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Technology Corridor

For most energy firms, the returns on investments in customer relationship management have been profoundly disappointing.
Fortnightly Magazine - November 15 2003

of deregulated markets, energy firms would have to relate to their customers in new and more demanding ways.

The technology response to these anticipated needs was the customer relationship management (CRM) solution. From the start, CRM has been an imprecise term that loosely describes a multitude of various capabilities, including sales management, marketing analysis, campaign management, customer contact management, and customer self-service applications. CRM solutions do not necessarily replace CIS systems. Many draw essential customer account data from existing CIS installations for a variety of collaborative and analytical purposes. The result is that CRM means very different things to different people, even people in the same organization.

To add to the confusion, CRM also describes a marketing strategy that technology vendors applied across a wide range of industries. By implementing the wide range of capabilities offered in CRM solutions, these vendors argued, firms could generate substantial new revenue streams by offering a far greater variety of products and services to a far greater variety of customers. In the energy industry, prospective revenue generators included new business lines like telephone services, cable TV, Internet access, and even merchandizing, as well as new energy products like interval billing rates and green power options.

Thus CRM never really had a clear and commonly accepted definition, but it did create a clear and commonly accepted set of expectations: namely, that investments in CRM technology would produce dramatic increases in profits.

Why CRM Failed

For most energy firms, the returns on investments in CRM solutions have been profoundly disappointing. One reason is that the benefits promised were unrealistic, even in the booming economy of the late '90s. A second reason is that CRM systems exemplified a longstanding and unfortunate tendency in American business to substitute technology for wisdom. The real promise of CRM is that this new technology can allow us to relate to our customers in exactly the ways they want us to relate to them. But the majority of energy companies had never defined the exact ways they wanted to relate to their customers.

CRM solutions are genuinely effective only when they have been configured to meet precise needs derived from the firm's own customer management strategy. And most energy firms haven't yet decided exactly what that strategy should be.

Customer Management

Despite the failures of many CRM initiatives and the increasing inadequacies of their aging CIS installations, energy companies still need to collect and maintain accurate and accessible information about their customers. Firms need this information to collaborate with their customers to resolve billing and service issues, and to identify business opportunities based on analysis of actual customer histories and preferences.

Over the past few years, "customer management" has become the industry's umbrella term for the wide range of business processes, strategic data, and applications associated with these tasks. Customer management also has become the label of choice for the IT applications designed to support some or all of these processes across the entire customer life cycle.

One of the best strategies for moving forward with customer management solutions is simply to avoid past