Could customer satisfaction scoring be hiding more than revealing fundamental truths around the customer in the utility sector? While there is generally high customer satisfaction with utility customer service, there are fault lines that could lead customers to reduce their engagement with utilities or even exit from their utility if given the opportunity.

In late 2019, DEFG LLC and the Utility Customer Research Consortium conducted the Annual State of the Customer Survey, where 1000+ consumers across the U.S. were asked a series of questions to test the most basic assumptions underpinning utility customer strategy.

There are several tracking questions from prior years to provide trend analysis. Just as important, we added new questions to explore new dimensions or offerings, e.g., residential solar or electric vehicles, or questions not typically asked, e.g., the level of customer trust of the utility.

The findings provide plenty of fodder for further analysis. As in past surveys, there is good news. Most customers believe utilities provide excellent customer service and value their utility over other service providers.

However, the findings also point to growing fault lines beneath the utility, especially the investor-owned utilities. Our collective assumptions around reliability, equity, and ownership may be outdated. Like all fault lines, though, it is necessary to dig to see them. In this case, we began to ask the tough questions of consumers to get their input.

Utility customer satisfaction high

Even though only one-third of consumers have contacted their electric utility company in the past two years, more than half responded as being satisfied with the customer service they have received. Fifty-seven percent of adults in the U.S. gave their utility company’s customer service a top-3-box rating. Older adults gave a significantly higher positive rating compared to their counterparts (65 percent of adults 55+ vs. 53 percent of adults 18-54).

Customers describe their utility customer service in favorable terms. When asked for a one-word description, “good” was the word most often used, followed by “great” and “excellent.”
 

For customers who contacted the utility directly over the past two years, 57 percent of the customers found the experience to be “easy.” Three-fourths of adults who have contacted the customer service department indicated that it was somewhat easy or very easy to interact with their utility. This compares favorably to ease-of-use ratings from other industries and represents a slight increase from 2018 of 56 percent.

Customers report feeling that their local utility is providing a better value to most of the comparable service providers (e.g., mobile or Internet). When comparing the value provided by their utility to other similar service providers, respondents felt the utility provided a better value compared to other service provides except for natural gas. Only 12 percent of customers said that electric utilities are a better value against natural gas.

Customer perceptions of utility value and reliability

What could utilities do to increase customer value? By far, customers would appreciate lower prices or other ways to lower their utility bills. When asked an open-ended question on how a utility could be a better value to the customer, 57 percent of the respondents pointed to lower prices. Forty percent of the respondents cited rates that are cheaper or less expensive. At the same time, two in ten adults suggested a variety of service-related actions- i.e., customer service improvements (8 percent), improved quality (2 percent), fewer service outages (2 percent), and quicker response to outages (2 percent).

Customers continue to be satisfied with the level of reliability provided by their utility, with a slight drop in the ratings from 71 percent in 2018 to 68 percent this year.

If given a choice, three out of 10 customers would choose a $10 gift card over having their power restored in 60 minutes, or less. Interest in this option was significantly higher among younger adults (33 percent vs. 18 percent of those 55+) and those in the lower-income bracket (32 percent of those with incomes under $50k vs. 26 percent with higher incomes).

Americans generally feel that their electric utility service is reliable in terms of keeping the lights on. Yet, only half believe that utility companies are prepared to meet their obligations during natural disasters or other emergencies. Only one-fourth of customers are willing to pay more to get an increased level of reliability.
 

CHOICE OF GETTING POWER BACK ON 60 MINUTES SOONER VS. 60 MINUTES LATER
ALONG WITH A $10 GIFT CARD AT THEIR PREFERRED STORE

(click to enlarge)

Utility reliability is viewed better by those who are in an older demographic at 75 percent versus 65 percent among 18-54. Homeowners are significantly more likely than renters to believe their electric utility is adequately prepared to maintain service during emergencies and natural disasters (54 percent vs. 43 percent of renters).

Twenty-nine percent of customers, who are in a higher income bracket, would pay slightly more for increased reliability. At the same time, younger adults and renters are more willing to pay less for less reliability.

If given a choice, three out of 10 customers would choose a $10 gift card and wait to have their service restored. The interest in this option was higher among young adults (33 percent vs. 18 percent 55+) and those in a lower income bracket.

Billing and payment

The 2019 survey findings point to customers believing that their utility company gives them the right amount of information to help manage monthly usage and costs. More than half of the American adults surveyed say they get “just the right amount of information” to help them manage their electric usage and monthly bills.

When asked what was most important in terms of their utility company’s billing and payment options, consumers are most likely to be looking for:

more detail, incremental payments, paying each bill themselves, monthly payments, and interest in flexibility and going paperless. Consider the following:

• Younger adults (57 percent vs. 40 percent of older adults), lower-income brackets (58 percent of those with lower incomes vs. 47 percent with higher incomes), and renters (62 percent vs. 43 percent of homeowners) lower-income brackets consider flexibility to be significantly more critical.
   
