how utilities can leverage analytics and communications to better serve and educate customers
DESCRIPTION
How utilities can leverage analytics and communications to better serve and educate customers. Jay Robinson Senior Consultant, Professional Services & Software Ricoh Production Print Solutions. Utility Payment Conference. - PowerPoint PPT PresentationTRANSCRIPT
How utilities can leverage analytics and communications to better serve and educate customers
Jay RobinsonSenior Consultant, Professional Services & SoftwareRicoh Production Print Solutions
Utility Payment Conference
2
“Would it be more honest—and therefore more credible—to acknowledge that electricity prices will almost certainly rise going forward and that active management, at best, can mitigate that rise? It's
tempting to say customers will "save money," but if it turns out not to be true, the industry has
squandered significant good will on billions of dollars of investment by customer...”
“Would it be more honest—and therefore more credible—to acknowledge that electricity prices will almost certainly rise going forward and that active management, at best, can mitigate that rise? It's
tempting to say customers will "save money," but if it turns out not to be true, the industry has
squandered significant good will on billions of dollars of investment by customer...”
- Phil Carson, Editor-in-Chief, Intelligent Utility Daily, May 7, 2012
Today’s presentation will cover:
Factors driving the imperative to better communicate with you customers
Two great strategies for addressing targeted, relevant and high rate of adoption customer communications Predictive Marketing Analytics Case Study #1 – NW Utility utilizing predictive analytics to
achieve greater response, lower marketing costs, broader reach
Customer Statement Redesign Case Study #2 - How the Los Angeles Department of Water
and Power turned a dated, confusing billing statement into a clear, colorful and behavior modification vehicle
04/20/23 3
Now more than ever utility companies and their customers need to be in sync
Volatility of pricing
Environmental Concerns
Evolving portfolio of energy sources
Increasing costs of all services to customers and the endless drive for efficiency
Increased diversification of customer base and the attendant language and technology challenges
4
Rapid evolution in customer communication methods and technologies
Traditional Statements Paper - complex platforms
New Channelswebsites, email and mobile
Education Avenues
social media intersecting print, television and radio
55
Print/Mail/Fax
Web
SMS/Voice Message
Records/Archive
Connect
Rapid evolution in customer communication methods and technologies
66
TAKEAWAY:
Complex, rigid and aging customer communications vehicles and
infrastructures aren’t flexible enough to adapt to the new marketing capabilities
Challenges to better communication
Lot’s of data, less information, little knowledge
Inflexible legacy CIS, CRM and Print/Mail systems
Unable to accommodate evolving methodologies:
“adaptive/real-time”, multi-channel, integrated, predictive and feedback driven communications
This inflexibility results in no support for new communications opportunities: Made available by huge amounts of data from AMI/Smart Grid systems Needed for rich customer dialogue necessary to support Demand
Management Pricing
7
Some enabling technologies and data levers
Customer Marketing Analytics Multi-channel communications
engines Composition tools Color printing platforms Customer aggregators Workflow Managements tools Campaign management and
evaluation tools Cost efficient SaaS and On-site
Managed Services models
8
Leverage and integrate these to create and manage an adaptive, targeted customer communication strategy
The Result: A Fully Integrated Advanced Customer Communications Infrastructure
CUSTOMER MARKETING ANALYTICS
One strategy to increase the effectiveness and broaden the reach of you customer communications is to utilize
04/20/23 10
New York TimesApril 23, 2011
“Internet era technologies are doubling the quantity of
business data every 1.2 years.”
“The estimated number or agencies involved in managing California’s
water supply.
Analyzing the data they generate can make water management more
effective.”
*HBR November 2010
400
Reverse Engineer – “Start at the End”
Reverse Engineer – “Finish at the Beginning”
“From Start to Finish”
? ?
? ?
Your FeedbackDelinquent AccountsGoing ElectronicService EnrollmentCall Center ActivityGreen AdoptionUsage EstimationsCustomer AttritionOthers ???
