Six Considerations for Utilities in Selecting a Benchmarking Study

The energy utility sector is a unique part of the US economy. Since Samuel Insull crafted a bargain in which utilities were granted monopolies in exchange for a regulatory structure meant to make them behave more like competitive entities, most Americans have been served by monopoly utilities.

One perhaps unexpected side effect of this is that, unlike most industries Escalent works with, utilities are very open to sharing with and learning from each other. With utility chief customer officers seeking to create a best-in-class experience for their customers, most utilities use some sort of customer experience benchmarking study to help answer the question of who is doing this best.

Since 2014, Escalent has offered its Cogent Syndicated Utility Trusted Brand & Customer Engagement (UTBCE): Residential and Business benchmarking studies. I’m not writing this to pitch you on our research; instead, from a decade of working with the utility industry on benchmarking, I want to share some key considerations for selecting a benchmarking study, whether it’s ours or one of our competitors.

1. Who Is Surveyed? The Significance of a Representative Sample

Unlike other industries, utilities have an obligation to serve every customer in their territory. Thus, if you’re seeking to measure your customers’ experience, the best practice is to return to the research fundamental of a representative sample. In our residential Cogent Syndicated UTBCE study, for instance, we quota respondents based on age, race, and household income for each individual utility, ensuring we’re providing a demographically representative sample for every utility we cover.

If you’re comparing benchmarking studies, ask about the demographics of the sample and compare that to what you know about your customers from the census.

2. How Are Scores Determined? Exploring the Nuances of Benchmarking Methodologies

Most benchmarking surveys use calculated scores (often referred to as indices), but the modeling often looks very different between studies. While benchmarking is useful to identify peers who are delivering an exceptional customer experience, we believe that the ultimate arbiter of each utility’s customer experience success is that utility’s customers. Thus, models that account for differences between geographic regions and service types (e.g., natural gas vs. electric) are more useful than one-size-fits-all national models.

After all, we know that Californians and New Yorkers are a world apart in attitudes and experiences. Why would you measure customer sentiment on the same model for both?

Ask the study provider for details on its model and be wary of studies that have a “black box” scoring methodology. For a study to be useful, you should understand how customer perceptions interact and ultimately build up to the modeled scores.

3. Are the Data Comparable Across Time?

Because we believe that each utility’s customers are ultimately who decide whether a company is successful in its customer experience goals or not, it’s important to be able to compare your utility’s results over time. Benchmarking studies that have a methodological “break”—whether it’s their sampling approach, question set or modeling—have limited usefulness, at least until they build up a solid history.

4. How Actionable Are the Data You’ll Receive? Ensuring You Get Useful Customer Insights

Customer perceptions make up the core of most benchmarking studies. Are customers satisfied with their experience with the utility? How do they view the utility’s brand? While this is good information to have, it naturally leads customer experience leaders to ask how they can influence these customer perceptions. We address this in our Cogent UTBCE studies by providing more than 100 diagnostic questions that help utility leaders understand the factors (e.g., specific service experiences, customer communications, product/service use) that move customer perceptions.

If you’re comparing benchmarking studies, ensure you understand how the study allows you to connect customer perceptions to the strategies and tactics you employ at your utility. This will help ensure you receive actionable data and insights you can use to improve customer sentiment.

5. How Useful Is Cross-Sector Benchmarking for Utilities?

As one of my colleagues in our Energy practice said, “cross-sector benchmarking for utilities is like comparing apples to motor oil.” The main reason behind this is the obligation to serve: unlike banks or telecom companies that can “choose” their customers by segmenting the market and targeting certain groups, utilities must serve everyone.

That said, we believe looking across industries is a great way to bring fresh thinking to bear, so a company like Escalent with deep domain expertise across industries can help identify and implement solutions found in other sectors.

One other note on cross-sector benchmarking: while we measure Net Promoter Score (NPS) in our UTBCE studies because some of our clients are interested in it, we don’t think NPS is useful in the utility context. For starters, most utility customers don’t have the ability to choose their utility, so the framing of the question of how likely they would be to recommend the utility to others strikes many respondents as non-sensical. For more, please see my colleague’s blog on how utilities should pick KPIs.

6. One More Thing…

While I said I wasn’t here to pitch our Cogent benchmarking studies, I will pitch a key differentiator: our Cogent subscribers can tout their performance without any additional fees or paperwork.

With our team’s decades of experience and knowledge in energy industry research, we believe the utilities that will be most successful in the future are those that have built strong brands and customer relationships. We recognize top performers throughout the year based on their scoring in the study. Utilities that perform well should be able to share that success with their customers, regulators, and investors—and we actively encourage and support this!

If you’re interested in learning more about our perspective on utility benchmarking studies or our Cogent Syndicated studies, fill out the form below. We’d love to hear from you!

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