How energy companies can improve customer satisfaction in target areas by listening more effectively to deliver rapid and maximum effectiveness.

The UK energy marketplace has seen dramatic change in recent years. Privatisation, deregulation and competition have resulted in mergers and acquisitions and increased regulatory enforcement by Ofgem and Energywatch. Today many energy companies are managing a large and diverse customer base, geographically disparate assets, and sizeable workforces.

Yet these activities have not led to the improvement in customer service and quality that was expected. Instead, the utility sector retains a reputation for poor quality of customer service and continues to lag some way behind other sectors in delivering quality customer relations.

So what are the benefits to the utility sector in improving customer service, and more importantly, what strategies can be put in place to create sustainable performance improvement in customer service?

This paper explores why energy companies trail other sectors in customer service, and what processes they can adopt to capture customer satisfaction issues, deliver a positive customer experience and rapidly respond to strengthen their competitive position.

Perception is Everything

In 2004, the Citizens Advice Bureaux highlighted the extent of poor service in the utility sector. Their report entitled ‘Are you Being Served?’ revealed that 32 per cent of callers spend more than 30 minutes on the phone to their supplier with many unable to resolve their issue in a single call. Their most recent survey, published in 2008, indicated that more than 1 in 4 customers who had contacted a utility company by telephone in the last 12 months were dissatisfied with the way their call had been handled.

Other reports paint a similar picture. In 2009, Uswitch reported that only 52 per cent of customers are happy with the service they receive from their energy supplier, with less than 45 per cent of customers willing to recommend the company to someone else.

Numerous reasons are often cited as to why utilities’ customer service should be so poor in comparison to finance, insurance, retail and other sectors. Legacy and fragmented processes, disparate systems, offices and workforces, and complexity of data integrations after merger and acquisition activity can all play a part. Too often they impede the energy sector’s ability to respond rapidly to the need to improve customer service. But the impact of not addressing these challenges head on must be addressed.

Customers are increasingly able and willing to vote with their feet if utility companies fail to create a long term, sustainable model. Energy companies, in particular, invest millions in attempting to attract new customers, and it makes absolute sense to ensure that the cost and effort is not offset by an increasing churn in the existing customer base.

It is widely accepted across most industry sectors that the most cost-effective use of marketing funds is to sell more to existing customers. It is also generally recognised that acquiring new customers costs between 4-to-6 times more than retaining an existing customer.

At this level of cost, it can take energy companies up to seven years to break even on customer acquisition given the amounts that are invested in the acquisition process, but it is also highly likely that a new customer may have already churned and selected a new provider within that period.

Failing to respond to customer satisfaction issues can have a major impact on the value of such acquisition programs. And, the cost of handling complaints and dealing with repeat calls starts to rapidly escalate. As a result, the true lifetime value of the customer to that organisation may be diminished.

For most utility companies with large, disparate workforces, poor customer satisfaction can also lead to higher employment costs. Staff may leave due to stress and pressure as they are often measured personally
on customer satisfaction, and a perceived lack of empowerment to affect the customer situation because of backend process failure.

Adding to the financial strain are regulators like Ofgem that are prepared to “name and shame” with significant penalties if customer satisfaction issues are not addressed. In his letter to the six biggest gas and electricity suppliers, Alistair Buchanan, Chief Executive of Ofgem expressed his disappointment with the low level of customer satisfaction in complaint handling. Beyond a simple wag of the finger, he made it clear that he expected to see improvements when the regulator revisits the issue again next year: “With the systems and processes in place, the challenge now for companies is to really listen to what their customers were saying and look at how they could address their concerns.”

Aspect Software

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