Utilities and energy retailers face strong headwinds globally. Tough market dynamics are increasing pressure on customer wallets, driven by rising inflation, energy cost volatility, and energy supply-chain disruptions. In addition, customer needs and preferences around decarbonization—such as clean energy and electrification—continue to grow, forcing utilities and energy retailers to evolve their portfolios to meet these needs. Supply alternatives, affected by declining technology costs for distributed solar and battery storage, among others, have pushed customers to reassess their energy choices at an accelerated pace. Finally, customer expectations for service experience are rising, informed by customer experience (CX) leaders in other industries like Amazon, Uber, and digitally native companies, which offer seamless, personalized, and proactive experiences.
Given both the uncertainties and opportunities created by these trends, many leading energy providers are focused on driving CX improvements to boost their resilience. For regulated utilities, this means finding ways to simplify processes, create new digital products and experiences, develop new offerings, and ultimately make it easier for customers to do business with the utility—all in the face of tighter budgets and directives to reduce the cost to serve customers. For utilities in competitive energy-retail markets, this requires optimizing customer experiences and building new capabilities to maximize customer acquisition and retention, while maintaining a competitive cost-to-serve.
Consider, for example, the case of a North American electric utility. As part of a recent large-scale transformation, it identified several opportunities to modernize customer self-service for sub-journeys like customer bill analysis, making digital payments, and accessing payment assistance. These simpler solutions to customer pain points increased customer satisfaction and reduced call-center operational costs.
However, many energy providers struggle to make real progress on their CX ambitions. A number of CX initiatives stall or ultimately fail to realize their intended impacts, be these financial, customer satisfaction, employee satisfaction, or otherwise.
Typical CX roadblocks in energy
Utilities undergoing CX transformation may encounter challenges. These can include the following:
Ambiguous or imprecise business cases
Unrealistically high expectations for new technology implementations—often accompanied by hockey-stick-like impact curves in the future—make it difficult to rally the organization and secure necessary funding because the link to value seems weak or unclear. Business cases should articulate clearly how the CX changes will improve operational and cost performance and customer satisfaction.
An inability—or unwillingness—to engage deeply with customers
Some organizations find it easier to rely on long-held internal beliefs instead of deeply engaging with the customer (for example, via call listening, interviews, focus groups, or panels). In extreme cases, organizational leaders in the business have never talked with real customers!
The result is experiences designed from the energy-provider’s perspective, rather than the customer’s. Symptoms of this can include communicating with customers—on the web, phone, or in print—in language that does not resonate with customers but is utility- or regulation-focused (for example, “ratepayers”, “service territory”, “tariffs”).
Or—if organizations do understand the customer’s perspective—teams may still over-index on “shiny objects” (such as chatbots) rather than root-cause and design-led solutions. Teams often over-rely on core technology changes that take a long time to implement and rarely deliver the expected value. This can be at the expense of investment in the core experience. A broader pitfall occurs where organizations focus on spot fixes or incremental changes, rather than on end-to-end transformation.
Doubts about tech ability and agility
In large energy providers, there can be a misconception that legacy technology is a barrier to change. The perception is that antiquated tech stacks and legacy “tech debt” resulting from decades of underinvestment or historical budget cutting will make rapid, modular, and frequent improvements difficult to execute.
A typical manifestation of this, given the silos that can exist between customer and IT teams, is a limited understanding of feasible types of customer experiences and changes. Some organizations believe that only large-scale, long-term replacements hold the answer. The resulting long project timelines—often multi-year, technology-led transformations—rely on “big bang” releases that make it difficult to maintain the required end-to-end focus on CX and operational performance improvements and financial-value delivery.
However, perception is not always reality. Progress is possible and innovative energy providers find ways to deliver CX transformation quickly and effectively. By way of example, one utility was able to make significant changes to their digital CX in nine months, despite having customer-information systems that were 30 years old and even older support systems.
Lack of cross-functional collaboration
Functional silos based on ownership of individual customer touchpoints can prevent true, end-to-end customer-journey optimization. For example, multiple US utilities have treated “payment” and “payment assistance” as distinctly separate customer experiences because of existing business processes. However, customers naturally think of these as intricately linked and expect integrated support—such as one customer profile for both.
