Increasing Customer Intimacy Will Be Key Success Factor For Smart Grid

New smart phone applications are coming online daily, and while some are fun and others are useful, most cause one to stop and ask, “What’s the purpose?”

When I take a step back to look at the smart grid opportunities (and they are very real), I ponder if the largest benefit of Smart Grid will be that, for the technologies to be successful, utilities must endeavor to achieve a greater intimacy with their customers.

In many ways, this emphasis on customer relationship building is a return to the utility conservation marketing strategies that were so prevalent in the mid to late 80’s. The utility came to view customers differently: not as just a monthly check but as a partner capable of helping the utility reduce peak load. The smart grid technologies of today offer an even greater opportunity to build customer relationships and managing those relationships are as important as the technology itself.

As consumers continue along the path of digital convergence – of seeking a seamless existence of computing, phone, entertainment, and all other modern life-enabling conveniences -- there’s going to be ever more emphasis on home automation and its merger with smart grid technologies.

There’s no doubt this convergence will occur, despite the somewhat counter intuitive view held by some utilities, that this enhanced relationship will come as a result of new technologies. By themselves, new technologies are often viewed as being cold and impersonal.

As evidence, consider the questions that could be posed by a utility: What is the relationship with our customer? Are they a peak load manager (Demand Side Management), power generator (Distributed Generation) that is tied into our EMS systems, or an independent marketer using social media to promote green power programs?

 

All of these relationships require utilities (and their information systems) to engage in a new type of relationship with customers, through new media channels, and on terms set by the customer. All too often utilities and technology developers miss the mark when they focus on the technology and then build complicated tools that completely miss the needs of the consumer.

In my view, utilities can have the greatest residential demand management technologies in place, but not a kilowatt will be saved if the customer doesn’t participate.  Utilities can have the niftiest Web-based analysis tools, but they won’t deliver the intended results if the customer never logs on into the new web-based portal because they prefer to be contacted on social media instead of the Web. 

In this environment, it’s important that utilities focus not only on the technologies, but also on changing their relationship with customer, to one of increasing intimacy. It will take utilities the same amount of energy that has created our most successful smart grid technologies. And they should do so because the rewards are great.

It is encouraging to start seeing much more evidence of this dynamic in the writings of utility leaders. For instance, in the January/February 2010 issue of Electric Perspectives, Mike Morris, the chairman, president and CEO of American Electric Power writes about “Changing the Customer Relationship.”

Further adding to the need for utilities to use technology to drive relationships with customers can be viewed at Networkworld.com, where they recently made predictions that

· The internet will become a network of devices, rather than computers (driving more customer accessibility). Today, there are 575 million host computers, Tomorrow, sensors for electric use, security, etc. will be orders of magnitude larger than the number of users

· Internet Traffic, now around 20 exabytes per month, will grow to 44 EBs per month by 2012.  It will take a profound knowledge of our customers to present our utility data in a meaningful way.

· With mobile connections and battery reliance, users won’t necessary be “always on”.  This will require communications techniques that can tolerate delays or forward messages to other devices….again this drives a deeper knowledge of our customer.

Given these driving forces, the risk is that utilities can lose their relationship with the customer if they don’t start leveraging the emerging technologies that are available to them to become a part of these trends. 

The good news is that a study by the Consumer Electronics Association (Electrical Perspectives July/August 2009 page 16) showed that 56 percent of consumers expressed interest in “smart energy meters” and that 57 percent recognized that to conserve energy, changes in both technology and behavior are needed. Our customers are smart, engaged in these technology and social changes. It’s up to us to make this successful.

Obviously Microsoft sees these sorts of commentary, predictions and studies to validate our significant investments in Microsoft Hohm, our online energy management solution, which we’ve written about here, here and here. It’s vital that utilities look past their smart meter installments to their phase 2 priority, growing their relationships with customers. – Jerry Thomas.

Jerry Thomas is the Microsoft Power & Utilities Industry Market Development Manager for the western US. Jerry brings 28 years of Electric and Gas utility experience that covers Purchasing, Rates and Regulation, Strategic Planning, Transmission & Distribution Operations, Call Center technologies/operations, and Internet Self-Service.