Key Takeaway
“We need to improve the connection with our customers.” Richard McNutt @ Southwest Gas
Today’s QuestionsHow do we quantify electronic vs. paper? How can I affect ‘change management’?How much does it cost to go from generic to
specific?How can we establish ‘proactive’ pricing vs.
‘reactive’?In the absence of data, how can we better
understand our customers?Survey, Test, Measure
A Typical Customer CampaignBudget for communicating to
100,000 customers Key metrics to achieve
1,000 new accounts$1 million in revenue
Achieved stated objectivesRepeat campaign
Business Rules
Segmentation Profiling(look a likes)
Predictive Modeling(behavior
based)
Analytical ContinuumLow High
#1 #2 #3 #4
Volume of DataMinimal Extensive
95% (Results)
40% (Mailed)
22
100,000 Mailed1,000 New Accts$1M in Revenue
Six Months Prior Current
ScoreNumber of
HHLDsCumulative Households
Cumulative % of Households
Cumulative New Stays
Cumulative Response Rate
Cumulative % of Responders Captured
Group Response Rate
1 20,000 20,000 5.00% 374 1.87% 1.87% 40.17%2 20,000 40,000 10.00% 554 0.90% 1.39% 59.51%3 20,000 60,000 15.00% 695 0.71% 1.16% 74.65%
4 20,000 80,000 20.00% 768 0.37% 0.96% 82.49%5 20,000 100,000 25.00% 795 0.14% 0.80% 85.39%6 20,000 120,000 30.00% 829 0.17% 0.69% 89.04%7 20,000 140,000 35.00% 857 0.14% 0.61% 92.05%
8 20,000 160,000 40.00% 885 0.14% 0.55% 95.06%9 20,000 180,000 45.00% 897 0.06% 0.50% 96.35%
10 20,000 200,000 50.00% 901 0.02% 0.45% 96.78%11 20,000 220,000 55.00% 910 0.05% 0.41% 97.74%12 20,000 240,000 60.00% 915 0.03% 0.38% 98.28%13 20,000 260,000 65.00% 916 0.01% 0.35% 98.39%14 20,000 280,000 70.00% 921 0.03% 0.33% 98.93%15 20,000 300,000 75.00% 927 0.03% 0.31% 99.57%16 20,000 320,000 80.00% 927 0.00% 0.29% 99.57%17 20,000 340,000 85.00% 927 0.00% 0.27% 99.57%18 20,000 360,000 90.00% 930 0.02% 0.26% 99.89%19 20,000 380,000 95.00% 930 0.00% 0.24% 99.89%
20 20,000 400,000 100.00% 931 0.01% 0.23% 100.00%
Good segmentation
A B
C D
Bad segmentation
A B
C D
?
? ?
?
??
Take away: Good segmentation allows for campaign learning.
Proper segmentation is critical
Establishing sound portfolio segments
HIGH VOLUME ENGAGED
CONSERVERS OCCASIONAL
(LOW RISK / HIGH POTENTIAL)
(HIGH RISK / HIGH POTENTIAL)
(LOW RISK / LOW POTENTIAL)
(HIGH RISK /LOW POTENTIAL)
HIGH VOLUME
ELITE
ENGAGEDELITE
HIGH
Usage
Payment Risk
25
HIGH
LOW
The Audience•40,000 customers
•5% of your customer base•25% of all your power usage•Ave kwatt usage per month: X
Product Information•Average of 4.3 services
•10% of customers have ‘Auto Pay’•85% of customers have ‘Even Pay’
•Average amount due= $275.00•Average revenue = $4,000
Demographic• Tenured customers
•9 years under current address• 35-44 age range
• Home owners• Approx home value = $235,000
Sample Strategies
–Quarterly Campaign: Promote incentives around ‘Auto Pay’ and ‘Even Pay’ to address delinquency
issues in the portfolio
–Education: Personalize your communications to this segment via portfolio analytics for improved
efforts and targeted / relevant messaging
HIGH VOLUME ENGAGED
ONE OFFOCCASIONAL
(LOW RISK/ HIGH POTENTIAL) (HIGH RISK / HIGH POTENTIAL)
(LOW RISK / LOW POTENTIAL) (HIGH RISK / LOW POTENTIAL)
HIGH VOLUME
ELITE
ENGAGEDELITE
HIGH
LOW
UsagePotential
Risk PotentialHIGH
OffPeak20%
Peak80%
0
2,000
4,000
6,000
8,000
10,000
12,000
Single Service 2 Svcs 3 Svcs 4+ Svcs
First Year Year 2 Over 2 Yrs
Over 20,000 households that have been customers for over 1 year are single service or two service members, presenting a significant cross sell opportunity
# Households per Service Mix
+ = 20,000
Where is your communication opportunity?
