AUTHOR:Robert Walton@TeamWetDog June 19, 2017

Remember when no one wanted to talk with their utility? That’s not the case anymore By now it is a cliche that the utility industry has been “slow to change.”

It makes sense, of course: Monopoly providers selling a standard product have scant reason to innovate. And when there is little difference between products and no choice, customers aren’t going to ask for more.

But if you’ve been paying attention to the industry in the last several years, you see this is changing quickly. Gone are the days when utility calls were only bad, the result of either an outage or a high bill. Now, power companies reach out more frequently and communications are beginning to closely resemble those from the retail and tech spaces. And customers are … happier.

J.D. Power has tracked four years of consecutive improvement in residential customer satisfaction. On a 1,000-point scale, the customer research firm’s 2016 survey pegged overall utility satisfaction at 680 — up 12 points and consistently rising, but still trailing auto insurance and banking. The firm’s new survey is expected out next month.

“Consumer engagement has become a real thing,” said Seth Frader-Thompson, co-founder and President of EnergyHub. “It used to just be Opower and a bunch of others. It was somewhere between ‘squishy’ and ‘ineffective.’”

Opower was the cloud-based efficiency and engagement company that made a name for itself innovating behavioral demand response programs that leveraged big data to subtly cue customers to reduce energy usage. The company launched a decade ago, aiming simply to create a better power bill, but rapidly morphed into a thought leader in the space and was acquired by Oracle last year for more than $500 million.

The acquisition created the largest cloud services company in the utility sector, and company officials said the goal was to create an end-to-end solution for energy management.

If all of that explanation blurred together—from bill inserts to cloud-based demand management in 10 years and a half dozen paragraphs—that is essentially the pace of change which has swept over the industry. Alongside rapid advances in distributed energy, you can blame or credit Amazon, Google, Uber, online banking and the airline industry.

Electric utilities are finally moving beyond a narrow focus on delivering power, said Patty Durand, president and CEO of the Smart Grid Consumer Collaborative (SGCC). They are leveraging their knowledge of the industry with new tools and communications channels, and “they are repositioning themselves to be the energy experts,” she said.

That means efficiency, self-generation, and a focus on renewables. And the trend is likely to continue, according to Durand, as a new generation of power customer becomes even more engaged. SGCC recently completed research on consumers born between 1982 and 1999, and will produce additional analysis this summer focused on engagement surrounding Millennials.

“The shift we’re anticipating is more engagement around electricity and sustainability,” she said. “The electricity industry is well-positioned to take advantage of that higher sense of value.”

Engagement is being driven by choice and technology

There are two key aspects to the rapid growth in customer engagement: new ways of communicating and new products. Allowing customers more control over the energy they purchase leads to higher engagement, while an array of sales channels and feedback systems means they can choose what works best for them.

“There is a really strong overlap with those who embrace a digital lifestyle and some of the green champion segment,” Durand said. “That is a big implication for utilities to pursue.”

SGCC’s “Consumer Pulse and Market Segmentation Study,” grouped consumers into broad categories reflecting their interest in energy products and comfort with technology. While some customers simply want to be left alone (Durand recommends that you do), and others are already highly-engaged, there is a significant middle ground that can be reached with the right message.

“The real opportunity (and challenge) for those creating programs and wanting to increase consumer engagement is the ‘Selectively Engaged’ middle,” the report concluded. But the research also warned, “they will listen selectively and they will act only when an offer is clearly aligned with their values.”

About 40% of those customers will make contact once or twice in any six-month period, SGCC found. “Be sure you have an offer that addresses their values and interests,” the report suggests.

Having that offer ready means knowing the customer. Electric utilities have access to enormous amounts of customer data, and increasingly they are turning to outside for help in leveraging it. Utilities can look at generational cohorts, whether they live in an urban or rural area, household income and home ownership, information that the report points out is available “from publicly available information sources to identify communities and consumers when targeting offers.”

“There are companies that help utilities do that,” said Durand. “They will take a utility customer database and score it, field by field, and append onto each record what is publicly known about the consumer.” That could include magazines subscribed to, how frequently they vote, or examining tax exempt donations for environmental interests.

“There is a lot of public information that other industries spend money on to better understand consumers,” said Durand.

Connected devices, connected customers

Energy-monitoring devices have been around for a decade, but it is only in the last few years that they have broadly moved beyond a a niche category. Carol Stimmel, founder of Manifest Mind, has a phrase for it: “Mean time to kitchen drawer.” The first generation of devices simply didn’t do much, and consumers quickly lost interest.

But the Internet of Things has changed that, and getting customers to engage with their utility through some kind of a device is a growing and important trend. In a 2015 report, Stimmel estimated the home energy management market would reach an annual value of $2.2 billion in North America by 2022.

According to SGCC’s research, traditional communication methods are in decline and digital is on the rise in the staid utility industry. Website visits are up, telephone communication and home visits are down. About 7% of customers are using a smartphone app to communicate with their utility, roughly the same number are texting their power provider, and social media is a small but growing segment as well.

“Social media has seen very high growth,” Durand said. “Every utility has launched a social media platform.They’re into Twitter and Facebook … because that’s where consumers are.”

Close to 10% of homes in urban areas have some kind of a connected device, according to Frader-Thompson. Most commonly that’s a thermostat, and the number is growing about 40% year-over-year.

“Delivery channels have become very digital,” he said. “If a customer has some sort of device, the best way to reach them is through their phone.”

A full two-thirds of enrollments for utility Bring Your Own Thermostat (BYOT) programs are done via a smartphone, Frader noted, and a lot of this evolution remains in the early stages. “We’re only 10 years into the smartphone,” he said, and their functionality is growing.

The BYOT model is a popular and growing method for utilities to attract customers to demand management programs, allowing choice and control within the home as utilities link their systems with more manufacturers’ devices.

“A big change was being able to leverage the devices already in homes,” Frader-Thompson said.

And the ability to connect with more and smaller customers, and to see them as granular resources, is broadly changing the way the entire system works, he explained.

“The key changes were modern software platforms and communication technology that allows utilities to be more surgical: they can target only the areas where they need load relief, they can run shorter and more frequent events, they can shift load throughout the day, and they can have load follow renewable supply both up and down,” Frader-Thompson said. “And obviously they can still reserve capacity for operational emergencies

“What you used to see, demand response was an emergency resource, and utilities would put it in and hope they didn’t have to use it,” Frader said. “Part of that was because of the technology they were putting in people’s houses. The technology wasn’t as capable, but has gotten better. … Now, instead of only running demand response territory-wide, utilities are moving into ‘operational demand response’ and might be doing some kind of demand response every day.”

More communications, more ways

In general, as long as utilities are targeting their message and tailoring it to a customer, more communication may be better.

Salt River Project, for example, sends out 1.5 million customer emails each month to its 1 million customers. And while much of the engagement focus is on residential customers, the same ideas apply to other sectors. J.D. Power’s survey of business customers, released earlier ths year, also came back with indications of sustained improvement to satisfaction.

“Utilities are really beginning to understand the importance of engagement with their business customers, which is reflected in increased communication,” John Hazen, director in the utility & infrastructure practice at J.D. Power, said in a statement.

The firm concluded that utilities 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.”