original article the challenge of new marketing issues · otherwise known as the intelligent grid...

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Correspondence: Merlin Stone Rose Cottage, Ship Knapp, Morcombelake, Dorset, DT6 6EW, UK E-mail: [email protected]

Original Article

The challenge of new marketing issues Received (in revised form): 13 th September 2010

Merlin Stone is an independent consultant, teacher, author and researcher. His recent research projects include work on smart metering, Web 2.0 in fi nancial services, customer empowerment in the public sector and customer retention during the recession. He is now a visiting professor at De Montfort, Oxford Brookes and Portsmouth Universities, and is a part-time teacher of economics at the Open University and marketing at Exeter University.

Jane Fae Ozimek is a writer and researcher in the areas of IT, Business and the Law. She is currently Editor of the Journal of Database Marketing , and has previously published works on the use of statistics in business and Marketing Resource Management.

Together, these two authors have recently produced three major reports on behalf of the Business Insights division of Datamonitor. They are: Carbon Management in Emerging Economies, Carbon Trading and the Effect of the Copenhagen Agreement and The Smart Power System.

ABSTRACT The next decade is widely forecast to be a decade when a new technology and a new approach to power distribution takes hold globally. This is the ‘ smart grid ’ – otherwise known as the intelligent grid system – which is intended to turn on its head traditional centralised models of providing energy to consumers. The approach is expected to empower and politicise customers in a variety of new and unexpected ways, creating a series of opportunities and challenges for companies working in this sector. One response is already visible in the form of a heightened awareness by suppliers of the need to engage with customers and to manage customer relationships. While this is clearly the correct way to go, some organisations may only see the requirement as ‘ just ’ a requirement for relationship management, and will fail to meet wider challenges. This article examines the challenge provided by the new technology: the range of factors likely to infl uence its adoption – or rejection – by existing customer cohorts and a number of associated risks for organisations moving towards its implementation. The article looks specifi cally at the way in which organisations are using customer relationship management (CRM) techniques both to manage customer expectations and to develop awareness of a new way of relating to companies. Factors likely to contribute to success as well as weaknesses are examined, and key learnings in respect of CRM development are identifi ed. The question is whether a new form of relationship management, based mainly on customer perception of that relationship, is suffi cient – or whether reality needs (where possible) to be aligned with the marketing promise. Case studies from Europe and the United States suggest that although there are benefi ts from ‘ vanilla ’ implementation of CRM, failure to follow through with real difference risks alienating customers, with serious negative impacts on business. Journal of Database Marketing & Customer Strategy Management (2010) 17, 188 – 200. doi: 10.1057/dbm.2010.20

Keywords: CRM ; learning transfer ; customer experience ; customer experience management ; smart grid ; energy sector

© 2010 Macmillan Publishers Ltd. 1741-2439 Database Marketing & Customer Strategy Management Vol. 17, 3/4, 188–200

The challenge of new marketing issues

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BACKGROUND Traditional models of electricity generation and distribution are very centralised and hierarchic, as illustrated in Figure 1 . That is, power is generated in large centralised facilities and distributed outwards, via large-scale transmission and distribution infrastructure power lines. Critically, there must always be a balance between supply and demand, usually maintained by a single (central) system operator.

By contrast, the anticipated smart grid is more like the Internet. Power is generated centrally, but also at lower levels in the system, either within ‘ power parks ’ , or even by individual consumers. The current monopoly on supply of central generators will not be broken entirely, but there will be more scope for local generators to take up the slack, cutting dependence on central generators. Local groups, or even individuals with power surplus to requirements will be able to feed it back into the grid, turning the relationship into one based more on trading than on simple supply.

Information is a key currency in this new model, with central suppliers increasingly managing their power generation, and therefore the way in which they supply power using sophisticated sensor mechanisms dedicated to monitoring the state of the system at far lower levels than today. Information is distributed outward, providing consumers with far more information than today, about usage levels and about costs and effi ciencies of their individual usage.

