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Growing Pains

Utilities work toward a more mature relationship with customers.

Fortnightly Magazine - June 2011

ask, ‘How many engineers do I have in the room?’” Shelton says. “Half of the people in the room raise their hands, even at a marketing conference, because utilities frequently put engineers in marketing positions.”

Not that there’s anything wrong with engineers, it’s just that their communication style tends to focus on technical data and operational logic. The entire industry is technically oriented, and the people who are best able to solve complex technical problems rise to the top of the organizational ladder. That’s great for the reliability of the grid, but not optimal when it comes to answering emotional questions that might be fundamentally irrational.

Moreover, engineers tend to err on the side of providing too much information. So if, for example, customers don’t understand the smart meter value proposition, the solution is to deluge them with data. But data doesn’t win hearts and minds.

In this sense, utilities need a crash course in the fundamentals—Marketing 101. Other types of retail-product companies have been selling cars and sneakers on a purely emotional basis for generations, but utilities have never had to really sell anything before—and now they find themselves swimming in the deep end of the pool.

“There’s a learning curve because of the history and structure of the industry,” Wolf says. “It’s been vertically integrated, regulated—almost a sanctioned monopoly. There hasn’t been the need to truly understand the customer. So this is a huge organizational and cultural challenge for utilities. They have a lot to learn from other industries.”

Some utilities are taking the cue and beginning to hire marketing talent from outside the industry. That bodes well, Shelton says, especially when it comes to embracing social media and other facets of modern communication technology.

“They’re making positive steps,” she says, “but I think the challenge is the top tier and upper middle-level executives at utilities that are making these decisions. They’re so engineering and operations oriented that marketing is kind of an afterthought. Being cautious conservatives themselves, they often try to take control of everything and over-manage the process.”

Promises, Promises

Overbearing, tech-heavy messaging about the benefits of the smart grid might have led to more confusion than clarity among customers. For example, utilities often talk in terms of overall efficiencies that most directly benefit the utility itself. For a customer to truly understand how they fit into that picture, they need a working knowledge of market structure, regulation and rate-making, and that’s asking a lot of customers who think of electricity as a God-given right, rather than a retail service.

“There’s a disconnect between many of the statements that utilities make and customers’ actual experiences,” says Brooks. “I’m being told that smart grid is allowing more reliable service and that the utility is operating better, but my day-to-day experience hasn’t changed.”

A big part of the reason the industry has struggled to communicate customer benefits is that until recently, those benefits have been anything but tangible.

“When you look at the investment to date on things like AMI and substation automation, the benefits for customers have been opaque