Can Utilities Energize Their Operations with More Customer Centricity?

Consumer-facing industries have been acutely aware of changing customer preferences, consumerization and their growing impact on businesses. In the last five years, these companies have realized the need to engage with consumers in more personalized, contextual and convenient ways—from the point of attracting and acquiring them, servicing them throughout the customer lifecycle, to long term retention. But while verticals such as retail, consumer goods, travel and hospitality and telecom have all started to embrace customer centricity with investments and results to show, the utilities industry has been left far behind. The global utilities industry arguably has one of the largest customer bases and spread for basic utility services such as electricity, water and sewage through public and private owned entities. And yet, the examples of customer experience transformation, investments in infrastructure and IT overhauls and customer service operations are lagging the rest of the consumer-focused verticals.

HfS is mid-way through a Blueprint study evaluating the state of outsourcing in utilities and the potential for moving toward As-a-Service delivery. We see a few bright spots where services buyers are trying to bring in change in their own internal culture to become more customer oriented. A services executive from a Canadian electric utility emphasized the paradigm change underway, “The things they [customers] expect from a modern service provider, utilities have not historically kept pace with. The delta is now growing and soon it’ll be so large for some that they’ll lose any chance of creating good customer experiences and become transactional commodity providers.”

Heeding this call are some service providers that want to share their experience with customer experience management solutions gained from working with other industry verticals. One of the ways service providers are doing this is by bringing a customer-oriented process flow to client environments, in place of isolated transaction processing. A British utility we spoke to provided an example of this, “[Service provider] helped us explore things from a customer account basis rather than exception management, which they were originally contracted for. They gave us actionable insights to help identify process failures or behaviors to reduce exceptions in the first place by focusing on customer account level commercials across billing, customer care, etc. This led to a differentiated customer service and significant financial benefits for us, which we gainshared with them. They are challenging us to think about our overall business processes for better outcomes.”

Another client explained a similar change in dynamic with their service provider as a result of focusing on the end customer:

“Earlier we had a traditional BPO relationship, and now it is a vested partnership model to raise customer experience in a meaningful way for us both. It makes us work through an integrated partnership versus an arms length multi-party contract.”

These examples show that services buyers are making some progress toward modernizing their utilities operations and collaborating with their service providers to make the shift.

It’s a difficult change from being asset and capex-intensive and risk-averse, but it is now riskier for them to ignore the changing customer landscape and expectations, and the capabilities needed to address them.

We expect a significant competitive differentiation, particularly in deregulated markets, for utilities that are reorienting their operations around their customers, and undertaking the massive cultural and organizational changes needed to get there.