In the traditional model, end-users are in fact, as well as in perception, largely passive. They have few choices. The average electricity bill is hard to understand, and delivered days or even weeks after usage. The availability of much more information changes this, enabling consumers to manage their usage more closely, effi ciently and effectively.

An important aspect of the smart grid may be control based on remote access by consumers and suppliers to end-use applications. The fi rst implementation of this new technology is likely to be viewed

Today’s Electricity Tomorrow’s choices

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Figure 1 : The IEEE ’ s version of the smart grid involves distributed generation, information networks, and system coordination, a drastic change from the existing utility confi gurations.


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in a mostly positive light, as enabling consumers to monitor and control the use of electricity in their homes while they are away, to check whether appliances have been left on and to switch them off remotely. Far more controversial is likely to be the natural corollary to this – suppliers may be able to exercise a similar degree of control, optimising local power use and even over-riding householder decisions.

TECHNOLOGICAL BASE: ADVANCED METERING, AMR AND AMI Advanced metering, also referred to as Smart Metering has been defi ned by the US Federal Energy Regulatory Commission as ‘ a metering system that records customer consumption (and possibly other parameters) hourly or more frequently and provides for daily or more frequent transmittal of measurements over a communication network to a central collection point ’ . 1

This forms the basis for an Advanced Metering Infrastructure (AMI). The same body has defi ned the smart grid as an Electricity delivery network modernised using latest digital / information technologies to meet key defi ning functions. These include:

Enabling active participation by consumers Accommodating all generation and storage options Enabling new products, services and markets Optimising assets and operating effi ciently Anticipating and responding to system disturbances in a self-healing manner Operating resiliently against physical and cyber attack and natural disasters Providing the power quality for the range of needs in a digital economy

Automated Metering has been in use for some years, and is the basis for systems known as Automated Meter Reading (AMR).

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The main difference between Smart Metering and Automated Metering is that the former is interactive and based on two-way communication between supplier and consumer, whereas the latter is just a tool for more effective one-way information gathering. AMI involves data collection and exchange, as well as remote control of appliances.

Smart Metering enables suppliers to interact with customers, using information taken from a household or customer about individual usage patterns to predict consumption. This facilitates planning to meet demand and use of real-time information time to infl uence customer behaviour for example, by rewarding consumers for particular behaviours. The use of tariffs based on the cost of electricity at different times of day is known as Dynamic Pricing. However, this approach is still one step removed from real-time interaction. A truly smart grid / AMI will also encourage Demand Response, under which consumers actively manage their use of electricity to maximise benefi t to their household from variable tariffs.

ENABLERS Smart grids cannot become fully operational until all the necessary support technology is in place. According to the US Department of Energy, smart grids require three key components – AMI, visualisation technology and phasor measurement units. 2 They require fi ve fundamental technologies – integrated communications, sensing and measurement technologies, advanced power engineering components, advanced control methods, as well as ‘ other ’ advanced technologies, such as superconductivity, energy storage along improved interface and decision support. 3 Although not all these technologies are in place, the consensus is that most of them are, and thus it is possible for smart grids to move off the drawing board and into real-world implementation.



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DRIVERS Therefore, smart grid technology is feasible. Meanwhile, several changes in politics, economics and commerce are leading in the same direction. In the political sphere, governments are under pressure to reduce carbon emissions, seen as a primary cause of global warming. Computer-aided optimisation of power usage processes is one of the least painful means to achieve this, allowing consumers to reduce carbon emissions without cutting standards of living. One US study suggests that smart grids could be reducing carbon emissions by between 5 per cent and 9 per cent of total 2005 US output by the year 2030, whereas a study in the 15 EU countries 4 showed that if smart meters were installed voluntarily they would save some 200 terawatt hours per month by 2020 (the residential consumption of Spain and Germany) and approximately 100 m tons of CO 2 emissions.

