Utility Customer Engagement StrategyPartnering to provide additional services

As we noted back in 2014, it is critical for utilities to build strong relationships with their customers. “Customer engagement is about opening communication with the customer, incentivizing them to [get] involved and exciting them to come back for more.” If anything, the importance of consumer relationships has only increased in the intervening years. “Utilities have a range of reasons for wanting to better engage their customers, from staving off retail choice threats to more efficiently managing their distribution system,” observes Utility Dive, in it’s mid-2017 article on utility customer engagement trends.

Utility Dive found that one of these trends is partnering to provide additional services that customers like. The article goes on to quote Seth Frader-Thompson, co-founder and President of EnergyHub, “Partnerships are huge—they're kind of everything, going forward… as recently as a couple of years ago, a lot of utilities were worried they were going to be pushed out. And they're now realizing it's a huge opportunity.”

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Some utilities are already seeing positive customer engagement results with more and better communication. With business customers, the attention to higher-volume, more sophisticated, more customer-centric interactions are already coming to fruition. J.D. Power’s 2016 Calendar-Year Electric Utility Business Customer Satisfaction Study found that, “Electric utility providers are communicating with more of their business customers, more often and in more ways, and their efforts are resulting in record-high levels of satisfaction.” That report attributed record-high business customer satisfaction to improvements on three factors:

  • communications
  • corporate citizenship
  • price

In that order.

At least by the beginning of 2016, the communication trend included public utilities using tech to enhance consumer engagement. “Technology… can enhance public power utilities' relationships with their customers…,” says an American Public Power Association article, “Enhancing the customer power use experience through technology.” How do technology partners help with consumer engagement? The article says they give customers: “better information about their electricity use…, options for managing that use…, [and] save [them] money.” These advantages, “help public power utilities trim their power needs and costs….”

This works because of more-demanding customer expectations. The customer relations manager at Colorado’s 35,000-customer Loveland Water & Power says that, "customers have come to expect more from us.” Customers are “Increasingly familiar with rapid, web-based [and increasingly app-based] interactions [like] Amazon, Netflix and other high-tech service providers.” When a utility can help customers understand their power usage, they can reduce costs in several ways while increasing customer satisfaction. 

“[Sacramento Municipal Utility District] has always been focused on customer engagement, but certainly customer expectations are changing regarding technology, electricity-use information, renewables and other factors.” Farres Everly, Director of Marketing and Corporate Communications at 615,000-customer Sacramento Municipal Utility District (SMUD). SMUD’s big changes are coming in the, “My Account section of [the SMUD] website, including, provid[ing] a number of tools related to customers' electricity use, green energy program options and more.”

How are customer preferences changing?

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Utility Industry Trends

As science fiction author William Gibson has famously said, “The future is already here — it's just not evenly distributed,” yet. Many of these predictions are less extrapolation than pervasion. They involve technologies already in use and anticipate their spread to more utility customers. As that continues to happen, customer experiences and expectations already change.

Digital communications are a necessity.

Customer EngagementInternet use continues to spread and to change customer expectations. Nine in ten (89%) of respondents to a recent Pew Research technology survey reported using the internet. Almost three quarters (73%) have broadband at home. One thing that is clear from rates of technology adoption among people of all ages: the best way to reach a majority of customers is online, especially via smartphone.

Moving communication online already serves a large percentage of utility customers. Along with online communications, mobile accessibility will keep growing in importance. In April of 2018, Pew Research projected based on U.S. Census data predicted that Millennials would be the largest generation in 2019. They were already the largest generation in the labor force by then. The technology survey mentioned above examined technology use by generation. More than nine in ten Millennials (92%) have a smartphone. The next older generation is not far behind. Almost nine in ten (85%) Generation Xers also has a smartphone. Two thirds of Baby Boomers and one third of the silent generation do too.

The customers who most prefer traditional communication channels are aging out of the utility customer base. At the same time younger generations’ technology habits and expectations are influencing older generations. This will affect their parents’ accounts too — even for seniors who never adopt any new technology because at least some of the time when a utility communicates with an older customer, it will be with the assistance of a younger caregiver or family member in the household.

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Smart-home integration will become the norm

As the people and their homes become more connected, smart home technology will be an expectation. "We believe that in three to five years, home buyers will expect smart home technology—it will become the new norm,” said Sean Blankenship, CMO at Coldwell Banker and the CNET-Coldwell Banker study mentioned above found that already over four out of every five (81%) of Millennials report being more likely to buy a home that includes this technology

In 2016, Millennials were already willing to pay higher rent for smart home features. According to a survey covered that year by real estate blog Curbed. It found that nearly nine out of ten, “86 percent[,] of millennials are happy to pay a bit extra for a unit that comes outfitted with remote-controlled devices or automated features.” Millennials aren’t alone in this. Although the article played up the gap, two thirds (65%) of Baby Boomers were similarly willing to pay more for smart home features.

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Personalization and fun will continue to matter

A recent article about data sharing for utilities in Green Tech Media pointed out that personalization is vital to customer relationships with Millennials who expect utilities to provide the same tailored service as retailers like Amazon or Netflix. As we pointed out back in 2016, more and more people are interested in games, and gamification is driving all kinds of behavior change with fun.

Data sharing will continue to grow

The same Green Tech Media article notes the trend in information sharing. It really drives personalization and it has doubled every year for 10 years. To the utility skeptical about applying this trend to utility information, ask yourself whether who would’ve predicted in 2000 that people would share their step counts. People have been doing that for years now. It’s not hard to find a Baby Boomer of Gen Xer who has a FitBit, but Millennials offer the best snapshot of the near future of data sharing, and they can’t get enough.

