Four Terms Every Utility Executive Must Know

Published: Mon 19 Jan 2015
A blog entry by Christine Hertzog

Contributed by:

Christine Hertzog
Managing Director
Smart Grid Library

Christine Hertzog's Blog

Jargon is a fact of life in any business sector, and as the author of the Smart Grid Dictionary, I assure you its quite prolific in the Smart Grid sector. Jargon has a beneficial purpose. It is useful referential shorthand that encapsulates complex topics in minimalist terms. Buzzwords are an excellent barometer about business sector trends, and are the emerging jargon in a business vocabulary. Here are a few buzzwords that should become part of every utility C-level executive’s Smart Grid vocabulary in 2015.

Consumer-centric. This term refers to a deliberate strategy to re-engineer processes, reskill employees, and restructure operations that put the consumer at the heart of the business. It’s an oft-misused term in many business sectors. But here’s the rule of thumb to use as a reality check for utilities: When your utility can put numbers to consumer value, and you have built transparency into your customer-facing business processes, you have consumer-centric operations.

Consumer value. Electricity consumers are increasingly electricity producers, and personify the “producing consumer” or “prosumer” term invented by Alvin Toffler back in 1970. Prosumers create kilowatts with distributed energy resources such as solar panels or energy storage that can be discharged back to the grid. Prosumers create negawatts by active participation in demand response programs. Utilities must recognize consumer value as calculations that encompass much more than electricity consumption. (There will be more information about consumer value in a future article.)

Customer churn. The retail electricity providers in deregulated states are familiar with this term, as are all business sectors that compete for customers. Churn or attrition is the loss of a customer. Churn has costs – because to regain or reacquire that customer incurs greater expense than customer retention. Utilities traditionally enjoyed a captive customer base and direct interaction with their customers, but new technologies create viable alternatives for customers and new service providers can intermediate the direct relationships that utilities have had with customers. Increased customer churn and intermediation may result in increased grid operational challenges as well as increased costs.

Customer defection. Defection is the permanent loss of a customer. Given the ability of consumers to become self-sufficient prosumers, the electric utility sector may experience defections on a scale not seen in other industries. That won’t be an enjoyable distinction, and the loss of this aggregated consumer value will have significant financial and operational implications for utilities.  Its a situation every utility executive wants to avoid.

Contact centers perform critical roles for utilities to become consumer-centric and build consumer value, while reducing churn and preventing defections. We consider them to be the “tip of the spear” in successful consumer outreach, acquisition, retention and value-building strategies. There is no time like the present to work on your vocabulary and your plans to leverage your utility contact centers to perform to these expectations.