Communications and Customer Care

Texting increases customer engagement and reduces utility costs

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Customers are increasingly dependent on their mobile phones and rely on apps and texts for all types of transactions, service reminders and alerts. They expect the same from their electric utility.

For utilities, text messaging is highly effective for communicating outage notifications, weather alerts, tree trimming operations, and payment reminders to their customers.

Greater efficiencies and customer engagement

Texas-based public power utility, New Braunfels Utilities, started using text messages to notify customers about outages in 2016. The year before that, the Texas utility reported that 68% of customers called in when there was an outage. A year later, that number had dropped to 16%.

Employee time has been freed up and customers enjoy better service. “In the past, we relied on customers to call in,” Justin Stroupe, control center supervisor at New Braunfels Utilities, said.

Previously, customer notification involved setting up and recording a message on the interactive voice response (IVR) system. To hear the message, a customer had to call the utility and navigate the pre-recorded decision tree by pressing several buttons on the phone.  

With text messaging, the utility can push out notifications about outages, sometimes before users are even aware of it themselves, saving time for both the customer and the utility. Customers can also text the utility to report outages. As the notifications come in, especially when the text messaging system is connected to the utility’s outage management system, they provide data for predictive analysis — to pinpoint the location and extent of an outage and possibly to help isolate the cause.

Texting makes it “easier for customers to report problems, get status updates and improve the accuracy of predictive modelling,” said Mark Nielsen, executive chairman of TextPower, a company based in San Juan Capistrano, California, that provides text messaging solutions for mission-critical applications to about 100 utilities and other businesses.

Texting outage notifications reduces utility costs and increases customer satisfaction, says Nielsen.  

A utility’s phone service is limited to the number of lines it rents from the phone company. Unlike power generation, however, there is no requirement to maintain a reserve margin to handle spikes in phone calls, so most utilities try to match their day-to-day call volume with the number of lines they rent. During emergencies or large outages, those lines can quickly be overwhelmed.

Those limits do not exist with a texting service. “If you can move 50% of your calls to texting, you can reduce the number of trunk lines you have to buy and maintain or you can avoid the need to add new lines,” Nielsen says. Text messaging expands the utility’s capacity to handle outage communications without increasing its number of phone lines or personnel.

A texting service is less expensive to operate on an ongoing basis. The cost of a single text message is pennies, while the per unit cost of an IVR message is three to ten times as much per message. If a live person is answering the phone, the costs are measured in dollars, Nielsen says, making cost savings a major factor in many utilities decisions to go with text.

Texting can also be used for other purposes. New Braunfels Utilities, for instance, has the ability to text customers for severe weather alerts or notifications about planned outages, tree trimming, and water outages. The utility can also use text messages to alert customers about possible water leaks. That result has been a reduction in customer response time to repair a leak, from 33 to 13 days. Given that the average leak is about two gallons a day, that represents a savings of about five million gallons over a year, Stroupe says. Texting is “a great tool for proactive communication,” he says.

Nielsen notes that texting can be used to notify customers about overdue bills or to notify a prepaid customer that their account is running low. Text messages can also replace door hangers for disconnect notices, saving customers and the utility costs and inconvenience.

Texting alerts for customers subscribing to time-of-use rate plans is helpful, too. Nielsen said a utility in Nebraska saw a 50% drop in its peak load after it started using text messages to send out alerts to farmers. The alerts tell farmers when peak pricing is expected to occur during the day, so they can turn off their irrigation pumps to avoid paying for power when it is most costly.

Greater response rates

Many of the functions that a texting service can perform can also be handled by a phone service, but texting has advantages that go beyond costs. Texting is nearly ubiquitous and has an unparalleled immediate reach. Every mobile phone manufactured in the past 20 years can receive text messages so utility customers do not need a “smartphone” as they would to use an “app.” By using texts instead of a smartphone “app” the utility is sure to include all its customers, instead of just a fraction.  

Over 48% of households no longer have a landline, and smartphone penetration ranges from 65% to 85%, depending on location, Nielsen says. And only 46% of customers over 65 use a smartphone. Compared to other forms of communication, text message response rates are the highest of all communication methods. Studies show that 98% of all text messages are read and 90% are read within three minutes of receipt, Nielsen stated.

Other platforms, such as Facebook and Twitter, are useful, but Nielsen points out that those companies themselves report that only 16% and 30% of a business’ followers are likely to see any given post or tweet, respectively. Furthermore, typically less than 25% of customers follow their utility on Twitter or Facebook, making the effective “reach” of the service very low.

Finally, compared to emails text messages are virtually spam-free. Estimates indicate that over 75% of email worldwide is spam whereas less than 2% of text messages are spam. That is partially the result of the Telephone Consumer Protection Act (TCPA), which regulates the way businesses can use text messaging. A 2016 ruling by the FCC made clear that utilities are allowed to send text messages or make robocalls to their customers as long as 1) the customer’s number was obtained from the customer in the “normal course of doing business,” such as  when filling out a customer profile form; and 2) texts must relate to their utility service and not be selling a service or product.

In most cases, the rules are easy to follow. Some utilities remained wary of inadvertently violating the TCPA, specifically the rules about re-assigned numbers. But a decision last March by the DC Circuit Court of Appeals has alleviated those concerns. Previously the law allowed only one call or one text to a re-assigned phone number before it violated TCPA law. However, the appeals court ruled that this was an unreasonable burden to put on a business. As long as the business follows the rules and gives the recipient a clear and obvious way to opt out of future messages, there is no danger of TCPA violation, the court ruled.

The decision provides greater clarity for utilities interested in switching to a text messaging system to reduce costs, streamline operations and increase customer satisfaction.

For more information about TextPower, visit the company’s website. A case study about NBU’s use of TextPower services is available here.