Vicky A. Bailey, a member of the Federal Energy Regulatory Commission, has left the FERC to serve as president of Cinergy Corp.'s PSI Energy Inc. unit in Indiana. Bailey served on the Indiana...
Marketing & Competing
When the Salt River Project (SRP) held a series of focus groups in 1994, one participant said he related to our products and services, and felt he received good value for his monthly payments. Unfortunately, a few questions later, we discovered that he did not live in our service area, his bill was higher than he thought, and he wasn't particularly pleased after all.
We were more than a little taken aback. After all, we certainly had no trouble distinguishing our products and services from those offered by Arizona's other electric and gas utilities. Wasn't this customer paying attention to our paid advertising or to the local news stories about SRP that appeared with some regularity? Didn't he appreciate what we had been doing in the community all these years?
This type of customer confusion was of little consequence as long as electric utilities operated within well-defined service territories. But as we look toward a deregulated future, when customers will be able to vote with a telephone call and service territories are likely to become out-of-print maps, utilities and customers should be asking probing questions of each other.
Utilities should be asking: Why did you choose our product or service over those offered by the competitors? Or, alternatively, why did you choose a competitor's product or service over ours? Customers, on the other hand, should be asking their utilities: How do your products and services compare to those of your competitors?
Some sobering research has already been done. Each year RKS Research & Consulting conducts national surveys of residential, commercial, and industrial electric customers. Last fall, approximately 50 percent of those surveyed said they would switch electricity providers for a 5-percent decrease in rates. Between 61 and 67 percent would switch for a 10-percent reduction. A 20-percent rate reduction would convince approximately 75 percent of those queried to switch. These figures should have most utility executives anxiously looking over their shoulders at low-cost providers.
But the future may not be as bleak as it sounds: In a separate survey earlier this year of quick-service restaurants, hotels, hospitals, and department stores, RKS found that nearly 50 percent of these customers said they would be willing to pay higher rates to a utility with a favorable brand image. These customers include some of the nation's most sophisticated energy buyers, each responsible for the energy choices (em and, hence, the profitability (em of several thousands of stores.
The RKS survey also revealed a profound preference among all customer classes for doing business with a local utility. Among those customers who said they would switch to a lower-cost provider, clear majorities said they would reconsider their choice if the new entrant was not active in the community or lacked local offices.
What's in a Name?
SRP has, for several years, regularly used focus groups and other survey methods to assess public opinion about our rates, service, and standing. The focus group mentioned above was asked questions about Climate Crafted Homes, a certification SRP provides in our service territory to homes that meet certain energy-efficiency standards. SRP