RecapNew York Times
Quantity of business data doubling every 1.2 yearsHarvard Business Review
400 agencies involved in managing California’s waterThe need to improve our connection with customers
Richard @ Southwest GasEnablement technologies that are available today
Analytics, Composition, Workflow, Printing, Electronic
Why you should care
Improved revenueDecreased customer delinquencyDecreased call center activityImproved green adoptionImproved service enrollmentTargeted customer pricingOthers
Utility Variables for ModelingAgencyAssistAmountPast12Mo DisconnectOrdCompletedPast12Mo
AgencyAssistPaymentsPast12Mo DNPCantWork12Mo
AmountPastDue_0_29_Days DNPDisconnectPast12Mo
AmountPastDue_120__Days EmailPromotionsOkay
AmountPastDue_30_59_Days FifteenDayNoticesPast12Mo
AmountPastDue_60_89_Days FiveDayNoticesPast12Mo
AmountPastDue_90_119_Days KWhUsage_Past12Mo
AvgMonthly_BillAmount MeterNumber
AvgMonthly_KWhUsage PastMonth_BilledAmt
City PastMonth_KWhUsage
County PayChannelLastUsed
CustomerCode PremiseCode
DateAccountEstablished TimePaymentAgreement
DateCustomerCodeEstablished Year_Month
Summary of Utility Solution Set Offering
Analytical Toolkit Predictive Models
Risk Models (2) Attrition & Late Pay
Service Models (4) Equal Pay, Electronic Billing, Renewable Energy & Usage
Customer Segmentation Behavior Index & Risk Index
31
A ‘behavior based’ suite of predictive models designed to optimize marketing budgets and improve how utilities communicates with their customers.
Campaign Selection Process
32
Full Utility Population 500,000
If customer is in the “Frontier” segment and; 100,000customer has an “Equal Pay” score of 1, 2 or 3 30,000customer has a “E-Billing ” score of 1, 2 or 3 9,000Then customer gets offer “A” 9,000 Offer “A”
If customer is in the “Explorer” segment and; 85,000customer has an “Equal Pay” score of 1, 2 or 3 25,500customer has a “Late Pay” score of 1, 2 or 3 7,500Then customer gets offer “B” 7,500 Offer “B”
If customer is in the “Stable” segment and; 130,000customer has an “Equal Pay” score of 1, 2 or 3 39,000customer has a “E-Billing” score of 1, 2 or 3 11,700Then customer gets offer “C” 11,700 Offer “C”
If customer is in the “Explorer” segment and; 100,000customer has an “Equal Pay” score of 1, 2 or 3 30,000customer has a “Late Pay” score of 1, 2 or 3 9,000Then customer gets offer “D” 9,000 Offer “D”
Deploying the solution (Segmentation & Models)
33
Frontier
Challenger
Explorer
Promote Renewable Energy (scores 1-3) and improved usage (scores 1-3).This group is showing propensity for signing up for more services and is a minimal risk from a payment perspective.
