer experience while simultaneously improving the cost-effective delivery of kilowatts and other initiatives.

Over the last several years, I’ve had the opportunity to interact with utilities and their customers through a variety of mediums including online building assessments, site visits, building energy reports, and in-bound customer service queries. Based on the data collected through these interactions, there are a number of trends and findings that every electric utility should consider when planning their upcoming customer service delivery strategies, program and marketing campaigns, and even operational expenditures.

This article focuses on findings and trends in two main areas:

How utilities should communicate with customers and how utilities can personalize their communications.

How Utilities Should Communicate

With so much emphasis placed on moving customer interactions to the digital realm, you may wonder if the sun is finally setting on conventional paper-based communications?

With most of the utilities I engage with, the percentage of customers that have an email address on file with the utility is less than 30 percent, which is undeniably low. This finding is echoed by a 2017 Accenture Report finding that “only 27 percent of energy consumers are active digital users. A third of energy consumers are still struggling with their experiences on their energy provider’s digital channels.” Meanwhile, a 2018 GSMA report on the mobile economy explains that smartphone penetration in North America is currently at 84 percent of the population indicating that the lack of digital customer engagement is likely not due to a lack of digital access, demographics, or even personal preferences.

With smartphone penetration in North America expected to continue growing through 2025 and digital engagement on the rise across all industries, it is hard to imagine that the majority of customers will continue to want to receive paper from their utility. Indeed, that day may already have come and gone. Another recent utility-focused study by Market Strategies International found more than 50 percent of customers would already prefer to engage with their utility digitally, but “only 33 percent of consumers recall any digital communication from their utility.” The Accenture Report found that 88 percent of customers were ready to engage digitally with their utility. The Accenture Report also outlined the myriad of benefits of a digital customer engagement strategy, including more than 50 percent reductions in customer service costs, lowering of operating expenses, and even improved productivity and innovation across the utility workforce. 

In light of these trends and benefits, it is no wonder that other industries are pushing forward with digital transformations. Coleman Parkes, a UK based research firm, ranked industries’ efforts towards digital transformation on a scorecard and found utilities came in last out of 10 industry sectors examined. The leading industries according to the same scorecard were Telecom and Banking/Financial Services.

So, if customers are struggling to engage with their utility through digital channels, and utilities are struggling to find ways to boost digital engagement is there any hope of making progress? A recent program I was involved with indicates the answer can be a resounding “YES.” During a home energy assessment initiative in 2018, more than 100,000 households received home energy assessments and personalized home energy reports with the option to receive their report digitally via email or on paper via direct mail. During this engagement, we saw a complete reversal of digital engagement trends with more than 90 percent of program participants opting to receive their report digitally via email.

Reading between the lines, this speaks volumes to the perceived interest or value placed on typical utility communications and the customer’s motivation to engage with typical communications. There is an argument to be made that although the majority of utility customers continue to receive paper communications, they still aren’t as actively engaged as the customers that do engage digitally. For example, looking at site traffic referrals across digital platforms in Figure 3, the majority of traffic comes from digital leads such as social media, web-ads and referral landing pages. Similarly, the largest upticks in our site traffic occur after digital marketing campaigns and integrations with online utility “customer account pages" and partner websites.

Digital marketing and leads are key to helping customers engage with digital content, they also tend to be more cost-effective and trackable than direct marketing activities. (Note: direct traffic is comprised of in-person engagements, direct mailings, conventional marketing, radio ads, etc.)

So, the future, and the present, for that matter, are digital. But what should utilities be talking about with customers across their developing digital channels? Research indicates that personalization is key to effective communication with customers. And luckily, digital mediums offer unprecedented personalization at lower unit costs than paper or other conventional mediums.

How Utilities Can Personalize Communications

The starting point for electric utilities that seek to better understand and communicate with their customers is often consumption history. Information about the customer’s building can be just as informative, if not more so. Building data, such as building age, size and basic information about key equipment and appliances, can provide immediate insights into energy consumption patterns when analyzed through physics-based models or through machine learning algorithms.

