75/8. About Market Strategies driving confident business decisions. 1.3 million 6,000 #20. Global Reach. Broad Industry Expertise
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2 Session Overview Utilities are expected to better engage their customers but customer touch points and offerings have exploded, making the best path forward seem overwhelming. Data to the rescue! - The traditional view of customer engagement - A new definition of customer engagement - Using segmentation to further refine your customer engagement strategies - Using customer data to drive communication effectiveness, product development, and building your brand
3 About Market Strategies driving confident business decisions Qualitative and Quantitative Mastery Six Research Specialties Global Reach 1.3 million Yearly quantitative interviews 620 Interviewers on staff 1989 Founded, headquarters in Livonia, Michigan 12 Marketing and Data Scientists 7 Information Designers 6,000 Yearly qualitative interviews 300 Full-time researchers # AMA Gold Top 50 US Market Research firms ISO Certified Quality Process Brand Communications Customer Experience Product Development Segmentation Syndicated Broad Industry Expertise Technology Telecom Energy Healthcare 75/8 We conduct qualitative and quantitative research in 75 countries, across 8 global regions. Financial Services Consumer & Retail
4 MARKET STRATEGIES UTILITY EXPERIENCE Utility companies as clients 60+ in dedicated utility 150+Utility projects in 2016 researchers 1 mission deliver meaningful results so you can make confident business decisions and drive change throughout your organization
5 Traditional Stages of Customer Engagement Tracking complaints in the call center Tracking transaction satisfaction Tracking overall customer satisfaction Benchmarking vs peers
6 Transaction Satisfaction Studies Surveys measuring customer satisfaction with their call center experience or an onsite technician are very common. Surveys can be kept short (5-7 minutes) Track results based on call type Track first-contact resolution Metrics on the CSRs and technicians
7 Benchmarking Satisfaction Studies Over time and across utilities, we track numerous satisfaction metrics for benchmarking performance Provides context for your performance Longer surveys (10-20 minutes) Full customer base Metrics ranked against peers
8 Maslow defined a customer engagement model Actualized Relationship Esteem and Purchases Engaged Customer Relationships Product Demand and Experience Customers want to do business with you Love and Belonging Brand Trust Safety and Security Basic Needs Safety and Reliability Billing, Payment and Service Customers don t mind doing business with you
9 Managing Customer Engagement requires a complete customer relationship review 360 o Customer Engagement Evaluation Strategic Factors % Importance on Operational Satisfaction 44% Safety & Reliability Strategic Factors % Importance on Brand Trust 35% Billing & Payment Customer Focus 20% 21% Customer & Field Service Company Reputation & Advocacy 19% Communications Effectiveness 18% Reliable Quality 16% Community Support 14% Environmental Dedication 14% Brand Trust 31% Engaged Customer Relationship (ECR) Product Experience 32% Operational Satisfaction 37% Strategic Factors % Importance on Product Experience 70% Design Features 23% Benefits Awareness 7% Usage Performance
10 Path to optimal engagement isn t one size fits all Segmentation Theory Goal Group like customers with similar characteristics to help understand customer motivations so as to target high-return customers and prospects Our philosophy Uncovering real segments means looking at the market from multiple angles: triangulation around customers emotions, needs, motivations, demographics, and behaviors High-quality segmentation frameworks are robust, sustainable, and remain valuable even as markets constantly evolve
11 Not all segmentation schemes are useful Segmentation: Key Success Factors The segmentation framework must be guided by the overall business goals of the organization The segmentation must identify motivations, needs, and behaviors that are unique to each segment Segments must be reachable through identified communication and marketing channels Segments must be receptive to specific messages and offers
12 Not all segmentation schemes are useful Personas to Characterize the Final Segments > Develop a persona or characterization for each segment, which will bring to life the type of person included in the segment > If necessary, conduct qualitative research (e.g., in-depth interviews) to develop a personality for each segment > Work with implementation partners / agency to develop creative messaging and communications plans
13 SDG&E has benefitted from its customer segmentation 2016 SDG&E Residential Segmentation Study Overview SDG&E commissioned Market Strategies to build a Residential segmentation: Address changes that have occurred in the market over the past several years (e.g., increased use of solar power / distributed generation, EV s), and potential changes to the rates, programs and services that are currently offered or will be offered to customers in the future Provide in-depth profiling of the new segments using survey data and internal customer data Develop updated segment typing algorithms based on the new segments Residential segments were developed based on a combination of survey-based segment platforms (energy-related attitudes, preferences, behaviors, and demographics), and segment platforms derived from the SDG&E customer database, including electricity usage, program participation, geographic/climate zone, tenure, transaction frequency, channel usage, bill payment history, home ownership, home type, and household PRIZM-68 segments Database scoring and classification algorithms were successfully developed to allow SDG&E to assign residential customers to one of the five segments based on either: Internal database information (13 fields) delivering 70% cross-validated correct classification, OR A reduced set of survey questions that can be used to assign future research participants to specific segments delivering 88% cross-validated correct classification.
