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August 6, 2014

Consumer-Focused Utilities? You Bet.

Posted by Ashiss K Dash (View Profile | View All Posts) at 4:31 AM


8 Utility Trends for 2014 by Infosys [Source: https://www.youtube.com/watch?v=FeaVo_UZodU]

The other day I saw a billboard that read something like this: You book your flights online, so why do you still use your telephone to order take-out food? It's a clever advertisement that challenges digital consumers to give up some of our in-grained, old-economy behavior.

Think about it: It's easier to access an online menu from your favorite corner restaurant and place your order. Everything is done over your smartphone or tablet. There's no fishing around for a paper menu in a kitchen drawer and then using your landline to call in the order. Once you place the order online, you can either pick it up or have the restaurant deliver the food.

All things are relative, which is why casual-dining restaurants appear to be light years ahead of businesses in other industries. Take, for example, the utilities industry. Only lately have most utilities been using the term "customer" to refer to the head of a household or business that pays for electricity, gas or water. In the recent past, they were known simply as "ratepayers."

How things have changed today! Utilities are intent on changing their corporate cultures and are among the latest companies to foster a customer-focused approach. This newfound emphasis on customer retention and loyalty comes as a result of decades of de-regulation and consumer advocacy. As evident in many States, Utilities will compete in three distinct areas: generation, transmission, and retail.

Depending on what line of business (or combination of businesses) your utility is in, you might be facing stiff competition from other firms. This free-market atmosphere means that utilities in many parts of the world are now fighting to retain and attract new customers. And that's a good thing for everyone. Competition is raising the bar in terms of corporate development, customer service, flexibility and pricing.

One of my colleagues in the retail & consumer packaged goods practice at Infosys is known to lend his expertise to executives in, of all places, the financial services sector. Banks want to tap into his insights as to how best to focus on customers and learn about what we at Infosys like to refer to as the Consumer Genome. Like commercial banks, Utilities are becoming just as aware of how critically important customers are to their future success and viability. Pioneer powerhouses (excuse the pun - I couldn't help myself) such as Duke Energy and Northeast Utilities now have executives who are essentially Chief Customer Officers.

I recently came across a report in a trade magazine that features some of the best practices of North America's consumer-focused Utilities. Just as my colleague in the retail practice lets banks know how to structure their organizations around digitally savvy customers, so, too, are utilities taking a page from the retail playbook. Case in point: One of the utilities that was featured has the ability to send its customers a text message when they have been "bumped up" into a higher rate structure. That might mean a household that is using a lot of air conditioning during a heat wave. The idea is that the customer will know that she is now using a lot more electricity and will be billed for it. That text message is a heads-up. The customer might choose to tone down her air conditioning so that she remains in a lower rate structure. In either case, there are no surprises when she receives the monthly electric bill.

Even the concept of a monthly bill is changing. Some utilities are open to sending their customers updates during the middle of the month in order to give them a general idea of what their power use will be over the course of the entire billing period. Here's my favorite feature: Some companies are letting you know how your energy use compares to that of your neighbors. There's nothing quite like the concept of what economists refer to as "anchoring." If you know the houses on either side of your house are using half the energy you do, chances are you're going to lower your use to fall more in line with your peers.

From my office base in southern California, I've been able to witness firsthand the radical transformation of American utilities, a century-old industry. Given Infosys' focus on Utilities globally, I can compare and contrast the ageing infrastructure in America with, say, areas of south Asia where demand for power is growing in leaps and bounds - so rapid that they can barely build a brand new infrastructure to keep up with the demand. But no matter where there is a need for electricity, you can bet that utilities have turned a corner in their own development. Globally they are now hiring people with social media, analytics and customer service skills. They know that the coming century is all about the customer who consumes their product and likes to interact with them.

And why not? If I can track a package I've shipped in real time and can perform my personal banking with my smartphone, I should be able to expect a similar level of customer service from the company that's providing my business and my home with the most essentials of my household - electricity, gas or water!

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