Utility customer loyalty – it’s the new imperative

by Aug 19, 2015

Google, Comcast, ADT, SolarCity and other corporate giants have set their sights on utility customers.

Soon they’ll be trying to lure them away with attractive new offers and product/service bundles, and when that happens, even the best J.D. Power scores are not going to keep them from jumping ship. Shelton Group’s 2014 Energy Pulse study signaled this loud and clear.

  • Right now, a full 29% – nearly a third – of residential customers say they would be interested in leaving their current utility. Of those, 64% would prefer to buy from a non-utility provider.
  • Most of these are under the age of 55 and skew toward minorities.
  • That means that as the minority population grows and your Boomer customers age out, that 29% will grow. Fast.

So never mind customer satisfaction. What utilities need is customer loyalty.

Research – our own included – shows that in any business, satisfaction and loyalty are not the same thing. For utilities, satisfaction is heavily influenced by whether people have experienced recent power outages or rate increases.

Loyalty comes from a different place. Without getting into the academic weeds of the subject, it has to do with perceived value, convenience, service quality and trust. The good news is that businesses have the power to influence customers’ perceptions of all these.

So our message to the utility industry is this: it’s crucial to start building loyalty right now. It’s critical that you know your customers, what they want you to offer them, and what they need to hear you saying.

A few insights on that topic: the people most willing to switch to a non-utility provider are predominantly under 55 (and mostly well under). Drilling down, we find that of the 25- to 44-year-olds comprising 37% of paying utility customers,

  • 36% would switch their electric utility if they could (compared to 29% overall).
  • 36% (but interestingly, not necessarily the same 36%) are likely to buy electricity from someone other than a utility (25% are very likely, compared to 8% overall).

Interestingly though, their willingness to switch is not just from dissatisfaction – they simply feel no loyalty to their utility. To earn their loyalty, people across all your customer segments want utility companies to

  • Make it convenient and easier to do business with you
  • Make it faster
  • Make it personal

Also remember that this is a fairly to very tech-savvy segment, so of course they are much more likely to want communications from their utility via mobile app, email and text messaging.

Other key points:

Keep telling them how they can save. Virtually everyone wants to know how they can save money on their utility bills, and research shows that energy efficiency incentive and rebate programs do contribute to customer satisfaction. (No, I’m not backpedaling here: a satisfied customer may not be loyal, but a dissatisfied customer most definitely won’t be.) So don’t stop communicating, loud and clear, about your efficiency programs.

Don’t leave them in the dark. Power outages are a real sticking point with utility customers. Outages happen – no getting around that. But how well and how closely utilities communicate to customers before, during and after an outage can make all the difference in how they feel about the company. Do all you can to advance technologies and programs that keep customers informed about power outages.

Shout out the green. People care about renewable energy. A full 60% of survey respondents say it’s important for their utility to generate or purchase renewable energy. And customers who believe their utility is “green” like them a whole lot better. Utilities involved in renewable energy efforts shouldn’t keep them a secret but shout it from the rooftops.

Even though you should focus on Gen X and Millennial customers as the most likely to jump their utility ship, most of what I’ve said here applies across the board. If you work in or with utility marketing or communications, get to work building customer loyalty. That’s the key to viability for the long-term.

Want more insights/data on this topic? Download our free report: What Utility Customers Want

Power lines image in public domain via Pixabay

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About the Author

Lyn Meany

Lyn conceptualizes and develops compelling content for a variety of clients, including CertainTeed Insulation and PowerSecure. She excels in both the technical and creative aspects of her work. Before joining us, she served as director of marketing at a leading scientific publisher, which was right up her alley – she holds a degree in physics.

1 Comment

  1. Trust Chimoto

    Great contribution to the body of knowledge in customer loyalty.

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