Utilities have a strong use-case to collect building information directly from customers, and they are often able to learn a lot about a population in a relatively short amount of time. For example, building data collected over two months through an online building assessment was cross-referenced with actions taken to enroll in energy efficiency programs. When the data was sorted by region, a clear trend emerged: low participating regions had building stocks with a narrower age distribution across a more recent period, while high participating regions had a wider distribution of building ages with a significant number of older buildings.

Building data indicated a trend that older buildings were more likely to participate in energy efficiency programs.

When the trend was applied in reverse, regions with older buildings were targeted with marketing campaigns to increase the likelihood of program enrollment, while simultaneously targeting older buildings with a higher average potential to reduce consumption. Relatively straight-forward initiatives like the example just provided indicate that data collected from customers can be used not only to personalize communications back to those same customers, but they can also uncover trends that facilitate more effective and personal communications with customers outside of the surveyed population.

From this example, we can also see that personalization isn’t limited to putting a customer’s name and address on every message. Simply including facts, or even suggestions, targeted to specific building types, customer personas or geographical areas dramatically increases resonance in a historically “one-size-fits-all” industry.

Building data can also be combined with consumption data to provide new insights into customer motivation. In this example, data from an online building assessment platform was analyzed to estimate the difference between the building’s current performance and a modern standard (i.e., annual energy-saving potential). Savings potential was then compared to average historical monthly energy bills provided by a utility partner.

Although the general population saw an increase in their maximum savings potential correlated with higher average monthly energy bills, the population that engaged with the program did not. The engaged population was characterized by an above-average savings potential, regardless of their current average bill amount, and the average annual savings of the engaged population was relatively flat. This indicates that targeting customers simply based on high consumption or high bills is not effective. Engaged customers are often looking for high return-on-investment or above average performance increases, which are not necessarily correlated with high energy bills.

In addition, building data provides some of the best insights into what topics, services, and energy products customers are most interested in. Customers tend to be most interested in products and services that are related to building features and equipment they currently have. The more unique the building feature or piece of equipment, the more likely a customer is to engage or convert on products and services related to that equipment. In another program, where digital home energy reports were sent to residential consumers, clicks on information regarding certain recommended building upgrades were tracked to reveal that the most infrequently recommended services often had some of the highest conversion rates. This indicates that utilities are likely to get the highest relative customer engagement on relatively “niche” topics; and conversely, attempting to engage customers on common or overly broad topics does not guarantee broad engagement or high conversion rates.

Conversion rates tend to increase for products and services that are recommended to fewer people. Products like attic insulation were recommended for more than 12 percent of a population, but only achieved conversion rates of less than 2 percent. Conversely, more specific improvement recommendations like tankless water heaters were recommended for less than 3 percent of a population, but achieved conversion rates of up to 5 percent.

Final Takeaways

Digital communication strategies offer a host of information about customers that savvy organizations use to improve their service offerings, including the percentage of customers engaging via mobile devices, open and read rates for utility communications and conversion rates for utility services and programs. Building information provides deeper insights into building performance and predicted consumption patterns and can be a strong indicator of customer sentiment, engagement and action.

In conversation with utility executives and directors, it is apparent that gaining access to customer information is becoming a top business concern – and it is easy to see why. Customer service strategies, marketing decisions, program planning and even CapEx and OpEx planning are all influenced by our understanding of the customer base. As utility executives realize the growing importance of customer information as a planning resource, safeguarding and leveraging the customer resource is of increasing importance.

Modern digital communication strategies provide a number of mechanisms (e.g., email reporting, web analytics, digital ad stats, etc.) for utilities to collect customer feedback and create conversations with customers. Furthermore, the available options for digital communication channels continue expanding through the popularization of chatbots, artificial intelligence, tracking pixels and advanced customer profiling. As the cutting-edge advances, the utility’s objectives in building out new digital strategies and communication channels to improve personalization in a historically impersonal industry have never been more achievable. And, if all that wasn’t enough, customers simply want a more personal, accessible experience with their utility.

In a time of unprecedented change, where we see consumer choice growing exponentially as new technologies come to market with increasing speed, utility executives have already started asking whether they can afford NOT to make the transition to a more accessible and personal relationship with their customers. With this outlook, the quest to better understand and communicate with the customer becomes an important part of every utility’s near- and long-term planning.

Are you a utility executive hoping to provide more personalized experiences for your customers?