Assessment: Marketing and Customer Experience Benchmarking for Utilities

Customer expectations are rapidly evolving in all industries—and utilities are no exception. Those utilities are being tasked with providing safe, reliable, and affordable service to customers while efficiently and effectively communicating, assisting, and collecting payment. Customers expect a streamlined digital experience that delivers usage data, outage notifications, self-service, bill payment, and other services. 

The goal of meeting current and future needs is real. Utilities have an opportunity to do so by engaging customers and putting into place the programs needed to deliver more transparency and customer choice. 

This will help identify where you can maximize investments and understand gaps and areas for improvement. 

Our team contacted 39 water and electric municipal utilities from across the country, obtaining data points from utilities spanning 150,000 to 1 million meters. Our objective? Understanding correlation between spend and customer experience and identifying best practices. That information was then used to establish metrics in four key areas: marketing, contact center, billing, and key accounts. This primary research, augmented with West Monroe’s internal Customer Experience and Marketing Center of Excellence (CoE) research, formed the basis of this report. More than 200 data points were collected from each utility survey, but the focus of this report focuses on analyzing spend in few areas and the correlation it has to customer satisfaction.

Marketing

The very nature of the utility industry is rooted in relationships and trust with customers. Marketing can be a powerful tool to strengthen customer relationships by highlighting new customer and energy efficiency programs, water conservation efforts, sponsorship opportunities, and limited income programs. Marketing efforts serve as a reminder of the value utilities provide to their customers and serve to establish and build trust. 

The goal for utilities—while still making their services and community impact well known—is to maximize the effectiveness of marketing campaigns while minimizing the marketing spend (on a per meter or marketing FTE basis). 

The utilities we surveyed take a wide variety of approaches to market programs to their customers. Online advertising topped the spend list for most of the utilities we surveyed. Other channels included print, radio, TV, and tradeshows and conferences.

Most municipalities also pride themselves on community engagement, working with non-profits and local entities to engage community in several programs. Some utilities have the option of working with sports teams, while others volunteer time with donation drives and local events. 

The chart below indicates meters per FTE in the marketing area across the utilities surveyed. A high number of meters per FTE indicate that 1 FTE services more meters than the peer average and are likely using the marketing dollars more effectively.

Contact Center 

Contact centers have long been the primary means of customer service in utilities. But evolving customer needs and expectations are forcing these centers to be more nimble, responsive, and tech-savvy. 

Customers expect to engage with utilities in more ways than ever—over email, chat, text, and apps. Contact center teams hold the potential to serve and engage customers more effectively while making it simple for employees to offer consistent, high-quality service. This includes finding new ways to engage customers and balance between digital channels and self-service and person-to-person support. 

Billing 

An effective and efficient billing department that provides accurate bills can save time, money, and resources. Using one utility as an example from our benchmarking data, a drop in billing accuracy of 1% would result in 4,200 more inaccurate bills per month. This adversely impacts customer satisfaction and can also lead to additional costs downstream. Reducing costs or resources associated with the quality assurance/control of bills before they’re sent may decrease the upfront spend, but a reduction of accuracy it can cost you in the long run with a reduction of accuracy. 

While most of the billing can be handled internally, utilities need to look at the overall spend which includes a variety of factors. To best determine where your utility lands on total billing cost, you’ll need to factor the spend on labor, outside services, licenses, supplies, and other areas.  

Though we did not see a correlation between spend on billing and customer satisfaction, we did compare utilities across several dimensions. Utilities in the top quartile spent 0.17% on billing as a percent of their O&M. Top quartile utilities on average spent $0.38 per bill and sent 16,616 bills per month per billing FTE. When measuring bill accuracy, top quartile utilities produced accurate bills at a rate of 99.91%. We also compared the percent of customers on eBills: Top quartile utilities have 54% of their customers receiving eBills rather than traditional paper bills.  

We also reviewed days until unpaid bills are sent to collections and discovered top quartile utilities had an average of 60 days of balance prior to sending to collections.

Key Accounts 

Key accounts make up an important—and oftentimes significant—portion of a utility’s revenue. As a key account program is developed, it’s important to consider the ROI on your spend and which customers should be included in the program. Different utilities use different classifications to identify which customers should be considered key accounts: some use revenue, others use volume (gallons or kWh), and a number use community impact.  

Efforts to service these top accounts include well-planned and supported programs that use genuine relationships to understand and meet sometimes-unique needs. 

Several metrics were collected to measure the efficacy of the key accounts program. Top-tier utilities were spending 0.06% as a percent of their O&M budget on key accounts, spending $2,600 per key account per year. Though the number of key accounts managers per FTE were highly variable and dependent on the classification used to define a key account, top-tier utilities were using their key account reps effectively and had a key account per FTE ratio of 39.

Conclusion 

What works for one utility may not necessarily work for another. But understanding how you rate in the industry and where room for improvement exists should be the first step to identify growth areas. 

Once potential areas are identified, a process improvement initiative should be undertaken to identify waste in the targeted process. West Monroe has used lean tools and techniques to take out more than 50% of waste in customer facing processes by streamlining the contact center, eliminating unnecessary wait times, improving efficacy of marketing and community engagement programs, and implementing technology solutions that minimize ongoing O&M expenses. Once processes are optimized, utilities are encouraged to set up a Continuous Improvement (CI) office that is constantly looking at what others in and outside of the industry are doing and bringing those best practices to the utility.