In economic terms, existing power generation is based on infrastructure that is well on its way to becoming obsolete, and is no longer fi t for purpose. There are growing concerns in the United States and elsewhere that mismatch between power requirements and carrier infrastructure will lead to power cuts and other domestic disasters. The infrastructure must be replaced. Implementing smart grids would ensure that new grid was more effective than the one replaced.

Companies are subject to pressures. Market liberalisation has opened the market to direct and open competition, increasingly turning end-users from passive to active customer. Use of CRM strategies and software is habituating consumers to the idea that electricity is not a simple undifferentiated product, but differs according to time of day and commercial package. In such an environment, a gradual move towards smart metering and an intelligent grid will not be a step change for the customer, but a logical evolutionary development.

A further force supporting the creation of smart grids, linked indirectly to CRM, is the integration of renewable energy sources (for example, wind, hydro, solar, tidal, wave). The issue here is that apart from certain specifi c renewable projects – particularly large hydropower plant – renewable energy tends to be widely distributed geographically, diffi cult to manage and space-hungry. Thus, wind farms take up large areas for a relatively low power return. Where renewables are distributed (produced by homes and factories, for example), the issue shifts from managing power production to managing integration of energy into the grid. This has much in common with CRM.

COSTS The costs of this development are expected to be massive. One estimate is that the United States will need to spend between US $ 1.5 and $ 2 trillion to carry out a full upgrade of its infrastructure, while the comparable fi gure for China may be $ 590 billion. However, there are benefi ts. The UK government recently estimated that the cost of converting all UK gas and electricity meters to smart meters would be £ 8.6 billion, while benefi ts of £ 14.6 billion were estimated.

COUNTERVAILING PRESSURES A number of concerns may slow or halt smart grid introduction. Some of these are dealt with in more detail below. They can be categorised as a mixture of real and perceived threats. Thus, there is a growing concern in the literature that smart grids may be a security risk, vulnerable to hacking or even terrorist activity. Whether this is a real threat is hard to assess, but consumer response indicates that it may become a real obstacle to development of smart grids.

Customer concerns have been expressed about smart grid technology becoming a


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‘ big brother ’ intrusion by power supply companies, as well whether smart metering will lead to increased bills. There is a gap between reality and perception, but consumer backlash in some US states is well documented, suggesting that companies ignore this at their peril.

CURRENT TRENDS The last few years have seen a gradual move of smart grid projects from drawing board and the academic environment to full-scale development. A recent review of smart grid development across the world identifi ed 2009 – 2010 as the period when governments and industry began to invest seriously in real large-scale smart projects. The scale of investment envisaged over the next few years is immense, with a cumulative worldwide spend of $ 200 billion required between 2008 and 2015 alone. The two lead nations in respect of investment in this area are also the world ’ s leading nations in respect of power consumption and greenhouse gas emissions: China and the United States, both currently making around $ 7 billion per annum of state investment. It has been suggested that the former will need to spend about US $ 600 billion to implement a fully smart grid, whereas the United States will need two to three times that (between US $ 1.5 and $ 2 trillion).

Development of smart grids is deeply embedded in the strategic planning of larger nations. In China, the State Grid Corporation of China has put in place a “ Strong and Smart Grid Plan ” – a three-phase development between 2009 and 2020. In the United States, the transition to smart grids was fi rst envisaged as a strategic need in the Energy Independence and Security Act of 2007 and has since received a major boost through being identifi ed as deserving major capital injection to kick-start the economy following the recent downturn. Similar trends are visible in other leading economies, including Japan,

South Korea and Spain, all planning spends over US $ 800 million in 2010. Australia is also planning strategic investment, with a smart grid project planned to create a new smart city.

THE ROAD TO IMPLEMENTATION OF THE SMART GRID: EARLY ADOPTER TRENDS In a previous paper 5 from one of the authors, it was noted that we are still in the early days of smart grid implementation. Thus, although many major and strategic projects are under way, the majority of initiatives offer only partial smart technology. In terms of grid delivery, the focus has been on AMR rather than AMI – although AMR is seen as precursor to AMI. In terms of evolving customer relationship, the focus has been on delivering a ‘ vanilla ’ version of smart grid. That is, getting customers used to power supplies and electricity no longer being undifferentiated commodities, but being variable to meet individual needs. Further, that consumers can begin to exert some control over how and in what form to take the new differentiated services.

