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Power industry

CTMA’s measurement programmes help electricity and gas retailers build customer-driven brands by turning customer experience feedback into management actions.

Designed specifically for the power industry, these services include industry-wide customer experience baseline studies, and the ongoing tracking of key customer processes such as complaints handling and new connections and transfers.

Electricity and gas supply - a “power-struggle” to keep customers

By Paul Linnell

In many countries where deregulation has transformed the power industry, disruptive business models, increasing competition, customer churn, increasing customer expectations and easier switching practices, is moving the industry towards aggressive customer acquisition campaigns, mainly driven by offers of lower priced energy.  The energy industry is facing a wide range of local and global challenges, from legislative reform, privatisation and mixed ownership models, to global fuel markets, disruptive technology, climate change and increased internal and external scrutiny of financial and service performance.

In a largely undifferentiated market, one of the biggest opportunities for power companies, is to differentiate their brand and customer relationships by investing in their capability to respond to customers who have questions or concerns

This unsettled environment is placing an increased emphasis on establishing alternative areas of differentiation, where customer loyalty and advocacy can be built on values of supplier confidence and service excellence.

In 2012 CTMA began working with a number of electricity and gas supply companies to identify opportunities to improve customer retention through service excellence in an otherwise undifferentiated industry. This work culminated in a national customer experience baseline study that helped to identify company-specific sources of customer dissatisfaction and set customer-driven priorities for service improvement. It also provided participating power companies with a measure of their effectiveness responding to customers when they make contact about problems or concerns.

Study objectives

The purpose of the study was to provide participating power companies with a baseline of customer satisfaction, loyalty and advocacy and to establish a national baseline against which improvement initiatives can be identified and planned.

Scope of the study

For each participating power company, the study examined four perspectives of customer experience and service performance:

• Overall customer satisfaction with the power company and the impact of satisfaction on customer loyalty and advocacy
• Problems experienced by customers, identifying specific areas of poor service and sources of customer dissatisfaction
• Customer behaviour (when things go wrong), identifying key aspects of complaint and word-of-mouth behaviour amongst customers who had experienced problems and concerns
• Response effectiveness, providing a measure of the power company’s effectiveness responding to customers when they make contact about problems and concerns

It’s not about electricity or gas – it’s all about service

Compared to similar studies CTMA has performed in other industries in New Zealand, and findings from similar research performed overseas, this study demonstrated four key differences.  These differences appear to characterise customer experience with electricity and gas suppliers in New Zealand and helps to emphasise a potential priority for improvement.

The four key differences can be summarised as follows:

• Fewer customers experience problems or concerns with their power company than customers experience in many other industries (good news)
• There is a bigger impact on customer retention for power companies when customers are less than “very satisfied” with their energy supplier and when they experience problems than with many other industries (bad news)
• A higher percentage of customers seek help from their power company when they experience problems or concerns than in many other industries (good news)
• Customers are much less satisfied with the response to their request for assistance from their power companies than in many other industries (bad news)

 
The specific problems and concerns customers experienced about individual power companies have been reported back to the power companies participating in this study in their company-specific reports. The more general observations from the study point to a common improvement opportunity in the way in which power companies respond to customers when they experience problems and concerns.

In a largely undifferentiated market, the biggest opportunity for power companies in New Zealand today, is to differentiate their brand and customer relationships by investing in their capability to respond to customers who have questions or concerns.

It’s clearly not possible for any single power company to provide the “best electricity” or the “best gas” in New Zealand, but there is a clear business advantage for the power company that becomes the best at making it easy for their customers to do business with them, and the best at responding to customers when they come looking for help.

© CTMA New Zealand Ltd.