In our last post, we covered why utilities must first deliver on customer’s basic physiological and safety needs to become a customer’s trusted utility provider. 

By earning customer trust, providers will be empowered to engage in the innovation efforts that are so top of mind for both utilities and their customers.

Research from Cogent has found that while only 21% of customers view their utility as a leader of industry innovation, customers want and expect in the future that their provider will become more innovative.

Before reaching this future, utility providers must first fulfill their customers’ basic needs in Maslow’s Hierarchy. If physiological and safety needs are not met, then customers won’t trust utilities. And if customers don’t trust you, is it possible to build innovative solutions that appeal to a customer’s belonging, esteem, and self actualization needs?

Remember, trust is built by consistently delivering on customer needs and expectations. So what happens to innovation when expectations aren’t met?

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Failure to Meet Expectations: The Downfall of Innovation

After a customer’s physiological and safety needs, the next set of customer needs you must target are belonging needs. Belonging needs are described as the need for friendship, family, or a sense of connection. While many would argue they don’t need their utility provider to be their “friend,” utilities should look to create a sense of connection with their customers.

In fact, customers have shown that they actively crave this connection. A 2018 McKinsey study found that 60% of customers were less than fully satisfied with the channels available for contacting their utility provider, and almost 45% would prefer to use digital channels as their primary means of interacting with their utility provider, even though only 22% were actually doing so.

This statistical disparity points to a key issue for utilities—if customers aren’t satisfied with their ability to communicate with a utility, then why would they sign up for additional services or new products? When customers cannot count on you to answer their questions, both in a timely manner and via their channel of choice, trust is broken and your innovative efforts will go to waste. Utilities can prevent this by using each and every customer touchpoint as an opportunity to build a connection. Email, SMS, push notifications, and even call center representatives can foster this connection, enabling utilities to exceed their belonging needs and move onto esteem needs.

The Key to Utility Innovation? Data.

A person’s esteem needs include the need for respect, self-esteem, status, and recognition. To reach these needs, utilities must fully leverage data to incrementally improve the customer experience, and ultimately, improve ROI. With multiple touchpoints already in place to meet customers belonging needs, utilities can personalize these touchpoints to show customers they respect their needs and value them as people, not just as someone who pays their bill. Personalization, particularly in the form of value-adding recommendations, increases the likelihood that customers engage with your promotions. In fact, 79% of customers will only engage with an offer if it has been personalized to reflect their previous interactions with that brand. Personalization appeals to the customer's desire to be recognized, improving the customer’s self esteem, and strengthening the connection with their utility provider. 

Once a customer trusts a utility enough to offer the data for highly personalized communication, they’ll look to capitalize on the promotions being offered specifically for them. Take for example a smart meter. Customers receive the same end product (electricity, gas, or water) whether they’re using a standard meter or a smart meter. But their self-actualization needs are what make this innovation appealing. Smart meters combine the meter hardware, communication network, software and analytics into a coherent solution that makes data actionable. For the customer, smart meters provide data on their gas and electric use on an hourly basis, increasing their ability to be energy-efficient and conscious of the environment. The motivation for the customer is their self-actualization needs to become the best version of themselves and achieve their full potential.

But data doesn’t just allow utilities to innovate for customer-facing solutions. The use of artificial intelligence (AI) and machine learning allows for utilities to better forecast load management, reducing demand during peak usage times and saving the utility millions of dollars. Utilities can also use data and AI to minimize outages by determining optimal times for maintenance as well as predicting equipment replacement needs prior to a breakdown. While AI and machine learning internally impact your business, they appeal to what is a basic safety need of all businesses and individuals: the ability to preserve resources such as time, effort, and money.

When framed through the lens of Maslow’s Hierarchy, innovation can be simplified into two truths:

  1. Your customers won’t buy into your innovative efforts if those efforts aren’t rooted in what’s important to the customer.

  2. You must build trust and meet the customers’ basic needs before introducing innovations that appeal to higher level needs.

Want to learn more about why understanding your customer’s needs gives you the platform you need for innovation? Download our latest insights report on customer experience (CX).

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How Utility Providers Build a Foundation for Innovation

Teresa Ceballos Brent Harmanis
Teresa Ceballos & Brent Harmanis