• Making incremental payments was more important to women (81 percent vs. 70 percent of men), lower-income households (83 percent vs. 69 percent of higher-income households), and renters (82 percent vs. 79 percent of homeowners).
   
• Women (74 percent vs. 66 percent of men) and lower-income households (75 percent vs. 66 percent of higher-income households) were significantly more interested in paying each bill themselves rather than making automatic payments.
   
• Nearly half of American consumers think this is very important that utility companies offer the ability to pay bills using a mobile phone on a mobile platform in the future. Significantly more women (53 percent vs. 46 percent of men), younger adults (61 percent vs. 21 percent of those 55+), and renters (62 percent vs. 41 percent of homeowners) expressed the importance of mobile payment options.

The green challenge to utilities

The 2019 survey findings point to more than half of Americans felt it was important that their local utility reduce admissions and support environmentally friendly practices. Yet, only one-third of consumers feel that their utility company is supportive of solar and other renewable energy.

Without cost in the equation, there is a decent level of interest from consumers in obtaining solar power or purchasing an electric vehicle during the next two years. Consumers also expect that they will need more customer assistance from their local utility to help them work with the new technology.

• Nearly half (47 percent) indicated they would be interested in owning or leasing solar power in the next two years (putting aside cost). Interest was highest among younger adults (50 percent vs. 41 percent of those 55+).
   
• Approximately one third also expressed interest in purchasing an electric vehicle. Interest was highest among younger adults (34 percent vs. 18 percent of those 55+) and those with higher incomes (33 percent vs. 27 percent of those with under $50k household income).

Utility ownership

Due to the unique circumstances related to wildfires in California, utilities have been shutting off power to local residents to avoid sparking new fires. The governor of California has argued that utilities should pay $100 to consumers whose lives were disrupted by these shut-offs. Americans, regardless of where they live, were asked their thoughts on this proposition.

More than half of Americans agree that consumers in California should be compensated when their power gets shut off, specifically concerning the wildfire issue. The youngest adults (58 percent vs. 49 percent of those 55+) and renters (63 percent vs. 50 percent).

Americans believe that the best form of utility ownership is either public power/local governments or coops/customers (with approximately three out of ten choosing each of these options). Relatively few believe they should be owned by private investors/shareholders (13 percent).

Potential fault lines for utilities

The utility sector continues to do well on the basics of customer service; however, there are growing signs that the sector is falling behind when serving specific segments of the customer base.

Probably the most significant divide facing the utility sector is an increasing segmentation of the customer base. The 2019 survey findings point to a majority of customers that believe they receive the right amount of information from their utility. But there are statistically significant differences between younger Americans that want to receive more information from the utility (24 percent) versus older Americans who wish to receive more information (17 percent).

The generational gap continues to segment the utility customer strategy. The “average” customer does not exist, yet the customer service model was built on that assumption. The survey questions around customer preferences were riddled with significant deviations in the demographic breakdowns. There is a large and growing generational gap. The customer service model of utilities is a perfect fit for senior citizens.

There is a stark generational divide on the importance of being able to pay the utility bill using a mobile phone or platform. 61 percent of younger Americans considered it either “extremely important” or “very important” as compared to only 21 percent of older Americans.

What do customers want regarding bill pay? The obvious answer is lower bills. However, the second desire was to have more flexibility in how they pay the bill. Flexibility was significantly more important to younger adults (57 percent vs. 40 percent of older adults), those in lower-income brackets (58 percent of those with lower incomes vs. 47 percent with higher incomes), and renters (62 percent vs. 43 percent of homeowners).

Additionally, nearly half of American consumers think it is extremely or very important that their electric utility offers the ability to pay their bills using a mobile phone or other electronic devices in the future. Significantly more women (53 percent vs. 46 percent of men), younger adults (61 percent vs. 21 percent of those 55+), and renters (62 percent vs. 41 percent of homeowners) expressed the importance of mobile payment options.

Customer satisfaction is not customer loyalty. Customer satisfaction and trust is an issue that needs to be addressed, especially for engagement with younger customers. All of the survey questions focused on questions around customer service had many instances of statistical deviation from one demographic to another.

The good news is that less than half of the respondents on this survey still fully trust what their utility says and does. With older Americans (55+) more trusting with 53 percent giving high marks as compared to 45 percent of younger Americans (>55+) giving top marks.

The survey also discovered that 41 percent of respondents would highly recommend the utility as a place of potential employment for young people.

To bridge the growing generational gap, utility companies should consider the following:

• Accessible and prompt customer service
• Lower bill prices or ways to lower the price
• Flexible bill payment options
• Compensation for power outages
• Mobile phone / electronic bill payment options
• Investment in solar power and renewable energy