In 2020, utility companies’ desire to innovate is more prevalent than ever— and it’s not just because of the demands of COVID-19. Innovation goes even beyond being in front of the latest industry trends and adding value for the customer, but results in significant cost savings and ROI.
According to a 2018 McKinsey study, utility companies that transform their operations and systems with digital technologies can save up to 25% on operating expenses. Utilities can also improve performance in customer satisfaction, reliability, and safety by 20-40%.
Yet, in spite of the potential benefits, digital innovation in the utility industry lags far behind that of other industries such as retail and restaurants.
Why? Because the utility industry lacks a key component for successful innovation: consumer trust.
Why is Trust Important?
A 2018 survey by Cogent of over 60,000 utility customers found that only 16% of customers view their utility as a trusted energy adviser.
Cogent also found that 53% of variability in customer satisfaction scores are affected by trust.
Not unlike trust between a parent and a child, or an individual and their employer, or a consumer and a retail company, the trust between a customer and their utility provider is determined by how consistently and effectively the utility is able to deliver on their customers’ needs and expectations.
A customer will not trust a utility provider that does not meet their expectations. Without trust, customers are far less likely to engage with their utility provider, offer up personal data, or participate in innovation initiatives from the company.
This begs the question: What exactly are customers expecting, and what do they need from their utility provider to fulfill these expectations?
Fulfilling Customer Expectations Builds Trust
First and foremost, a paying utility customer expects reliably clean water, heated homes, and light switches that work—resources that are critical to survival and therefore fulfill a basic, physiological need on Maslow’s Hierarchy of Needs. If you’re unfamiliar with Maslow’s Hierarchy, the concept is simple. People will always be motivated primarily by what they need to survive (physiological and safety needs), and it’s only after these needs have been met that higher-level needs such as belonging, esteem, and self-actualization become a priority.
The reality is that today’s customer expects their utility provider to meet more than their physiological needs for water, heat, and electricity—they also expect their utility provider to meet their basic safety and security needs.
However, fulfilling the basic “safety” need is not just protecting someone from harm, but also saving limited resources such as time, effort, and money.
According to a 2019 Cogent survey of over 60,000 utility customers, 94% of customer satisfaction is derived from the amount of effort they exert to do business with their utility. If a utility company is able to save their customers effort, it has an overwhelmingly positive impact on customer satisfaction.
If you want to innovate, the first thing you must do is ensure that you are providing an experience that meets your customers’ basic needs. Beyond functional utility services, time-and-effort-saving experiences such as online portals and digital self-service fulfill a basic need by saving them resources.
With connected backend and legacy data and a user interface that is optimized by service layer architecture, utilities can provide the seamless, resource-saving experience that customers expect across every touchpoint.
Only once you have fulfilled customer expectations, met their basic needs, and begun to earn their trust, can you begin to look toward innovation efforts that will fulfill higher level needs.
Read the next blog in this series to learn how this foundation of trust will empower innovation into the future.