You know what the Holy Grail is for an analyst? It’s results data – especially financial results data. And that’s especially true for analysts who cover customer experience because all too often CX professionals don’t track – or won’t share – their results.
That’s why I’m especially pleased with what I am able to share with you today.
Last week I posted part 1 of Forrester’s customer experience Q&A with Olivier Mourrieas of E.On, one of the world's largest investor-owned electric utility service providers. Olivier will be speaking at Forrester’s Forum for Customer Experience Professionals EMEA in London on November 17 and 18, 2014, and he was kind enough to share some thoughts with us in advance of his appearance.
This week I’m posting part 2 of Olivier’s answers, in which he tells us the tangible business results that the E.On CX program has achieved.
I hope you enjoy what he has to say and I look forward to seeing some of you in London!
Q: How do you measure the success of your customer experience improvement efforts (e.g., higher customer satisfaction, increased revenue, lower costs)? And have you seen progress over time?
There are hard and soft benefits which we are continuously demonstrating:
Churn reduction: Increasing Net Promoter Score (NPS) leads to increased loyalty. This will help to stabilise the Private Household and SME customer base.
Here’s an objection I sometimes hear when I talk to people about how improving customer experience can boost business performance: “Sure, it sounds great for glam industries like automotive or fashion. But I sell widgets.”
Okay, it’s fair to say that the business value of CX is more obvious for industries that advertise in magazines with slick, glossy paper. But the reality is that focusing on CX can also do a lot for less sexy industries.
That’s why we invited Olivier Mourrieras of E.On to speak at Forrester’s Forum for Customer Experience Professionals EMEA in London on November 17 and 18, 2014. E.On is one of the world's largest investor-owned electric utility service providers. And even though utilities don’t exactly captivate their customers, E.On has made huge, measured advances in the customer experience it provides, resulting in corresponding improvements to business results.
Olivier recently responded to our questions about what E.On has been doing and how it’s evolved. He gave us such amazingly detailed insight that I’ve broken his answers into two parts, with Part 1 appearing below.
I hope you enjoy what he has to say and I look forward to seeing some of you in London!
Q: When did your company first begin focusing on customer experience? Why?
Prior to 2009, customer focus had not been a crucial part of E.ON’s strategy. Customer satisfaction scores were often lower than market average scores across the group resulting in high customer churn.
Companies understand the urgency of ramping up their business technology (BT) capabilities to help the business innovate and grow. Increasingly, they realize that they cannot do this alone and firms will require partners that can help deliver agile services that bring fast and predictable outcomes to the business. For instance, Bharat Light and Power (BLP), one of the largest clean energy generation companies in India, signed in late 2013, a 10-year engagement with IBM to build a new business capability that aims at nothing short of transforming the utility sector in India. In a few words (more details are available in this report), BLP and IBM are creating an open energy service platform that will help BLP understand how to optimize the utilization of its wind turbines. The really interesting part for me lies in the way the company intends to leverage the information generated by this platform as the basis of its competitive advantage. The energy service platform will indeed act as an expertise repository that BLP can leverage to:
Increase the value of its own assets. As the company operates, grows, and optimizes its own asset efficiency, it learns how the climate, power grid, and wind turbines influence a vital business metric for a utility company: the plant load factor (PLF). This will allow the company to generate more revenues from its existing assets.
Smart meters provide consumers with granular data on how they are consuming energy — when is the meter spinning fastest, which appliances are the energy guzzlers, how much energy are those idling appliances consuming? Programs to increase consumer awareness and shift demand to off-peak times abound. I delay the start of my dishwasher to after 11pm here in France to take advantage of off-peak tariffs. Most consumers, however, are not highly motivated by just knowing their own consumption. Good news: Opower, a provider of really smart energy solutions, has cracked the code.
The Opower solution draws on a study of how messages influence consumption. Turns out, if you tell people that they will save money by turning off their air conditioning and turning on a fan during peak hours they likely won’t. Those are typically the times when it is really hot. Messages of “civic responsibility” and “saving the environment” also don’t really register. However, when consumers are told that 75% of their neighbors will turn off their air conditioning and turn on a fan, behavior changes. That message had a 6% drop in consumption. Opower now uses these types of comparisons in all of their offerings.
Like millions of Americans who live along the Eastern seaboard, my family got hit by Hurricane Sandy.
