Utilities: The Power of CRM & Loyalty

How CRM and loyalty tactics are helping utilities adapt to the new reality of a changing climate and increasingly scarce resources.

Utilities are feeling pressure from regulators to adapt to the new reality of a changing climate and increasingly scarce resources. And their key compliance challenge is getting consumers to move beyond the transactional relationships and one-time activities—like replacing old bulbs and appliances with energy-efficient ones—and commit to a long-term change in usage behavior. Having witnessed brands in retail, travel and hospitality increase engagement through loyalty programs to meet the needs and expectations of consumers, utilities have quickly become savvy to the power of using customer engagement to drive down total consumption and increase energy-efficiency awareness on a national level. Here are three ways the energy industry is tapping into loyalty and CRM to do just that:

Energy Efficiency and Demand Side Management Programs

Customer engagement and loyalty are crucial for utilities in managing their government-regulated energy-efficiency and demand-response programs. These programs represent an enormous opportunity for utilities to empower consumers to play an active role in driving down consumption. Utilities can help consumers understand how they can reduce or shift their electricity usage during peak periods to balance supply and demand. This, in turn, leads to lower costs in both wholesale and retail markets, at the rejoice of energy hogs everywhere. Utilities are leveraging time-based rates, critical peak rebates and other financial and rewards incentives to get customers to comply. However, with the rise of IoT technology, the opportunity here is in changing consumption behavior through empowerment, and not forcing compliance through direct load control programs, which allows power companies to cycle off things like air conditioners and water heaters in residential homes during periods of peak demand. Like on a hot summer afternoon. Talk about a bad customer engagement.

Customer Engagement as a Rate-Lowering Mechanism

For many who live in regulated energy markets, there is no choice of who supplies their power. As such, their engagement with energy suppliers is usually limited to their reaction when they open the monthly bill: it’s either good or bad. Good in the sense that the amount is the same or lower than expected. Or bad if it’s not (which often leads to an attempt to understand the bill’s energy charts and a frustrated phone call to a customer service representative). Neither of these is more than a transactional experience. But there’s a silver lining: better overall customer satisfaction often leads to lower energy rates.1 Utilities are seeking ways to change the customer mindset from a ordinarily transactional to a more sophisticated experience—where customers are empowered, inspired, recognized and rewarded—and also nurture and educate them on their energy-consumption levels. Even things like paperless bill programs can serve as a vehicle to build awareness and increase engagement.

The “Grid as a Platform”

Since the inception of the industry, utilities have had central generation systems as their business model, whereby power companies were the sole generators of energy which they distributed for consumption. Smart grid technology is bringing utilities into the 21st century, and with it a new distributed energy model, where smaller-scale and modular devices allow consumers to store, use and sell electricity back to the market. With this “commercialization of energy” and new distribution infrastructure, utilities are creating new ways with which to engage and educate their customers. Examples include bring-your-own-device (BYOD) programs and customer-engagement portals featuring energy insights driven by things like thermostats, meters and weather data to help realize energy-efficiency savings. Indeed, if done right, loyalty programs in the energy sector won’t just make us all a bit more energy-efficient, but will also help transform our world into a cleaner place to live for generations to come.

So, let’s lower those rates, people!

1J.D. Power and Associates, 2012.