The key fi ndings from the previous paper were in three main areas.

CONSUMER REACTION In terms of consumer reaction, early evidence suggested

an increased awareness of the overall cost of energy or water; accessing of simple tactics to reduce usage, for example, saving power by switching off instead of leaving appliances on stand-by, economising on water by recycling or saving more rainfall; purchase of A-rated energy-saving appliances; variation in responsiveness according to the type of space and water heating used (how controllable it is) and according to

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whether energy-saving lighting has been installed; a variation according to whether the customer is in a water shortage area; a tendency for the consumption of customers to revert to previous consumption levels after initial reductions

The fi ndings were mixed. Several reports suggested that consumers respond well to efforts to change their behaviour, but against this is the fi nding that many consumers revert to type.

EARLY RESEARCH CONCLUSIONS The main conclusion emerging from earlier research is that thinking about the CRM

implications of smart metering and smart grid is still in its earliest stages. Key conclusions were: Most utilities are still coming to grips with the implementation of ‘ classic ’ CRM, particularly where deregulation is recent or (even more so) where it has yet to take place. This includes integration with billing systems; Advanced analytics are beginning to make their appearance in utilities, along with a much more refi ned approach to market segmentation and associated customisation of tariff and other offers; Complete optimisation of communications designed to achieve customer recruitment, retention and up- or cross-sell is beginning to appear. Integration of channels is already well underway in most companies, particularly of web and call centre, but also SMS and face-to-face channels. In some companies, experience will be transferred from the B2B to the B2C sector, because smart metering is already a reality in the former. However, the arrival of the smart grid will increase complexity in both sectors.

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Many companies are already experiencing clear benefi ts from their investment in CRM – improved customer profi tability, increased customer satisfaction, improved effi ciency in customer acquisition, retention and development, and improved up- or cross-sell rates. Countries where deregulation has been slow will be most disadvantaged. Competition is a signifi cant customer stimulant to CRM activity and the development of a strong CRM capability; Taken together, these fi ndings suggest that some companies are putting in place key elements of the infrastructure required for CRM in the smart era. However, none of those surveyed were confi dent of applying it smoothly to the smart era, given the signifi cantly increased data volumes, complexity of products / tariffs and complete change in the nature of the interaction, including the emergence of the customer as supplier.

CASE STUDIES: KEY THEMES Using the fi ndings from previous research as a guideline, we now return to the issue of CRM implementation as a precursor to the smart grid, and examine several key emergent themes.

These include:

The management of customer perception The use of piloting as a means to identify barriers and likely customer issues value of information to customers as commodity and as precursor to new customer relationship systems evolution and progressive change to systems architecture

CUSTOMER PERCEPTION It has already been noted that there are several high-level customer motivations and perceptions that may greatly infl uence smart grid developments. Already mentioned are

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concerns over ‘ Big Brother ’ data collection. The reality of smart grids is indeed collection of much more data over than would normally be collected. Sensitivities to this issue are articulated either through consumer groups or through established political groups. Businesses need to take them into account in their marketing decisions, even where they are at odds with real-world experience. This is especially the case given (a) the public perception of poor data security in large organisations and (b) the fact that over the longer term, the focus of the smart grid is likely to move towards remote control of customer-owned appliances. This is perhaps one of the most signifi cant requests that a supplier can make of an end-user of their product and may be resisted. If there is any hint of supplier impropriety or mishandling of data, that resistance may become an insurmountable barrier to further progress (without intervention from state legislatures).

Examples of negative perceptions affecting the roll out of AMR (not even fully Smart metering) in this fashion come today mainly from the United States, where the process is most advanced and also where there is perhaps the greatest expectation of democratic involvement in corporate decision-making processes, where they affect the lives of everyday consumers.