Millennials… believe that access to real-time energy usage information is more important and more valuable than do older generations. Smart Energy Consumer Collaborative's analysis of consumer surveys found that more than half the millennial respondents were willing to pay for energy usage information, while less than one-third of non-millennials are.

One need only refer back to the beginning of this section to see that while Millennials lead digital trends because of their age and comfort with technology, Generation X and Baby Boomers tend follow the same arc at rates.

Efficiency will continue to matter

Whether it’s the more frugal Generation Z, an environmentally conscious Millennial, one of their retired grandparents, or somebody in between, almost nobody likes waste. And that fact provides a nice niche to open up better utility-customer communications. In that data sharing article, Green Tech Media recommended efficiency tips as a good starting point, and concludes, “rather than ignoring the trend, utilities have the opportunity to improve [the] digital experience and create positive long-term customer relationships.” More on that below.

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Big Data

The flow of information with customer engagement is two-way, and tech partnerships facilitate better customer communication, but they also help utilities understand customers. AMI and smart meters are an important piece of the puzzle notes the American Public Power Association discussed above. It helps utilities provide the personalization that is key to a better, more tailored customer experience. But smart meters are not necessary to get started. The article notes that big data makes it possible for Loveland Water & Power to notify customers of high bills even without smart meters.


Analytics and sophisticated algorithms support timely customer interactions both via web and call center. This flow of data means that utilities no longer have to rely on generalities for market segmentation. They can use actual customer information to decide what is relevant, and how to communicate it, to each. The Utility Dive article on customer engagement trends cites the following example, “Austin Energy… [which] has about 460,000 customers… created a program giving service representatives access to preferences and history.” It uses this information to, “creat[e] a much more personal relationship with… customers,” it says, quoting Deborah Kimberly, Austin Energy's Vice President of Customer Energy Solutions.

Connected Devices

The Internet of Things has expanded to help utilities with the communications that engage customers and support satisfaction. As Utilities begin to see the return on their technology investment, “The IoT will make energy and water consumption far more efficient in the next several years thanks to smart devices that allow consumers and companies to have a clearer understanding of energy usage than ever before,” concluded a Business Insider article about the IoT for utilities.

The mind of a forward-thinking utility executive likely jumps to devices that utilities provide and might even install and manage. The prime example would be smart meters, but there are more ways that the Internet of Things can help utilities. A quick search of EnergyStar.gov's list of utility rebates yields many programs involving supplies, appliances, HVAC components, etc. As more and more of these become smart enough to join the consumer IoT. Smart utilities will take help their customers understand and share all of this data.

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Smart Meters

Smart MeterIt takes little extrapolation from recent figures to say that just over half of the U.S. is now covered by a smart meter. The U.S. Energy Information Administration (EIA) says that by the end of 2016, nearly half of U.S. electricity customers [had] smart meters.” That’s approximately 71 million smart meters, out of 150 million customers. These are the more advanced AMI meters, not the less advanced, one-way AMR devices which are leveling off.

Smart Thermostats

Smart thermostats are worth mentioning specifically because they have been an early example of integrating the consumer IoT in the energy sector. They look like the next wave in the utility IoT ecosystem. Some utilities already offer rebates on them. The New York Public Service Commission requires utilities to provide demand response for all retail customers, and this is a major way of doing that.

Bring Your Own Thermostat (BYOT) is an important part. These programs allow customers to hook up their own smart thermostats and connect them with their utilities for demand response. BYOT could soon be a $3 billion market, according to Navigant. The same New York City regulations that require demand response availability for all customers also require incentive payments to customers who respond to 80% of utility demand response requests to their smart thermostat.

The American Public Power Association article, “Enhancing the customer power use experience through technology,” (discussed above) anticipates that utilities will need to integrate more and more hardware in the near future including integration with smart phones. This investment will pay off in integration and efficiency, as Indy Ratnathicam, VP of marketing and strategy at FirstFuel told them, the more complex grid is also, “more integrated and more efficient.” The Business Insider article cited their study results estimating that utilities will save over 10 million per year from 2020 to 2029 on smart meters alone.

Smartphones and Tablets

Brilliency App ElectricalThe internet of things is not restricted to utility-side devices, nor is it restricted to dedicated hardware. The smartphone is a key component of a smart home. Pew Research estimates that 77% of American adults own a smartphone and 53% own a tablet in 2018.

“The smartphone is the remote control for your smart home.” In 2015, a study by CNET and Coldwell Banker found that over a quarter of American houses, and almost half of Millennials, had at least one smart home device. Over three quarters (76%) of people who have smart home products, use a mobile device to control them.

Smartphones are now an integral part of life and a key piece of customer experience and satisfaction. They are also a major part of the smart home, and the first point of contact for customer communication whether by email, website, app, phone call or text message. So they are an important part of the utility-connected device ecosystem. 

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Smart Speakers

Amazon EchoAnother, more recent consumer device, the smart speaker, illustrates that. Almost 17% of Americans now own a smart speaker, finds a report from NPR and Edison Research (pdf). Smart speakers, like Amazon Echo, Google Home, Apple HomePod, or Microsoft Alexa, connect many different smart home devices and the internet, and this technology illustrates an important point about integrating devices, people seem to really like it. “Sixty-five percent [of smart speaker users] say that they wouldn’t want to go back to life without their Smart Speaker,” the report says, and when people like something they use it. Over half of smart speaker owners said they were using their speaker more or as much as they did in the first month, and another third were using it just as much as in the first month.

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