The world of electricity marketing is changing: Utilities across the nation face an ever-more-competitive market for retail and residential accounts, and the new level of competition will profoundly alter how power companies run their customer relationship management (CRM) services.
In many areas, we’re seeing a gradual process of deregulation as state regulators and politicians slowly open retail power markets to competition.
Some business users in particular are already benefiting from the cost savings that come with more competition for power.
The Deregulatory March
The major developments break into two categories:
- California’s legislature has just passed a limited deregulation billOpens a new window that instructs the state’s public utility commissioner to consider development plans for full retail competition by 2020.
- Nevada has staged a referendum which, while inconclusive, came close to opening that state’s power grid to more competition.
Texas, whose economy ranks second to California’s, deregulated its electric power industry in 2002 and provides a template for the nation.
Altogether, 17 states have deregulated their electricity industries to one extent or another. While no state has completely deregulated its industry, Texas comes closest with some 85% of its homes and industries deregulated.
Traditionally, power companies have had a sharply limited amount of contact with customers. But customer relations are going to become critical for utilities across the nation as they are forced to start vying for business. Customer experience will become a key differentiating factor.
Power companies will have to go back to CRM software to see how they can deliver enhanced customer service for business and retail users. In many cases this will require new CRM platforms, including online sign-up portals, cloud-based telephone systems backed up by call centers, and call-flow configurations.
Existing systems, like accounting and risk management, will be integrated into the new CRM platforms.
Defending Their Turf
For those companies that will be breaking into newly opened markets, there will also be a need to educate customers about the choices and savings they did not face before, including how to switch to a new power provider.
Experience from overseas markets demonstrates that many business remain unaware of how to go about switching their accounts, and incumbent power providers will not be in a rush to tell them.
Many regulated power companies will be poorly equipped to fight to keep the customers they previously took for granted.
The move towards deregulation of power markets seems to be gathering steam. Virginia, for instance, recently passed an orderOpens a new window that allows organizations to use up to five megawatts of their electricity load to purchase renewable energy from a non-utility supplier.
The deregulatory drive was fiercely opposed by Dominion Energy, the electric monopoly that challenged it at the state Supreme Court level, where it was defeated. If Virginia’s example is a template, the national market can expect further competition and demand for large CRM contracts.
Key takeaways
- The power market has experiened a gradual process of deregulation that now seems to be picking up speed. Recent activity at state legislature level has seen governments pushing through bills to open power markets to more competition.
- This trend will create more opportunities for CRM companies equipped to provide power companies with the tools they will need to keep clients loyal. More emphasis will be put on sales and customer relations.
- Evidence from other deregulated markets demonstrates that new competitors also will want to be able to communicate with power customers, including educating them about how to change their electricity accounts.