An early initiative was launched in March 2008 in Boulder, Colorado, which was to be the nation ’ s fi rst fully integrated Smart Grid City, providing customers with smart grid technologies including:

a robust, dynamic electric system communications network, with real-time, high-speed, two-way communication throughout the distribution grid; conversion of substations to “ smart ” substations capable of remote monitoring; installation of programmable in-home control devices;

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integration of infrastructure to support future distributed generation techno-logies (such as plug-in hybrid electric vehicles).

The project was run by the Smart Grid Consortium, with a lead implementation role for Xcel Energy, who committed to funding only part of the forecast $ 100 million budget. The project ran outside Xcel ’ s normal budgetary constraints, and has already had serious budget over-runs (original estimates were a third of what has so far been needed, with no fi rm estimate for completion). Possibly infl uenced by this major public setback, in June 2010, Maryland Public Service Commission blocked proposals by Baltimore Gas & Electric ’ s (BG & E) for customers to pay most of the initial costs of a Smart Grid metering project, arguing that it could not substantiate the benefi ts claimed for this project and that the energy supplier should pay some part of the estimated $ 835 million project cost.

Negative public perception is posing problems in California. The early months of Pacifi c Gas & Electric ’ s (PG & E) programme to roll out 10 million smart meters to customers throughout the state were hit by a string of very public complaints that the meters were wildly inaccurate. At least one lawsuit has been fi led with California State Senator Dean Florez 6 calling for a moratorium on further installation of the technology, describing the meters publically as ‘ fraud meters ’ .

This is not a technological issue. The key point is not whether the meters are accurate – although evidence of inaccuracy would clearly add to problems. PG & E dismiss the claims of inaccuracy. Of greater concern is the damage done to the reputation of the company and the technology by poorly managed introduction of a new approach.

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PILOTING AS A MEANS TO IDENTIFY KEY CUSTOMER CONCERNS If the experience from the United States has been mixed, with negative customer perceptions at times becoming an obstacle to smart grid development, the experience from some start-up projects in Europe has so far been positive. A particular positive experience is reported by Nuon Energy, who have identifi ed a need to renegotiate their relationship with their customer base.

Rather than embark on a mass roll-out, Nuon have positioned their development efforts within a piloting framework that follows approximately fi ve stages. These are:

Interesting idea; alpha (small pilot: focus on customer and operations); beta (pilot: focus on fi nancial); gamma (large pilot: focus on technical); mass roll-out.

We examined an alpha pilot conducted by Nuon in Amsterdam with a relatively small customer group, aimed at establishing in-depth learning within that group, as opposed to less insightful fi ndings taken from a much wider audience. Nuon ’ s overall focus is on customer lifetime value, loyalty. Value added services like energy advice and home energy management services are seen as an important part of this strategy, with additional non-energy services, like home automation, helpful in building a strong position in energy management. Their long-term aim is to transition to a fully smart grid operation. To date, they have beta tested in-home display metering, and found a positive response from consumers. More households commit to saving energy, energy saved per household goes up, and – unlike the fi ndings of some previous projects – the savings are sustainable.

Nuon also participated in the West Orange Gamma Study, in which 500

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households in Amsterdam took part. Renewable integration featured as part of this project, with a further monitoring and evaluation of the effects of installing progressively smarter levels of technology.

The levels approach is set out in Figure 2 : At the fi rst level, the focus was on simple energy saving, comfort and sustainability, and simple energy use display was achieved by smart metering. The second level enabled customer insight into the energy used in individual appliances by means of the ‘ e-wizard ’ , coupled with remote devices such as mobile phone and Internet portal.

Finally, a third level – energy control – was achieved in the pilot by remote access to switching devices, plus the Nuon Off switch, which allowed simultaneous switching off and on of several devices. The latter was available to consumers in the pilot via a 24 / 7 accessible energy management website, which showed all purchased Energy Management Services, as well as providing real time connection to services in home.

