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August 31, 2016

Customer-Side Management: A New Utility Business Model

Matthew Burks

Your customers want to be comfortable, productive, self-reliant, and secure—conditions that the reliable provision of electricity and gas can provide. Yet many still see their utility as only a small piece of this life puzzle. To change this perception, utilities can help their customers become proactive business partners who are capable of supporting a wide range of utility goals.

E Source calls this shift Customer-Side Management or CSM™, and it highlights the strategic importance of demand-side management (DSM) and other customer-side programs as critical gateways to a more relevant and trusted customer relationship. CSM represents the intersection between DSM, distributed energy resources (DERs), and customer experience (CX). The essence of CSM is this: Utility customer relationships matter. Utilities that truly place customers at the center of their business strategies, planning initiatives, and implementation efforts will become trusted energy providers for future energy consumers and garner better business outcomes.

Graphic showing how Customer-Side Management represents the intersection between DSM, distributed energy resources, and customer experience

We’ve heard it before: Customers compare their utility service with the service provided by other companies—from Amazon to Zappos to Citibank. Utilities we work with often describe large gaps between their customers’ expectations and their ability to deliver on those expectations. Do any of these statements apply to your utility?

  • Our DSM program offerings are not fully integrated with other departments.
  • Our customer-facing processes, such as DSM rebates or start/stop service, aren’t easy for customers.
  • We’ve made some missteps in communicating with customers about solar.
  • Our bills aren’t easy to interpret.
  • Customers find our rate plans confusing.
  • The experiences customers have on our contact channels are disconnected.
  • We offer limited contact channel and payment options.

If you’re nodding your head, consider these suggestions for starting a CSM revolution at your utility.

Inventory your utility’s current market research capabilities. It’s important, albeit difficult, to examine how well you actually know your customers. Is customer data used once for strategic decision-making and then lost in daily work? How well is your existing market research disseminated and leveraged across the utility? Are you able to predict their future actions and feelings? Putting customers at the center of everything the utility does requires each department to understand customers’ wants, needs, and feelings in a sophisticated, holistic, unified way.

Assess your DSM portfolio from a CX perspective. Start with your largest, most important, or fastest-growing programs and create journey maps from the customer’s perspective. This isn’t a process map of programs but a step-by-step journey map of what customers experience as they participate in this service you provide. During this exercise, it’s not unusual for utilities to identify significant misalignments that create inefficient or outright bad experiences for customers.

Evaluate how much your utility actually knows about customers in relation to solar and other DERs. You’ll need to question your traditional assumptions. Segment your solar customers to understand their market potential, but incorporate research on human factors into your modeling. Looking at customers through engineering, economic, and technology potential lenses only shows a fraction of the DER picture. Irrational human behaviors are driving the early-adopter market and negative narratives from competitive solar market players are eroding the utility brand and long-term customer trust.

Examine whether your utility looks defensive in the face of progress. How do customers perceive your utility’s attitude toward new technologies, social progress, and innovation? Is your messaging and brand forward-looking and emotionally invested in being part of solutions that enable progress, or is it reactive and defensive? Has your team talked with the strategy department about the relationship and visibility the utility wants with customers in the future?

Do your homework on technologies under review. Does your team have robust market research, segmentation, and human-centered predictive analytics to effectively determine the market potential, customer penetration rates, and locations for the technologies you’re considering? Have you identified the human factors that will influence how various customer segments are adopting, using, and combining different technologies? This data will increasingly become an essential part of the emerging tech assessment process as new technology options continue to flood the market.

Think about the skills account managers will need in the future. Determine how the role, knowledge and skill requirements, and cross-functional collaboration needs will shift over the next 10 years. Consider completing a gap analysis to compare the account management team of today with the team of the future. Evaluate any training that account managers will need to successfully support business customers as they make energy-related decisions.

Because customers are critical for positive utility business outcomes, CSM intentionally places them at the center of corporate strategy and provides a gateway to a more relevant and satisfying relationship with them. Wondering how mature your utility is when it comes to Customer-Side Management? Take our short, online CSM assessment to find out where you land on the maturity spectrum and how you can start to become a more customer-connected utility.

About the Author

Matthew Burks

MATTHEW BURKS

Vice President, Strategy & New Products

Matthew Burks oversees new product development, strategic partnerships, and corporate strategy for E Source. His years advising North America’s largest utilities support a robust understanding of the connections between energy, technology, society, and policy. Matthew is an industry thought leader in the rapidly evolving electric and gas utility sectors, with a vision for innovating energy-related products and services and an extensive knowledge of customer experience. He focuses a behavioral lens on energy consumers and takes a holistic view of utility markets, disruptive technologies, and new business models. He holds an MA in environmental management from Duke University and a BA from Cornell University.

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Contributing Authors

Chief Strategy Officer

Matt Burks oversees new product development, strategic partnerships, and corporate strategy for E Source. His years advising North America...