New data availability, compliments of the smart grid, meshes easily with a business and marketing model called Customer Relationship Management (CRM). This has been widely adopted across a range of sectors over the last couple of decades, ranging from financial services to telecoms to retail. CRM is a company-wide business strategy which includes all corporate activities.
Information about customers is used to measure and value customer relationships. The most obvious place where such measurement finds expression is in the marketing area and externally directed communications.
Customers are managed relative to their value to a company. An individual customer may be allocated a notional value in terms of their anticipated future business and may be allocated to one or more segmentation systems. This will add more detail to how the individual is likely to respond and react to promotions.
Normally, it would make sense to spend more on high-value customers by promoting to them more frequently, in an attempt to sell them more expensive products. Companies must also acknowledge the concept of the customer journey or customer lifecycle as the most valuable customers may, at any given time, have reached their peak spend with an organization. The core marketing task then, is to mitigate a likely downward turn in their spending.
In other words, the key to CRM is not simply to reward or direct the maximum marketing effort towards the currently most valuable customers. To manage the customer more efficiently, companies must also take in to account customer characteristics, including personal preferences, current value and likely future value. This will shape both the tone and content of promotional messages and will determine not only what is said to an individual but when and how. It can also determine how a customer is treated when they first contact the company.
CRM is only as good as the information available
CRM in theory is all encompassing, determining the way that customers are treated at every interaction they may have. Those interactions may be part of the everyday run of business where calls, promotions, and follow ups originate with a conscious decision to communicate on the part of a member of staff or they may be automated and event driven such as a letter dispatched automatically on non-payment of an account. In practice, CRM is only as good as the information available to business managers. That in turn, is a function of the data physically present within a system and the ability of the system to unlock that information for use in everyday transactions and transactional analysis.
A major barrier to the implementation of CRM within some businesses is that key data exists within legacy systems and cannot be easily transferred into operational environments where it can be used to initiate daily processes.
The promise of smart grid networks is that they will make total information of customers’ behavior patterns available to utilities and other operators in the energy mix. Eventually, these utilities will have access to a customer’s aggregate home energy usage at 15 minute intervals during the day, as well as energy use by appliance and even, forecast energy use.
Smart grid operators will be able to ascertain when a customer is at home by accessing appliance timer data. That in turn, allows for a theoretical future in which call center resource planning is interfaced with smart appliance information. This allows companies to plan their call activity around when individuals are most likely to be present to answer.
Central issues in implementing CRM
A number of the issues likely to affect corporate implementation of CRM are identical to the issues likely to affect other aspects of smart grid networking. These focus around the ability of organizations to handle the massive increase of data volumes generated and their ability to extract meaning from that data in real time.
Certain tasks, such as customer segmentation using available data drawn from various systems, are relatively simple as far as existing data analysis providers are concerned. However, the business must be prepared to take the time to collect and analyze personal and usage data from various sources.
This is a wholly different proposition from extracting data in real time, combining it with a range of other available data in widely dispersed silos within the overall system, and then feeding the results of that analysis back into operations in order to influence CRM decisions on an ongoing and dynamic basis. That remains the “holy grail” as far as many utilities are concerned and its resolution in other areas, such as the Transmission and Distribution networks, is likely to impact on its resolution at customer level too.
The smart grid generates significant levels of data which, if assimilated and analyzed correctly, can enhance the customer and utility relationship. Utilities will be able to better understand their customers’ needs and react accordingly.