The pilot was claimed a success in two important dimensions. First, end-users approved of many of the components tested, and gave valuable feedback that will be applied in future developments. It is arguable that there will always be ‘ unknown unknowns ’ in introducing technology of this sort. However, the pilot is believed to have identifi ed many, if not all, barriers to implementation and strategic issues. Second, the pilot demonstrated the need to move into areas that are quite new for traditional power supply companies. They must design, buy and support a range of new in-home products and services, and sometimes fi nd partners to provide these.

Piloting has allowed potential pitfalls to be identifi ed provided essential learnings in respect of the way forward. Nuon are now seeking to avoid vendor and technology lock-in, by adopting a partnership model, as well as by selecting the right communication channel and protocol(s) to maximise customer buy-in to their message.


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CRM AS BASIS FOR A NEW CUSTOMER RELATIONSHIP Many energy providers have begun the transition from centralised commodity marketing to tailored relationship marketing.

Although the change is ostensibly in respect of how the marketing relationship with the customer is managed, the immediate fi nding is that once new systems are developed a new relationship begins to permeate the entire business.

In 2008, Brazilian company Comgas set about modernising and improving its relationship with its customers via a new

CRM system . As shown below, it was clear from the outset that relating directly to customers, and matching offerings more closely to customer needs involved processes at every level within the business:

In the end, the Comgas CRM solution encompassed changes and enhancements to processes that ranged from order-taking through the Call Centre, prospect creation and management, to billing, collection and work management.

A similar result was reported in 2009 by TXU Energy, whose CRM development aimed to differentiate products and

Value Proposition Overview

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Online thermostat & mobile access

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Figure 2 : West Orange Study: levels of customer development.

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incentives offered based on both imputed and dynamic characteristics, and to improve acquisition, retention and growth. Their solution delivered:

proactive targeted offers, using campaigns executable across multiple channels, with target groups, products and incentives determined by fl exible combinations of customer, product, geographical and competitive attributes from internal and external sources of information dynamically determined segmented offers where a campaign did not already exist or to supplement the targeted offers within a campaign, with segments, products and incentives to be determined based on customer, product (usage), and customer intent

The TXU CRM initiative mixed information and service offers from all parts of the company ’ s operations, providing the same level of service, whether a customer

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dealt directly with customer agents, through the web service or through third parties.

SYSTEMS EVOLUTION: PROGRESSIVE CHANGE TO SYSTEMS ARCHITECTURE AND BUSINESS PROCESSES The change to TXU ’ s business model is a good example of the transformation needed to implement a full CRM solution. Figure 3 shows a logical schematic for the data and system relations in the new TXU system.

The new CRM system required several key changes to how TXU managed its data, including:

a move away from holding data in separate product silos; centralisation of data and a single customer view the loading of multiple processes (previously held in discrete systems) onto that single data source;

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Customer Service &RelationshipManagementRevenue ManagementValue Added ProductsCampaigns

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Web selfService,SocialAgency & VAPPortal

Business &IndustrialPortals

Marketing PartnerPortal & Web

Services

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Key AccountManager Portal

Figure 3 : Logical schematic for the data and system relations in the new TXU system.


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new rules for access to data and managers and partners, in order to interact with the data

CROSS-MATCHING OF CRM FEATURES TO SMART GRID FEATURES The shift to smart grid information technology (IT) may be smaller for many organisations than the shift to CRM. By moving to a CRM-based approach to customers, organisations are implicitly recognising that:

their customers must be managed holistically and as individuals; customers may engage in an ongoing negotiation with the organisation concerning the type of relationship that they have with it; control of that relationship is no longer wholly with the supplier managing customer data is key to maintaining the relationship

Figure 4 demonstrates the systems and data relationship likely to be put in place in a full AMI (smart grid) implementation.

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There are key differences between AMI and CRM implementation. Specifi cally, in the former, information is in respect of detailed energy use, most likely in real time and the end-user is offered increasing levels of operational control over the energy solution. That is, in CRM, the relationship with the end-user is managed in respect of the perceived product and service package, while in AMI, that relationship moves up a further notch, focusing on how the product is used.

