The procurement and supply-chain functions of today’s utility are the Rodney Dangerfield of the utility cost-cutting paradigm: They don’t get any respect. Supply chains in most industries extend...
Web technologies are transforming the utility-customer relationship.
problems such as a falling tree, a gas leak or a street-light dysfunction, then customers actually work as virtual SCADA by feeding information into the outage management system. If the website is GIS (geographic information system) enabled, customers in real time can view current problem areas and crew locations.
• Risk Assessment: By promoting end-use efficiency and conservation, 4 utilities can hedge against customer risk tolerance for rising and volatile energy prices. Many states provide incentive mechanisms for utilities to recover the costs of demand side management (DSM) and energy efficiency investments. But the success of these programs largely depends on consumer awareness, and the Internet can help as an effective promotion and educational tool.
The ENERGY STAR Change a Light, Change the World Campaign is a good example of how the Web can be leveraged to engage and educate consumers in environmental risk-reduction goals. The campaign takes pledges from electricity customers to replace their incandescent light bulbs with more energy-efficient and environmentally-friendly compact fluorescent lamps (CFL). To date, the campaign has received pledges from more than 1.7 million individuals that could save about 3 billion pounds of greenhouse gas emissions. 5
Such applications of Internet communication not only allow the utility to promote its energy efficiency programs, but also to learn about the interests and concerns of consumers. Such feedback might help the company’s enterprise risk management strategies by supporting and validating its business plans and government-relations efforts.
• Transparency: Understanding customers’ needs also is paramount for improving corporate social responsibility and sustainability performance. The Internet can allow customers to participate in determining the criteria for special purpose programs, such as eligibility, targeting, discounts and coverage. 6 Democratization through Internet use can influence critical regulatory rulemakings around low-income programs and various other social tariffs. Stakeholder engagement is a key measure of social responsibility and sustainability, and nothing can match the Internet as a platform to engage stakeholders, especially when most of them also are customers.
Combining DART Building Blocks
Competitive advantage in today’s market demands a shift in management focus, from product profitability to customer lifetime value (LTV). Traditional CRM works almost unilaterally, but higher customer loyalty and retention—which eventually increases LTV—requires a more bi-directional relationship. Transparency, combined with access to customer-focused tools and services, helps to develop this relationship.
By unifying data from multiple sources, the Internet can address the customer’s specific concerns. Am I on the best service plan for my usage pattern? How can I adjust my consumption pattern to reduce my bill? Why has my bill gone higher compared to last month? A Web interface can host tools to generate interactive customer reports, perform trend analyses, provide benchmarks and enable “what-if” analysis.
Furthermore, the Internet has made virtual communities a phenomenon in the 21st century. Combining dialogue and access not only generates awareness, it also creates thematic communities virtually working for utilities on issues and programs. For example, subscribers to demand-response, renewable-energy, and energy-efficiency programs might discuss their opinions, experiences and realized benefits in community forums, and assist the utility in strengthening campaigns. Consumers interested in such