Are Your Customers Loyal?

December 10, 2019 | Customer Engagement

Why is customer loyalty important to both a regulated and deregulated utility?  Loyal customers will support a utility in good times as well as bad times.  Whether a utility is challenged by the need for behavioral demand response, disruptors attempting to disintermediate the relationship between the customer and the utility, or the threat of privatization, customer loyalty is the answer.  Customer loyalty is the best defense against all these threats.

Before diving into customer loyalty, let us understand the difference between customer satisfaction and customer loyalty.  Measuring customer satisfaction is a standard utility business practice; measuring customer loyalty is not.  Customer satisfaction is the sentiment of the customer after completing a transaction with your business. Customer loyalty is forward-thinking; it is a measure of how much value you may get out of your customers over the long term.

Customer satisfaction can either be measured by services such as J.D. Power or American Customer Satisfaction Index or by a customer rating such as on a scale of one to five how satisfied is the customer.  Loyalty is measured most notably based on Net Promoter Score (NPS) which places survey respondents in categories on a one to ten scale as Promoters (9-10), Passive (7-8) and Detractors (6 and less) and calculates the difference of Promoters to Detractors relative to total respondents.  According to Temkin Group, utilities score between minus 12 and 48 with an average score of 15.

How to Improve Customer Loyalty⁽¹⁾

No business can score 100, which means there are always opportunities to improve your customer loyalty. Here are four areas to focus on as you work to improve your customer loyalty.

1. Exceed expectations.

Exceeding expectations takes a little work, but it’s worth it. You can exceed expectations by delighting your customers.

A few ideas:

• Train customer service representatives to go above and beyond for customers
• Provide new customer onboarding
• Check-in with customers after beginning service to find out if they have any questions or complaints
• Identify targeted programs and rebates
• Alert proactively to billing matters

2. Communicate well.

Good communication is a human trait. If you communicate well, it can add a human element to your brand that inspires a deeper, more emotional connection between the customer and your business.

Times to focus on strong communication include:

• Strong follow-ups to any customer support emails
• Use language the customer will understand (dollars vs kWh/therms)
• Timely explanations for any service or order delays or issues
• Reasonable and accurate updates for the time of service restoration

3. Use metrics to improve your business.

Customer Satisfaction and NPS are not the only metrics you should use to improve your business. Keeping a close eye on the health of your business means understanding the customer journey and measuring your service impact.

Measuring your results and monitoring analytics is critical to gauge the successfulness of your communications efforts.  For example, if your email marketing campaigns are generating more customer program participation, you might uncover other ways to improve customer loyalty.

Remember, a satisfied customer is not always a loyal customer. Benchmarking your customer experience is a critical part of keeping a business scaling and moving forward. If you are not measuring your performance in these areas already, consider creating your own surveys to measure Customer Satisfaction and NPS for your business. What you find could be truly enlightening.

(1) Source: Jimmy Rodriguez, HubSpot

About The Author

Jim Malcom, Chief Financial Officer and EVP of APOGEE Interactive, Inc.

Jim Malcom oversees business and financial operations of the company. His senior management experience in the telecommunications and management consulting industries is providing strategic direction for Apogee’s continued growth and success.

Malcom brings more than 20 years in corporate finance and accounting to Apogee, which began with the firms KPMG and Ernst & Young in Atlanta. His career steadily expanded to include senior posts as chief financial officer, corporate controller, vice president and treasurer for such area companies as Heidelberg USA, LecStar Telecom and Powertel.

He is a graduate of the University of Georgia with a bachelor’s and master’s degree in business administration, a certified public accountant, and a chartered global management accountant.