14 Build a profile of each segment
15 Distill the data down into opportunities and challenges for each segment
16 The impact of a good segmentation Senior Management and the Marketing teams have embraced the segmentation framework (to better understand the market landscape), and use it to spur thinking about how to develop and promote new rates, programs, services, etc., and more efficiently target the right customers with the right messages/offerings (via the database typing). Engaged Customer Relationship Index Product Experience Index W W Q Q Q Q Q Q Q Q Q W W Q Q Q Q Q Q Q Q Q1 Initial Data Mining Segmentation (2012) Full Segmentation (2016) Initial Data Mining Segmentation (2012) Full Segmentation (2016)
17 Segmenting Customers for Energy Efficiency Programs Issue An electric utility was aggressively ramping up its investments in energy efficiency programs for residential customers. Program and marketing managers wanted to ensure that the programs were designed and promoted effectively. The goal was to understand the behaviors, attitudes, needs and preferences of potential program participants. Process We conducted a multimode study with 4,000 respondents, utilizing our custom segmentation method to identify and develop detailed profiles of seven distinct groups. These groups differ from one another in many important ways: likelihood to participate in energy efficiency programs, motivations to participate, energy usage, knowledge of energy management, media and shopping preferences, lifestyles, attitudes, values and demographics. Result Market Strategies collaborated with the client to develop materials and make presentations to communicate the value and actionability of the segmentation framework to internal stakeholders. The segmentation enables program managers and marketers to design and promote programs that target specific, well-understood groups of customers. In turn, this boosts the cost effectiveness of, and energy savings delivered by, the expanded energy efficiency effort.
18 Load Shape Segmentation For a large electric utility developing new dynamic pricing plans to be piloted in 2015, we identified and profiled distinct load shape segments based on one year of hourly interval usage data across large, representative samples of residential and business customers. > We then developed classification algorithms to assign load shape segment designations to the utility s customer database to support the targeting and promotion of the new rate offerings among customers in ways that will most effectively achieve the overall objective of reducing peak loads. > After load shape segments were identified, qualitative research was conducted among selected load shape segment groups to gather feedback on rate offers and messages. > The final phase of this project includes a quantitative discrete choice study to support the optimization of rate offerings and messages, and estimate customer response by load shape segment and other characteristics.
19 Newcomers (13%) Young Urban (14%) Cogent Segmentation Framework Black (13%) Hispanic (11%) Digital Types (26%) Environmentally Focused (23%) Urbanites (34%) Low Income (24%) Consumption Managers (19%) Traditionalists (30%) Established Suburbs (32%) Out of Touch (5%)
20 Engagement Varies by Segment ECR by Segment Consumption Managers Digital Types Young Urban Environmentally Focused Hispanics Urbanites Black Traditionalists Established Suburbs Newcomers Low Income Out of Touch 651 Industry average = 726
21 How we define Brand Trust Strategic Factors % Importance on Brand Trust Customer Focus 19% Company Reputation & Advocacy 19% Company Reputation & Advocacy Supports programs/causes/charities I care about Well-managed company I would make good comments about them if asked Comments from others are mostly positive Good local reputation Communications Effectiveness 18% Reliable Quality 17% Community Support 14% Environmental Dedication 13% Communications Effectiveness Communicates information that matters to me Communicates with me in ways I prefer Information provided is accurate Communication format is clear/easy to understand Credible source of information
22 Brand Trust improves Service Satisfaction Industry Service Satisfaction Index Overall Service Satisfaction Score Operational Excellence Performance* Above-Average Brand Trust (6 or more) * Operational Excellence Performance = no outage, never heard of outage, no safety issue, no inaccurate bill, not heard of rate increase Source: Utility Trusted Brand and Customer Engagement: Residential, Cogent Reports by Market Strategies, Q1 17 TTM n = 57,707
23 Product adoption doesn t happen without high Brand Trust Product Usage by Brand Trust Enhanced Service Support Online/Mobile Access Consumption Management Programs Billing and Payment Options 58% 48% 50% 27% 30% 36% 4% 5% 5% 7% 11% 12% Low Trust Apathetic High Trust Source: Utility Trusted Brand and Customer Engagement: Residential, Cogent Reports by Market Strategies, Q1 17 TTM n = 57,707
24 Brand Trust increases support for rate increases Brand Trust by Heard about Rate Increase Heard About Rate Increase Not Heard About Rate Increase Low Brand Trust Moderate Brand Trust High Brand Trust Source: Utility Trusted Brand and Customer Engagement: Residential, Cogent Reports by Market Strategies, Q1 17 TTM n = 57,707