Despite these challenges, a number of energy providers have “cracked the code” for delivering superior CX, while at the same time reducing overall costs to serve customers. These leaders are delivering real impact in a matter of months, rather than years. And in such timeframes, they’ve increased customer satisfaction by 10 to 20 percent and reduced cost-to-serve by 20 to 30 percent.
Key lessons can be learned from these organizations on how to achieve such benefits—with an approach that combines new collaboration models, design-led thinking, and modern, agile means of digital delivery to get to results faster.
Three key factors can help to get this right:1
1. Align on the “why”
The first step in a successful digital CX transformation is to align the organization around a common CX aspiration (for example, digitally enabled self-service), informed by the brand promise, to enable ongoing collaboration.
In particular, leadership alignment on customer importance is critical to drive a shift in culture. Leaders can drive collaboration and alignment between the business and the digital IT teams on the end-state vision. Typically, in energy providers, the CX team focuses on the call center, but wants to expand into increasingly digital channels and tech-enabled experiences, while the digital team lacks the customer insight and frontline strategy to optimize digital CX. To develop a common purpose, organizations should bring together the business and technology teams to simultaneously tackle business-process changes and technology changes. The changes can then be delivered through the primary—and increasingly digital—customer channels.
For example, in a recent CX transformation in a different utility in North America, the organization agreed to target industry-leading CX consistently across all its processes. After creating a collaborative team that merged customer and digital experiences, it is now targeting a 20-plus percent reduction in its cost to serve customers in some of its core journeys.
Leadership can then prioritize the journeys and the channels that matter most and establish a clear link to business and customer value. For energy providers, this likely means that payment and payment assistance-related experiences—for example, the “I have issues paying my bill” customer journey—are strong starting points because of the large number of customer touchpoints. By way of illustration, at a central US utility, it was observed that 5 percent of customers drove 60 percent of the call volume for these journeys, creating a solid business case for prioritization given the high call-center volumes.
Collections and field activities, such as notices, connects, and disconnects, as well as select back-office activities, can also typically be encapsulated in the scope of these efforts. Conversely, focus on low-utilization channels and applications should be minimized. We repeatedly observe channels that have low utilization relative to their investment levels such as chatbots, smart homes, and native-mobile applications. These are typically not well utilized but carry high development and maintenance costs.
Finally, a clear roadmap—that starts with a clear and specific aspiration that is both concrete and achievable—is critical for making progress and tracking consistent. Subsequently, one to two customer journeys should remain in focus at any given time, for end-to-end optimization. These optimization efforts often include front-end CX changes, back-end process changes, and technology changes, and should be prioritized based on the financial, satisfaction, and strategic value at stake. Each journey can be offered with a consistent approach that diagnoses customer pain points, designs the desired future state, prioritizes changes based on value and feasibility, and plans implementation using an iterative, staged approach that delivers value quickly.
2. Lead with user-centric innovation to transform the business and optimize customer journeys
When mapping out the future-state customer journey, combining traditional CX practices with user-centered design processes has proved to bring great value. Traditionally, design thinking is an approach to solving problems that puts the customers’ needs above all else. CX design also uses a human-centered approach2 but in addition aligns with broader business objectives by establishing the link to value across the entire customer journey. Redesigning customer experiences needs to be grounded in the voice of the customer and the underlying data rather than long-held organizational beliefs.
For example, rather than an energy provider focusing on chatbots and text-to-pay functionality that do not typically address real pain points, they could instead focus on how best to guide the 5 percent of customers who may drive 50 percent or more of payment-arrangement call volumes to digital channels with new features and customer-friendly language. Consider, for example, a web- and mobile-friendly sign-up tool that utilizes a “quiz” approach to suggest the best payment agreement based on each customer’s unique situation.
Design principles should be included from the beginning to eliminate complexity and to focus the organization on what matters most to customers. For example, rather than breaking down payment arrangements and human support service into different customer journeys, organizations could place all options in one place—which is how customers prefer it! Rather than designing websites and customer experiences using utility jargon ( “service territories”, “tariffs”, and the like), organizations can use terms that are familiar to customers to ease the customer-journey experience.
