Improving customer experience and the need for customer data management in the utilities sector

In the UK the Water industry operates on a geographic basis. If you live in a water company’s supply area, then that company bills you for the supply of fresh water and treatment of waste water. In the electricity and gas industry the retail market is more open and non-geographic, so you can have a billing relationship with a company from a wider range of energy suppliers even though your local network is owned by only one.

This is one of the reasons why the water regulator Ofwat imposed its Service Incentive Mechanism on water companies, where they are assessed on a number of customer satisfaction metrics, ranked and rated accordingly, with lower ranked suppliers mandated to improve their customer service rather than raising their pricing. In a non-competitive market the regulator, who has consumers’ interests at heart, has ensured that water companies have a strong incentive to improve customer service.

In the gas and electricity markets with open competition there was a drive to attract new customers and retain existing customers through a large number of pricing tariffs that were changed regularly. This made it hard for consumers to compare the offers from various suppliers. The regulator Ofgem, as part of its recent Retail Market Review, has mandated that energy suppliers can only offer four tariffs. In such a competitive market, being unable to differentiate as much from a sales standpoint has focused attention onto service delivery, and on improving customer experience as a way to attract and retain customers.

Water, gas and electricity companies are now all eagerly looking at ways to improve customer experience, and there are valuable lessons to be learnt from other retail markets that have already tackled this issue. Being able to offer a good customer experience is predicated on knowing your customer, having a 360 degree view of them, understanding all of their interactions with you, and even understanding how best to communicate with them. This in turn needs a customer data management system where the master record for a customer is held, and which can be enriched over time by every interaction you have with that customer.

While many suppliers have implemented large enterprise resource planning systems, the ability to address customer data management as above using these existing systems is limited, as they are often slow and hard to change.

There are also other factors to consider which are occurring at an ever increasing rate. There is a millennial generation of customers now who expect companies to respond to them immediately, who want the ability to self-serve, who interact and recommend or criticize through social media channels. This is a generation that has been heavily marketed to by brands, and are very brand conscious.

In addition there is the advent of smart metering, where suppliers are going to be measuring consumption on a granular basis, to help optimise supply and transmission networks, educate consumers on their consumption, and to provide other benefits.

All of the above suggests the need for a Customer Data Management platform, which can create rich customer data records over time, so that suppliers understand how to engage with their customers, what is important to them, and ensure that other business IT systems leverage this data so that every interaction a customer has with the supplier (whether through a printed letter, the contact centre, a service call-out and so on) appears seamless and consistent, where the consumer really feels that the supplier understand who they are, and best serves their needs.

For the Millennial generation, this is even more important, as they tend to group together on brands, building consensus through social media. A supplier that really understands every aspect of each of their customers is going to offer a better customer experience than one that doesn’t, and attract new customers from that generation.

Drilling down to the technology level, suppliers may have several customer data records for the same unique customer, from previous billing relationships with them, from customers moving from address to address where the current ERP systems are not updating a golden master but creating a new customer, or from different databases they use to market to customers and solicit feedback from them. This is where an MDM platform fills the need, providing that set of golden master data that all downstream customer relevant business IT systems can draw on.

Bringing together and making sense of all of the consumption data from smart metering is best addressed by a big data platform, and just as importantly the ability to exploit that data by finding the right “needle in a haystack” through analytics is required. This feeds into the Customer Data Management platform, further enriching relevant customer data records.

The days are long gone when consumers of water, gas and electricity had to live with what their service provider wanted to offer. In this ever-changing world of aggressive competition, demanding consumers, rapid technology advances and stringent regulatory requirements, the utility companies that succeed will be the ones that adapt quickly to changes in consumer needs and behaviour, and more importantly deliver an enhanced customer experience. And an effective customer data management strategy that helps in gaining valuable consumer insights will be the crucial differentiator for a utility company to maintain its market position or improve it!