25 Improving Company Reputation Support Causes Customers Care About Most Important Cause to Support Clean Environment Low income families Local economic development Safety Education Schools or education Community safety Healthcare Anti-crime support Anti-drug education Child development Arts or entertainment Political campaigns Sports Team Sponsorship None 1% 2% 5% 5% 9% 8% 14% 13% 26% 33% 32% 32% 36% 37% Source: Utility Trusted Brand and Customer Engagement: Residential, Cogent Reports by Market Strategies, Q1 17 TTM n = 57,707
26 Improving Communications Effectiveness Match Channel Offerings to Customer Preference 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Direct mail Bill insert/newsletter Utility website Message printed on the bill Phone call you received from utility Text message Utility mobile app TV/radio Online advertising Utility social media profile Newspaper/magazine advertising Community event Billboard Company interviews in news media News broadcast sponsorship Message on automated voice system School or College Handouts or Speaking Preferred Medium Recalled Medium Source: Utility Trusted Brand and Customer Engagement: Residential, Cogent Reports by Market Strategies, Q1 17 TTM n = 57,707
27 Communications Preferences Traditionalists Segment 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Direct mail Bill insert/newsletter Utility website Message printed on the bill Phone call you received from utility Text message Utility mobile app TV/radio Online advertising Utility social media profile Newspaper/magazine advertising Community event Billboard Company interviews in news media News broadcast sponsorship Message on automated voice system School or College Handouts or Speaking Preferred Medium Recalled Medium Source: Utility Trusted Brand and Customer Engagement: Residential, Cogent Reports by Market Strategies, Q1 17 TTM n = 57,707
28 Digital Channels offer opportunities for customer service as well 0% 10% 20% 30% 40% 50% 60% Phone Web Mobile Social media Preferred Channel Used Channel Source: Utility Trusted Brand and Customer Engagement: Residential, Cogent Reports by Market Strategies, Q1 17 TTM n = 57,707
29 Value-added utility offerings drive engagement Notification of when your HVAC system or other appliances might need service Have/Use Interested Engaged Customer Relationship Index 6% 42% Pay via Apple Pay/Google Wallet 6% 17% Utility's social media sites to discuss service issues Online tools to help you proactively manage energy usage 8% 30% 11% 50% Access to public electric vehicle chargers 6% 24% Home electric vehicle charger incentive and/or installation Battery storage of power produced at residence from solar/other sources 5% 25% 5% 42% List of certified local suppliers/contractors 6% 44% Online energy audit to recommend ways to conserve energy Incentive to reduce consumption during peak usage periods Service plans or extended warranties on household equipment Household gas pipes or electric wires service warranties Average of consumers who use a value-added offering Overall Industry ECR 9% 49% 9% 58% 8% 37% 7% 38% Source: Utility Trusted Brand and Customer Engagement: Residential, Cogent Reports by Market Strategies, Q1 17 TTM n = 57,707
30 Interested Interest and ECR by segment HVAC service notification 50% 48% 46% 44% 42% 40% 38% 36% 34% 32% Out of Touch Black Newcomers Environmentally Focused Established Suburbs Low Income Hispanics Young Urban Digital Types Consumption Managers Urbanites Traditionalists 30% ECR - Users Source: Utility Trusted Brand and Customer Engagement: Residential, Cogent Reports by Market Strategies, Q1 17 TTM n = 57,707
31 Interested Interest and ECR by segment pay by Apple Pay/Google Wallet 35% Young Urban 30% Hispanics 25% 20% Newcomers Out of Touch Black Environmentally Focused Consumption Managers Digital Types Urbanites 15% Low Income Established Suburbs 10% Traditionalists 5% ECR - Users Source: Utility Trusted Brand and Customer Engagement: Residential, Cogent Reports by Market Strategies, Q1 17 TTM n = 57,707
32 Interested Interest and ECR by segment social customer service 40% 38% Hispanics Young Urban 36% 34% Black Newcomers Environmentally Focused Consumption Managers 32% Urbanites 30% 28% Out of Touch Low Income Digital Types 26% 24% 22% Established Suburbs Traditionalists 20% ECR - Users Source: Utility Trusted Brand and Customer Engagement: Residential, Cogent Reports by Market Strategies, Q1 17 TTM n = 57,707
33 Interested Interest and ECR by segment service plans/extended warranties 48% Hispanics 46% 44% Black Young Urban 42% 40% Environmentally Focused 38% 36% Newcomers Urbanites Digital Types Consumption Managers 34% Out of Touch Established Suburbs 32% Low Income Traditionalists 30% ECR - Users Source: Utility Trusted Brand and Customer Engagement: Residential, Cogent Reports by Market Strategies, Q1 17 TTM n = 57,707
34 Interested Interest and ECR by segment household pipes/wires warranties 50% 48% Hispanics 46% 44% Environmentally Focused Young Urban 42% Black Digital Types 40% 38% Out of Touch Newcomers Consumption Managers 36% Established Suburbs Urbanites 34% 32% Low Income Traditionalists 30% ECR - Users Source: Utility Trusted Brand and Customer Engagement: Residential, Cogent Reports by Market Strategies, Q1 17 TTM n = 57,707
35 Thank You! K.C. Boyce Chris Riepe
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