Now don’t get me wrong: Compared with residents of New York, New Jersey, and several other states, we had it easy in our little suburb north of Boston. Even so, there were a few exciting episodes, like this tree that fell on my neighbor’s house.
And then there was this power line that came down on the sidewalk across the street from our home, about 4 feet from where I had been standing 20 minutes earlier (I had been talking to a firefighter).
What fascinated me, however, was what came after all the excitement: service recovery by our electrical utility and telecom provider.
Let’s start with our local electric utility, NSTAR. As you can probably guess from the above, our power had to be cut. To restore it, NSTAR needed to coordinate with both our local fire department and our local public works department in order to get that giant tree off the power lines before it could repair them.
When I looked at the job ahead for the utility, I guessed that we would be without power for at least a day. But exactly 12 hours after NSTAR cut power so that the burning lines wouldn’t pose a hazard, the tree was gone and our electricity was restored. In fact, NSTAR beat its own estimate by about 90 minutes.
The Oil And Gas Information Technology Innovation Dilemma
The hydrocarbon logistics chain of natural gas and crude oil connects globally distributed exploration and production sites with industrial and private consumers via pipelines, tankers, rail cars, and trucks with massive intermediate buffering storage and conversion facilities (tank farms, refineries, gas plants); it is the lifeblood of our energy supply chain today and for the coming decades.
More than 75 million barrels of oil and 300 billion cubic feet of natural gas are produced, transported, and consumed all over the globe — every day. Along the complex transportation chain, these special bulk products, both liquids and gases, are transferred between the different modes of transportation, resulting in a number of challenges based on complex measurements of product volumes and masses:
Measurement accuracy. In an ideal world, we would always determine the mass of crude oil and natural gas at each measurement point; however, due to the large quantities involved, weighing is possible only at the very end of the logistics chain. Consequently, we have to live with measurement data that typically carries an uncertainty of 0.1% to 0.5 %, depending on the measurement devices’ intrinsic accuracy.
Last week, I attended the ONS (Offshore North Sea) 2010 conference, one of the world’s largest energy conferences, with more than 49,000 participants, in Stavanger, Norway. The conference theme was “energy for more people,” an important goal, not only to keep pace with the growth of the world’s population (expected to hit 9-plus billion people by 2050) but to fight poverty and increase living standards around the globe. However, soon after the opening ceremony by King Harald V, it became very clear from the first panel discussion that the path forward to achieve this goal has many facets and that the leaders of the world, including politicians, academics, business people, and other authorities, are far from reaching consensus on the right path today.
Conventional Energy Resources
Global energy demand will increase by ~45% within the next 20 years (according to the International Energy Agency), but what will the distribution of energy resources look like by 2030? Most scenarios predict that fossil fuels will continue to be the primary energy source, with oil and gas making up 65% of the total demand. To no one’s surprise, most of the presentations and exhibitions at ONS 2010 were therefore dedicated to the future of fossil fuels that can be combined into the following themes to satisfy the energy demand of tomorrow:
Unlocking new oil and gas reserves in the world. The concept seems to be straightforward: Overcome technical and political hurdles and drill deeper, faster, and more efficiently to carry exploration into new territories such as the Arctic or ultra-deep sea.
Some days ago at Forrester’s IT Forum in Lisbon (June 9-11) I gave a presentation together with my colleague Andy Bartels on the IT market recovery (we predict a 9.3% IT market growth in 2010) after two economically challenging years in 2008/9. In fact, we were making the point that the market rebound we currently see is not simply a recovery but the beginning of a new IT hyper growth phase fueled by a new wave of innovation.
A strong driver of this innovation is what we call Smart Computing at Forrester: the integration of physical world information into intelligent IT-supported business processes in 4 steps: Awareness (via new sensor technology), Analysis (with advanced BI solutions), Alternatives (including rules and process engines) and Action (in industry business applications), plus a 5th feedback loop of Auditability for tracking and learning.
A well-known example of smart computing solutions is smart metering in the Utilities industry. In another presentation in Lisbon, a colleague asked the audience, a room full with all the leading IT service companies, who all had an initiative running with smart metering – everyone in the room raised their hands. Then he asked who actually had more than 1-3 (pilot) projects running – and almost no one raised their hand.
Is smart metering just hype that everyone is jumping on or what is the reality of the lighthouse example of smart computing at this point in time?