Supportive CX changes include account and bill simplification, such as a simple, modern cover page on top of pages of required regulatory legalese. Another positive CX change is shifting functionality online—for example, human services. Or the interactive voice response (IVR) could be simplified, using customer-friendly language to contain calls. These can create a more supportive experience at a time when customers may be experiencing shock and frustration and need to identify their next best actions quickly. The emotional and tactical support not only improves the customer experience, but also empowers customer self-service—which can result in improved customer affordability in the long run.
Of course, the call center remains a key driver of CX, and call-center operations must be evolved in parallel to modernizing the CX. While much of the work to modernize CX will occur in digital channels and experiences, delivering enduring performance improvement to both customer satisfaction and cost requires that companies transform how they run their call centers. This typically includes better performance management, training, and coaching of the call-center employees, as well as evolving the workforce strategy and agent-skilling model to handle more complex calls. Operational excellence across the full (and potentially smaller) footprint is also vital.
3. Execute technology upgrades through new ways of working
CX leaders should address technology alongside the first digital product releases. Too often, energy providers undertake massive, multi-year technology upgrades that take years before any value is delivered. Technology changes addressed with the first releases can build momentum and deliver value quickly (ideally in the first six months). For example, engineering practices—such as feature toggles, infrastructure as code, and continuous integration and continuous delivery (CI/CD) that accelerate delivery and allow for iterative testing and learning—can help lead to success.
Such engineering excellence should be supported with a modern CX tech stack and an agile product-based delivery method. For instance, in an East Coast utility’s recent digital CX transformation, a phased upgrade plan was created and implemented alongside each release of new features. This helped to bust the organizational myth of tech-stack modernization as a barrier to improving CX.
However, it is not enough to only build new features and channels and expect customers to alter their behavior on their own. Customer conversion and behavior change is an ongoing, active process that requires careful planning, targeted messaging, and dedicated campaigns to push behavior change and ultimately realize value.
New collaboration models and agile principles help to drive success, which demands alignment between an organization’s customer team, tech team (including digital and IT), and design team. This collaboration should then deliver using agile principles, including iterative design, product teams rather than waterfall projects, biweekly sprints that deliver incremental value at each sprint review, feature backlogs, and full transparency of progress and priorities.
For example, at a leading European energy player, the customer-centric transformation included the setup of cross-functional “excellence rooms,” bringing together stakeholders from commercial functions, customer service, and IT to work in a data-driven, agile setup as the new normal of day-to-day collaboration. The new operating model drastically increased speed of decision making and broke down previous functional silos, leading to a step-change in customer-journey excellence and realizing cost-to-serve potentials.
Finally, organizations may need to hire talented individuals who bring skills that may be currently missing in the organization. These include both tech and design skills that do not exist in many energy providers at this stage. Design capabilities go far beyond the historical focus on user experience and often require new talent to build the type of organizational muscle needed in CX. New tech talent may include a host of specialists such as developers, designers, scrum masters, and more. These people will quickly become part of the core capability that the organization will leverage and deploy on an ongoing basis to enhance CX.3
These are unprecedented times for energy providers globally. The volatility of market forces in the energy sector are likely to continue in the near future. Digital CX transformation offers an opportunity for the industry to become nimbler and more customer-centric, and energy providers that undertake such efforts will better position themselves to boost their resilience in the face of these market forces.
Each utility and energy retailer will have a different starting point on this digital CX journey. For some, the first step in a digital transformation may be to understand better their starting point and which customer journeys matter most to their customers, and therefore where to focus transformation efforts. For others, it may begin with a technology and agile-maturity assessment to identify both limitations and strengths, or inform prioritization.
For others, it may require hiring new design or digital talent to build the internal capabilities required to deliver on an ongoing basis. Regardless of the starting point, all power providers should maintain a laser focus on the call center to ensure that the call-center CX is optimal. To keep customers satisfied, supply needs to match demand, and call-center operators need to be trained to handle the more difficult calls.
Forward-looking energy providers focus on customer experience not only as a means to boost resilience to challenging industry conditions, but also to improve delivery and value capture. Focusing on three core factors when executing digital CX transformation could generate enough cost savings to pay for itself—setting off a reinforcing cycle of evergreen CX optimization to capitalize on the opportunities that lie ahead.