However, the IT challenges are similar. Implementing AMI requires sophisticated metering devices to constantly monitor energy use, though once those are in place, energy use is no more than another form of information in the system.

The previous paper 5 on smart grid implementation pointed to several key learnings that organisations implementing smart grids needed to take into account. The most signifi cant, applicable to both CRM and smart grid development, is the need for process improvement, using the principles of lean design and quality management. This applies to all areas from

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Figure 4 : Systems and data confi guration for Advanced Metering Infrastructure.



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service design through to delivery and impact measurement, to allow the increased complexity of customer management to be handled effi ciently. As previously noted, complexity generates cost, unless it is well managed.

CONCLUSION Climate change, ageing infrastructure worldwide and economic pressures are moving utilities inexorably towards implementing smart grids. The benefi ts of such implementation in terms of effi ciencies, cost-savings and the ability to integrate renewables into national grids are immense. For these reasons, the forecast major investments in smart grids over the next two to three decades are likely to materialise. However, organisations must understand that success in implementing the approach will depend greatly on their psychological and operational relationship with their customers. In psychological terms, organisations must understand the likely fears and misperceptions that customers will develop relating to an approach that, in time, will radically change end-users ’ relationship with their energy provider.

The change is not simply technological. Organisations approaching smart grids from the perspective that ‘ newer means better ’ may get a shock. There are signifi cant customer concerns over security, control and also over whether suppliers will use the technology to increase prices. These must be dealt with as realities, and not dismissed as mere misinformation.

There are parallels between smart grids and CRM. In many ways, the shift to CRM is a larger shift in IT terms, as it requires breaking the older silo mentality that characterised how suppliers managed their customers. The shift to CRM – as well as the shift to AMI – requires new thinking both on terms of IT operations and also in terms of how

customers are managed and treated. Once CRM is in place, the data fl ows envisaged as a result of smart grid implementation are merely one more overhead to the overall system.

Organisations looking to implement smart grid must, therefore, put in place the technological infrastructure to enable them to run their new customer relationship in future. Implementing will be a major engineering project. However, these organisations would do well to understand that success or failure will depend on the changing relationship as much as the technology. In this respect, the same learnings uncovered in previous work are highly pertinent to the shift to AMI:

Objectives and strategies must be set taking into account the likely phasing of changes in customer behaviour; Marketing, sales and service staff must be trained and briefed about the likely changes in customer behaviour and about the company ’ s policies on moulding this behaviour and responding to it, and must be encouraged and motivated to use new processes and policies, and be trained to apply them. A complete re-evaluation of approaches is needed – covering propositions, strategies, analysis, planning. These would include new approaches to segmentation, systems, data, customer experience / journey management, performance targets and measurement. A culture of enhanced segmentation and targeting must be created. Management at all levels must understand and use these ideas. Customers will receive new types of communication, and must get used to a new relationship with their energy supplier; Systems must be designed and implemented to sustain a future in which two-way dialogue becomes the norm.

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REFERENCES AND NOTES 1 2008 Assessment of Demand Response and

Advanced Metering, Federal Energy Regulatory Commission, December 2008 .

2 The Smart Grid: An Introduction, published by the US Department of Energy .

3 For a comprehensive list of all the technologies that might contribute to the intelligent grid, see NETL Modern Grid Initiative: Powering our 21 st Century Economy. A Compendium Of Modern Grid Technologies, US DOE Offi ce

of Electricity Delivery and Energy Reliability, 2007 .

4 by CapGemini . 5 Stone , M . ( 2010 ) Smart utilities and CRM: The

next phase of customer management in utilities . Journal of Database Marketing & Customer Strategy Management 17 (1) : 49 – 58 .

5 Goodin , D . ( 2009 ) Pitchfork-wielding mobs encircle smart meters . The Register , 27 November , http://www.theregister.co.uk/2009/11/27/smart_meter_backlash/ .


original article the challenge of new marketing issues · otherwise known as the intelligent grid...

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