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Rethinking Customer Engagement in the Digital Age for Utilities

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Conventional interaction channels face disruption owing to digital technologies which are becoming the preferred medium of communication for customers. This change has been brought about by the demands of a new, technology-loving generation, a shift in the regulatory environment and the adoption of smart meters.

Companies who embrace these digital channels can realize significant savings. For example, by moving telephonic customer interactions to self-service portals, companies can potentially save costs incurred in customer relationship management. Similarly, by encouraging customers to use self-service portals to send their monthly meter readings and view their current or past bills, energy and utility providers can save on the costs associated with serving customers. Given these inevitable changes and the benefits they can offer, WNS DecisionPoint(TM) conducted a study to determine the digital adoption rate of utility providers. The research found that high levels of digital adoption meant fewer customer complaints, lower costs per customer and a greater number of new customers.

Based on these findings, clear steps have been laid out for companies that are not in the top tier of digital maturity to bridge the digital divide and create more business value. The important steps include:
 Developing and enhancing customer-facing digital capability
 Building operations-focused back-end strategies such as:
o Adopting a definitive and unified strategy involving both digital engagement and traditional customer service practices
o Offering incentives to customers for using digital channels
o Balancing functionality and usability when designing digital channels
o Gathering unique customer insights to develop personalized services and proactively communicating through relevant digital channels to enhance user experience

To read the complete research report, visit https://www.wnsdecisionpoint.com/our-insights/reports/detail/56/digitizing-customer-engagement-in-utilities

Published in: Services
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Rethinking Customer Engagement in the Digital Age for Utilities

  1. 1. Wnsdecisionpoint.com Rethinking Customer Engagement in the Digital Age Digitizing Customer Services in Utilities
  2. 2. 11 Wnsdecisionpoint.com Changing customers’ communication preferences from traditional towards digital  Generation Y customers prefer to connect with utilities anywhere, anytime and also demand a quick response to their inquiries and complaints  Website, social media and web chat are preferred channels to contact utilities Declining customer trust in energy utilities in the UK Changing regulatory regime compelling utilities to provide better customer experience  Ofgem has laid down rigorous guidelines for utilities to improve the overall customer experience – It periodically conducts customer surveys to assess the effectiveness of digital initiatives taken by utilities and incentivize the companies that performed well and penalize those with the poor quality of customer interactions Rising use of smart meters and smart grids  UK Government aims to install ~53 million smart meters by 2020, implying the availability of an enormous amount of near- time data3 – Smart utilities have started to leverage this data to understand customer consumption patterns and deliver more value to customers such as introducing new tariff plans and proactively offering solutions Source: 1 - Institute of Customer Service, 2 – Ofgem, 3 - Department of Energy and Climate Change Read full report for the complete view of trends underpinning digitization in the UK energy industry Market trends compelling utilities to digitize customer experience 1 Wnsdecisionpoint.com  The UK utility sector was second least satisfied with respect to customer satisfaction (CSAT) scores1  In 2014, 44% of energy customers (an increase of 5% from 2015) did not trust energy suppliers to be open and transparent with consumers2 82.0 81.1 79.7 79.0 78.8 78.7 78.0 77.5 77.0 73.8 73.5 73.0 72.8 72.6 60.0 70.0 80.0 90.0 Retail(Non- food) Retail (Food) Tourism Leisure Automotive Insurance Banks& Building Services Average Public Services… Transport Public Services… Utilities Telecom& Media CSATscores Source: UK Customer Satisfaction Index, by Institute of Customer Service, July 2015 Customer satisfaction scores of various sectors in the UK, July 2015
  3. 3. 22 Wnsdecisionpoint.com Shift towards digitization enable utilities to reduce cost‐to‐serve  across the meter‐to‐cash process Source: WNS DecisionPoint™ analysis * Customer complaints related to billing and metering issues which they communicate with utilities through channels such as telephone, utility outlet, post, and e-mails2 Wnsdecisionpoint.com 0 0.5 1 1.5 Cost per meter readings per customer - physical meter reading Cost per meter readings per customer - self-service portal Estimated costs savings Costs(InGBP) 0 10 20 30 40 Approximate average annual customer contact cost - letter/post Approximate average annual customer contact cost - self-service portal Estimated costs savings Costs(InGBP) 0 500000 1000000 1500000 Approximate cost of contact center operations (pre channel shift) Approximate cost of contact center operations (post channel shift) Savings generated from channel shift Costs(InGBP) Costs savings likely to be generated by shifting physical meter readings to self-service channel Potential costs savings likely to be generated by reducing printed paper bill and mailing costs Estimated savings to be generated from reducing customer service agents by re-directing some of the call center workload* to digital channels
  4. 4. 33 Wnsdecisionpoint.com ‘Digitally’ mature utilities are experiencing increase in operational  efficiency Source: WNS DecisionPoint™ analysis 0% 2% 4% 6% 8% 10% 12% 14% Laggards' average Followers' average Forerunners' average 0 20 40 60 80 100 120 140 Laggards' average Followers' average Forerunners' average *Note:  Laggards - utilities that offer inconsistent digitally enabled customer service and are cautious when it comes to investing in digital platforms  Followers - utilities that have commenced digital channel initiatives with short-term strategy but have significant headroom to improve through long-term planning  Forerunners - utilities that deliver digitally enabled customer interaction services on fairly consistent basis but still lag in terms of digital innovation WNS DesicionPoint™ conducted a detailed study of top 16 energy utilities in the UK to  Estimate the digital channel adoption rate by utilities belonging in three categories* and its implications on complaints, customer acquisition and cost to serve 79 80 81 82 83 84 85 86 87 Laggards' average Followers' average Forerunners' average Cost to Serve per Customer, 2014 (in GBP) Average Increase in New Customers in 2014 over 2013 (in ‘000) SG&A Margin, 2014 (% of Revenue)
  5. 5. 44 Wnsdecisionpoint.com Energy utilities in the UK still have a long way to generate a ‘digital’ advantage * Transformers - utilities that have mastered alignment of digital customer engagement with long-term business goals and have set disruptive trends in the market # Scores are based on the data available for each utility as of August 2015 The development cycles of digital technologies are extremely rapid and utilities need to augment their digital capabilities sooner and continuously refine them But the question is how to bridge the digital divide? Read full report to assess digital readiness of the UK based energy utilities and understand how they can bridge the digital gaps to become Transformers Although many energy utilities in the UK have increased their focus in embracing and deploying digitization initiatives, they still need to significantly enhance the scope and reach of digital service offerings Laggards Followers Forerunners Transformers 0 2 4 6 8 10 12 0 1 2 3 4 5 Source: WNS DecisionPoint™ analysis Digital maturity gap between Transformers* and other categories Utilities Scoresscale#
  6. 6. 55 Wnsdecisionpoint.com A credible insights hub for companies looking to transform their strategies and operations by aligning with todays realities and tomorrow’s disruptions. Email: perspectives@wnsdecisionpoint.com Website: wnsdecisionpoint.com @WNSDecisionPt WNS DecisionPoint WNS DecisionPoint

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