Customer Satisfaction as a Utility Business Strategy

Like many other household goods, the average monthly residential electric bill in the U.S. continues to increase. In 2024, bills hit an average of $182, an 8% increase over the past two years.

Though the causes of the increases are well documented—inflation, the hottest summer ever recorded and an increased need to harden infrastructure due to severe weather—consumers’ reaction to these increases seem proportionally more negative, compared to other commodity service providers.

COMMENTARY

In fact, J.D. Power’s 2024 U.S. Electric Utility Residential Customer Satisfaction Study found that satisfaction among electric utility customers declined for the fourth consecutive year. Especially in regulated markets, consumers may hold energy companies to a higher standard due to a perceived lack of choice. Therefore, it becomes even more important to showcase value.

According to the J.D. Power study, one of the areas with the most significant decline in satisfaction was customer care. This creates an opportunity for utilities to implement proactive communication strategies that mitigate declining satisfaction, protect market share, and open doors for new programs and projects.

A Disconnect Between Pricing and Perceived Value

Consumer perception of value plays a significant role here. Customers assess the value of a service based on the benefits and costs relative to its price. In the energy sector, this process is influenced by factors such as reliability, customer service and the emotional satisfaction derived from energy consumption.

As energy costs continue to climb, it becomes difficult for customers to reconcile higher bills with the same level of service they have received in years past. Unlike industries where consumers can easily switch between providers, many utilities operate in a regulated environment. And, in any industry, limited options create customers who are more willing to voice their dissatisfaction. This exacerbates negative perceptions even when utility companies are making significant investments in new technologies, system hardening and increasing reliability.

The opportunity then is for utilities to ensure customer expectations and perception stand up to the cost they see on their bills, especially as the industry faces increasing complexity, external pressure and volatility.

Why Does Value Matter for Utilities?

The good news is that increased customer satisfaction has tangible, bottom-line value for utilities.

For example, a study conducted by PwC found that customer satisfaction can have a direct impact on regulatory outcomes. A minimum level of satisfaction can influence success when needing to ask for rate increases.

Further, in most industries, customer satisfaction serves as a competitive differentiator. For highly regulated industries, satisfaction translates to an easier path for new unregulated services and products that may be introduced to the market.

The Future of Energy: Value Alignment

When pricing and perceived value align, customer satisfaction is virtually guaranteed. Utilities can implement specific and measurable programs to ensure that customers understand the value they receive is reflected in the price they pay for energy.

Research from PwC underscores the importance of creating a 360-degree view of customers to deliver a tailored, customer-centric experience. This data-driven approach can help utilities better understand customer needs and preferences, ultimately improving satisfaction.

Simplifying interactions, personalizing customer experiences through data analytics, and proactively engaging with consumers to foster loyalty is key to closing the gap between value perception and price.

Improving the Customer Experience: Key Priorities for Utilities

As the energy sector grapples with evolving challenges, there are four key priorities utilities should consider when aiming to improve the customer experience (CX):

1. Changing Internal Culture and Behaviors—A shift in organizational culture is necessary to prioritize customer satisfaction at all levels of the business.

2. Funding and Budgeting—Ensuring adequate resources are allocated to customer experience initiatives is critical for long-term success.

3. Technology—Investing in advanced technology and data analytics will allow utilities to better personalize interactions and improve the overall customer experience.

4. Evolving Customer Expectations—Utilities must adapt to the changing needs and expectations of today’s tech-savvy, environmentally conscious consumers.

Case Study: Florida Power & Light Company’s Virtual House of Savings

Every summer, Floridians brace for the hot summer months where the temperature can reach over 90F for consecutive days and residents blast the air conditioning to stay cool. The higher energy bills that result come as no surprise yet they still frustrate some consumers.

Florida Power & Light Company (FPL) works year-round to educate customers on all the ways they can save on their monthly energy bill. After many years of providing written tips to help customers be more energy efficient, FPL wanted to offer customers a new, engaging way to absorb savings tips and help them save money, especially as research found that customers preferred information that is presented visually and also accessible on their mobile devices.

FPL brought these energy-saving tips to life using an Augmented Reality (AR) and Virtual Reality (VR) experience where participants learned easy energy-saving tips by interacting with different appliances inside of a virtual house. When customers entered the House of Savings via QR code, they learned how to apply better energy-saving habits inside three different rooms, and by answering all the questions correctly, they understood how to save up to $30 on their monthly bill, depending on where they live and the time of year. Further, each time customers completed the House of Savings experience, $2 was donated to support emergency bill payments for customers in financial crisis.

The House of Savings continues to evolve and is open year-round to help customers learn how to conserve energy and save money. It also adapts to customer needs. When temperatures cool in Northwest Florida during the winter months, the interactive home features new, energy-saving tips specifically for the winter season.

By giving customers the tools to control costs in an engaging format, the House of Savings has had a tremendous impact. In its first year, 94,000 customers visited the House of Savings to learn easy ways to save energy and money. More than 5,000 of those opted into FPL’s free energy savings tools at the end of the experience to learn more and engage further.

Case Study: DHL Express’ GoGreen Plus Program

Utilities can also look to the example of other customer-centric businesses. To address the needs of its key customers—small and medium-sized businesses, or SMBs—DHL Express recently expanded its sustainable services offerings to meet a need customers were seeking.

This expansion followed a survey in which 95% of SMB respondents said sustainability is important to their business, with almost half (48%) believing it’s extremely important. However, when asked about the biggest challenge to achieving sustainable goals, 42% said the overall investment is the main obstacle, and 11% said they had no idea where to start.

DHL launched its GoGreen Plus initiative which allows customers to reduce (“inset”) the carbon emissions associated with their DHL shipments through the use of Sustainable Aviation Fuel (SAF). In partnership with SAF providers BP and Neste, sustainable fuel is supplied to DHL Express hubs around the world and can provide greenhouse gas emission reductions of up to 80% over its life cycle compared to the conventional jet fuel it replaces.

Customers across the globe have the option to add GoGreen Plus when choosing their shipping preferences for individual shipments through MyDHL+. This option comes with a standard CO₂e reduction of ~20%. Or, with a DHL account and contract, shippers have the option to tailor the CO₂e reduction they want to achieve and the amount of SAF they use, up to the full 80% reduction (compared to fossil fuels). To support customer trust, an independent auditor annually verifies the emission reduction value of the purchased SAF, as well as verifies that all investments have been exclusively used for SAF. Companies also receive a certificate with their emission reduction value.

By uncovering the priorities of its customers and providing them with relevant choices, DHL has been able to close the gap between perceived value and pricing, while also supporting its own goal to achieve net-zero emissions by 2050.

Now is the Time

As electricity costs continue to rise due to today’s challenges, utilities must meet their customers’ expectations by focusing on customer satisfaction and aligning pricing with perceived value. By improving communication, embracing technology, and prioritizing customer experience, utilities can not only mitigate dissatisfaction but also create long-term value for both consumers and the business.

The energy sector’s ability to respond to customer needs, communicate transparently, and provide reliable, affordable service will determine its success in the years to come. Now is the time for utilities to invest in strategies that will help them meet the challenges ahead and build stronger, more trusting relationships with their customers.

—Sandra Ericson is an Executive Vice President, Energy Practice Leader and Partner at rbb Communications.