Leverage the service models to identify who to target with specific services.
Promoting Equal Pay (scores 1-3) and Electronic Billing (1-3). This group is showing propensity for signing up for more services and is a high risk from a payment perspective.
Leverage the service models to further integrate and mitigate the known risk that this segment is showing.
Promoting services will prove difficult in this segment. Improving clarity around billing options, call center help lines and overall content to mitigate late payer volume.
Consider testing special campaigns into this group to further understand their profile and what (if anything) the utility can do to improve delinquency in this segment.
35
Case #1 Utility Electronic Billing Campaign Validation
To assess the Utility’s recent electronic billing campaign, vendor offered to score their test population as well as their full May 2011 customer population through its electronic billing solution model. The first chart illustrates the results of vendors campaign distribution.
The Utility marketed to 220,634 customers. The campaign brought in 2,332 responders to the e-billing offer. Vendor took the 220,634 audience and scored this population through our e-billing solution model, as illustrated in the next chart.
pge_decile # AccountsCum % of
Accts# E-bill Sign-
upsDecile E-bill
rateCum E-bill
rateCum % of E-bill
captured1 37,030 17% 436 1.18% 1.18% 18.70%2 88,832 57% 1,081 1.22% 1.21% 65.05%3 73,769 90% 623 0.84% 1.07% 91.77%4 21,003 100% 192 0.91% 1.06% 100.00%
220,634 2,332
PGE Deciles (220,634 Audience)
Ricoh_decile # AccountsCum % of
Accts# E-bill Sign-
upsDecile E-bill
rateCum E-bill
rateCum % of E-bill
captured1 55,856 25% 880 1.58% 1.58% 37.74%2 57,407 51% 628 1.09% 1.33% 64.67%3 53,413 76% 501 0.94% 1.21% 86.15%4 25,288 87% 171 0.68% 1.14% 93.48%5 7,034 90% 39 0.55% 1.12% 95.15%6 5,550 93% 36 0.65% 1.10% 96.70%7 4,127 95% 19 0.46% 1.09% 97.51%8 5,035 97% 29 0.58% 1.08% 98.76%9 3,831 99% 13 0.34% 1.06% 99.31%
10 3,093 100% 16 0.52% 1.06% 100.00%220,634 2,332
RICOH Deciles (220,634 Audience)
Had the Utility’ leveraged the predictive model we would have recommended cutting off the campaign selection at score 3. This would have enabled Utility to market to 76% of this group while capturing 86% of the responders.
36
Electronic Billing Campaign Validation
In addition to this the vendor scored the full Utility’s portfolio for the May 2011 time frame. This allowed us to see who outside of this 220,634 we would have targeted with our model selecting the audience.
Ricoh_decile # AccountsCum % of
Accts# E-bill Sign-
upsDecile E-bill
rateCum E-bill
rateCum % of E-bill
captured1 30,516 5% 481 1.58% 1.58% 28.70%2 28,180 10% 484 1.72% 1.64% 57.58%3 34,017 15% 431 1.27% 1.51% 83.29%4 61,226 25% 181 0.30% 1.02% 94.09%5 73,138 37% 25 0.03% 0.71% 95.58%6 63,402 48% 13 0.02% 0.56% 96.36%7 56,991 57% 18 0.03% 0.47% 97.43%8 63,586 68% 14 0.02% 0.40% 98.27%9 65,925 79% 16 0.02% 0.35% 99.22%
10 129,689 100% 13 0.01% 0.28% 100.00%606,670 1,676
Deciles (1-3) 92,713 15% 1,396 1.27% 1.51% 83.29%
RICOH Deciles (Additional Group)
Had the vendor leveraged its electronic billing model on the May 2011 file we would have selected 92,713 customers outside of the vendors modeling selection. This group went on to respond to the electronic billing services at a 1.51% rate, accounting for an additional 1,396 additional e-billing customers.
