Some power companies need to be more “switched on"

Some New Zealand power companies need to be more “switched on” when responding to customers

With power companies actively engaged in customer acquisition campaigns, mainly driven by offers of lower priced energy, a national customer experience study has identified areas of serious customer dissatisfaction that threaten customer retention.

The study, conducted by service-quality improvement firm CTMA New Zealand Ltd, found that although most customers (81%) are satisfied with their power company overall, when customers do experience problems or concerns, only 16% are completely satisfied with the way their power company responds to their requests for help.

“The reasons reported for this varied from one power company to another” explains the study’s director Paul Linnell. “But with an average of 27% of all respondents who made a complaint to their power company reporting that it had taken more than a week to get a final response, and with a further 20% reporting that the issue was still not resolved, it should be no surprise that The Electricity and Gas Complaints Commissioner scheme has reported a sharp rise in the number of enquiries and complaints they have been receiving”.

The study also reports potential risks in customer retention to power companies associated with these findings. While many power companies are investing in customer acquisition campaigns, the study found a 26% drop in loyalty amongst respondents who experienced problems and concerns with their power company.

Compared to similar studies CTMA has performed in other industries in New Zealand, and findings from similar research performed overseas, the study demonstrates four key differences that appear to characterise customer experience with electricity and gas suppliers in New Zealand. The study summarised these four key differences as follows:

Fewer customers experience problems or concerns with their power company than customers experience from many other industries (good news)

There is a bigger impact on customer retention for power companies when customers are less than “very satisfied” with their energy supplier than in many other industries (bad news)

A higher percentage of customers seek help from their power company when they experience problems or concerns than with many other industries (good news)

Customers are much less satisfied with the response to their request for assistance from their power companies than in many other industries (bad news)

Specific problems and concerns customers experienced about individual power companies have been reported back to the power companies participating in this study in detailed company-specific reports.

Key recommendations from the study included actions for power companies to:

Improve customer response – so that each interaction becomes an opportunity to build (or re-build) customer relationships and also learn what it is the company does well and where it might improve.

Encourage more feedback from customers – by making it clear that the company is ready and willing to help and that their problems and concerns will be addressed, and by making it easy for customers to make contact by phone, company website, and email or by encouraging them to use other confidential feedback channels such as www.WasItOK.com and www.TellSimon.com.

Establish a “Learning from Customers” programme – to provide a continuous capability (and culture) to track the changing needs of customers, identify problems they experience and prioritise them for remedial action.

“CTMA’s experience helping organisations address these key action areas confirms the significant gains that can be achieved in terms of improved customer retention, reduced wasted costs and improved overall business effectiveness” explains Linnell.

“We must also acknowledge how seriously the participating power companies are already taking the business of improving customer experiences” confirms Linnell. “Our work with them has shown the depth of their commitment to learning from their customers and taking actions to improve service-quality. We thank them for their enthusiastic participation in the study”.
Background:

The energy industry is facing a wide range of domestic and global challenges, from legislative reform and mixed ownership models, to global fuel markets, climate change and predatory competition. This study focused only on the experience customers have when doing business with their energy supplier.

The study was conducted over a three month period from November 2012 to January 2013. Customers were invited to take part in the study by submitting feedback about their experience of their power company via a confidential online questionnaire. In addition to invitations sent out by participating power companies, media coverage of the study attracted customer participation from a wider audience. Responses were received from customers of a total of nine different energy supply companies throughout New Zealand.
About CTMA New Zealand Ltd.

CTMA is a service quality improvement firm that provides a range of consulting and research services to help organisations build loyalty and advocacy by improving service to customers. CTMA works with organisations to develop cost-effective measurement tools to monitor and support the ongoing management of customer processes. In addition to its client-specific services, CTMA conducts customer service benchmarking and best-practice studies to help public and private sector organisations improve the effectiveness of their customer relationship strategies.

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