Electronic Billing Campaign Validation
Response Rate1.21%
166,676 Marketed2,009 Responders
Response Rate0.60%
53,958 Marketed323 Responders
Response Rate1.51%
92,713 Selected1,396 Responders
Predictive Model
Utility Model
Represents the 220,634 that Utility model selected
Represents the population predictive vendor would have selected
STATEMENT REDESIGN
Another huge opportunity to drive program adoption and lower customer service is through
04/20/23 38
Little known statistics…
04/20/23 39
The typical consumer reads a billing statement 2.3 times
Source: CMO Council Research, November, 2009 Why Relevance DrivesResponse and Relationships: Using the Power of Precision Marketing to Better EngageCustomers,
Nine out of ten consumers open monthly bills delivered via
traditional mail, compared to 72percent who open bills delivered
via email
If you want customers to…
Make fewer calls to your customer service Pay bills on time and migrate to more advantageous
payment programs Adopt energy efficiency programs Adopt electronic communication channels Understand demand management, AMI and tiered
pricing programs Have a better opinion of the Utility value; when
services are affected (weather outages, etc.) they are less inclined to become angry/take action
04/20/23 40
Combining Promotional messaging with the Transaction statement will produce greater results
TransPromo
Business Statement
Direct Marketing
Targeted, relevant messages
Typical redesign utilizing this concept
Case Study #2 the Los Angeles Department of Water and Power
Nation's largest municipal utility, delivering water and electricity supplies to more than four million users in homes and businesses throughout the City of Los Angeles
LADWP was established in 1902 to deliver water to the City of Los Angeles. Electric distribution began in 1916.
The Department serves four million residents, with approximately 1.4 million electric service connections and 712,992 water service connections.
Also provides billing for City sanitation services (trash and sewer)
Challenges
Dated billing statements with poor readability and use of space
Poor layout to communicate different charges leading to customer confusion and higher customer service (call center) expenses related to bill related customer inquiries
Goal to reduce customer calls by 20%
Aging infrastructure of printing hardware and software to create communications, print and mail
Effort by the Mayor, LA City Council and LADWP effort to meet and mitigate rate impacts of the State of California Carbon mandates for reducing climate change or greenhouse gas (GHG) emissions (Assembly Bill 32) through Green education/adoption of conservation measures
04/20/23 44
LADWP addressed these by
Obtaining new high speed color inkjet printers New software to reformat customer communications Design consulting starting with key stakeholder
groups from within LADWP and the payer community Workflow management tools to support adaptive
custom communications with the highest quality from raw data to USPS
04/20/23 45
Before: Six Pages of Billing Information
46
47
Clear Highlights
Personalized Summary
Helpful Numbers
Program
After: Reduced the Six to Four Pages, added service category icons and attention grabbing color highlights
Plus: Two Pages of Relevant Marketing To Grow Program Awareness & Value and future personalized communications
48
SZ
Summary of New Statement Design Features
• Improved Bill Remittance: Customer total due presented clearly on page 1
• Color: Color used to draw attention to key sections of bill as well as payment.
• Graphical Diagrams: Graphs to show history patterns and peak usage.Visually show when product is used at what times it is optimal
• Improved Clarity: Clear, crisp font makes reading easier on the eye.Swiss font allows for more content to fit in less space, thus saving paper
• Sustainability: Eliminate inserts by using onserts. Messaging nearly guaranteed to be read (as opposed to throwing away a piece
of paper) and reduces paper (supporting green practices)
49
Goal = Reduce Customer Call Center volume by 20%
SZ
Recap
Customer communications are becoming more important than ever
There are many benefits to addressing customer communications
There are many technological and marketing tools available to create an integrated adaptive, personalized and relevant communications
Leveraging modern customer analytics tools and redesigning your customer statements are two strategies which can increase return and decrease costs
04/20/23 50