Utilities aren’t generally known for being customer-centric. Direct load control programs are a perfect example of utility-centric program design. When utilities need to cut peak demand, their solution is to turn off customers’ air conditioners during the hottest hours of the hottest days of the year, and bribe them with incentives. While customers can choose to participate, direct load control programs are built purely to meet a utility’s need without factoring in customers’ needs.

What if utilities flipped that thinking and put customer needs first by designing attractive programs around those needs, and only then layering on utility-centric goals? This approach may yield higher program participation rates, create ongoing engagement and improve customer satisfaction. So why, after decades of utility-centric focus, are utilities just now adopting this way of thinking and putting customers first?

The utility industry is going through an era of change, forced into action by market factors such as policy and regulatory issues, advances in distributed energy resource technologies and renewable energy growth. Utilities are beginning to understand how customers’ wants and needs are a driving force behind these changes. We often hear utility CEOs say, “We need to become more customer-centric,” but then fail to follow through. There is a myriad of reasons for this, including cultural inertia and regulatory barriers, but if this notion of becoming more customer-centric is coming from the CEO level, why aren’t we seeing more-concerted efforts? We believe it’s because most utilities lack a mechanism to act on customer-centricity. Design thinking is an effective way for utilities to put customers at the forefront of initiatives.

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Design thinking is a human-centered approach to problem solving, whether it’s for creating new products and services or improving customer experiences. Using ethnographic market research as the foundation, design thinking aims to uncover human needs and inspire better ways of serving people. Ethnographic research is a style of market research that studies how people live in their day-to-day surroundings. The goal is to uncover attitudes, values, emotions and behaviors in order to understand how people formulate their beliefs, and how those beliefs drive action.

For ethnographic research, we recruit “extreme users,” people who are outside the bell curve and beyond typical norms and averages. Extreme users demonstrate passion in a given area and are able to articulate their perspectives better than passive users (those under the bell curve). For example, an extreme user in the residential rooftop solar category may be someone who has not only purchased solar panels for their home, but expanded on their system over time. This individual is far more likely to be knowledgeable and opinionated about rooftop solar, and is more likely to have created unique work-arounds, than someone who bought a house that already came with solar panels. By observing an “extreme” rooftop solar user in his home, you might discover that he’s created an elaborate system for tracking his solar panels’ daily production and his consumption in order to estimate, and possibly reduce, his payback period. Speaking with extreme users gives us unique insights that we’re unlikely to obtain from passive users.

Design thinking uses these insights as inspiration to create new programs, products, services and experiences to better meet human needs. In the residential solar example, learning about that customer’s work-around for tracking his payback period might inspire a utility to create new services or programs that address and simplify the customer’s process.

Making customer needs the focal point of the product-development process increases the likelihood that customers will embrace a new offering. For example, through recent E Source ethnographic market research, we discovered that the people in our rate design category not only want rewards from their utility for participating in different rate structures, but they expect those rewards because they get them from other service providers. Do customers “deserve” to be rewarded? Maybe not from the utility’s point of view, but our research clearly shows that customers want — and even expect — rewards from companies they buy from regularly. With this insight, utilities can design more-attractive rate structures by incorporating rewards that customers understand and expect. Ideas for utility rewards include drawings to receive an energy-related prize (such as a smart thermostat), reward points that are redeemable for goods, and donations from customers’ monetary savings to a local charity of their choice.

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Design thinking has been sparsely used in the utility industry until last year, when 23 electric and gas utilities from across North America entered into a collaborative design-thinking research project with us to focus on key areas in the residential sector. The topics included bill design, low-income programs and solar offerings, amongst others. These utilities went through an intensive, three-day workshop, studying ethnographic research results, developing empathetic customer points of view, and collectively creating over 100 innovative concepts. We highlight two concepts below.

After studying the ethnographic market research data, workshop participants realized that residential customers don’t care about or understand kilowatt-hours or therms. Instead, they value the end-use benefits such as hot water, air conditioning, phone charging and streaming television. So why is the bill filled with detailed information about something customers don’t understand or value?

Participants discussed how to make the bill a communications tool that focuses on the value customers receive instead of the money they owe. This might entail using disaggregated smart-meter data to provide the cost of the end use by dollar amount, enabling people to see where their money is going and how they’re getting value — in terms they understand .

Workshop participants extracted an amazing insight from the ethnographic research on electric vehicles (EVs): The EV-charging experience is a huge opportunity to promote EVs and connect communities. One benefit of driving an EV is never needing to deal with a dirty gas station. Therefore, workshop participants developed a new charging concept: a utility-branded, clean, green meeting hub for people to charge their EVs. These charging stations would be in highly visible locations, offering different types of charging at different rates while providing a coffee shop/community feel. While charging their cars, customers can take advantage of free Wi-Fi and do some work, or just grab a cup of coffee and a bite to eat. These stations could also provide an opportunity to promote EVs. EVs could be available to test-drive, and representatives could be onsite to answer questions about the cars.

It’s time for utilities to use design thinking and work toward becoming more customer-centric. Market forces are pushing utilities to innovate faster than they have over the past 50 years, and due to rapidly evolving customer needs, utilities are at risk of losing customers and revenue if they fail to address these needs. Third parties aren’t waiting in the wings for this to happen — they’re aggressively courting customers with offerings that fill the void left by utilities. They speak to customers’ values and emotions, and provide a positive customer experience. Utilities have done an incredible job on the engineering side of the business for more than a hundred years; now they need to build the human side of the business and create programs, products, services and experiences that people love.

The concepts that make design thinking effective for developing new services and products can also be applied to improve existing customer experiences through journey mapping. Journey mapping involves a cross-collaborative group that walks through an end-to-end customer experience and painstakingly maps out the customer’s interactions. With a well-defined customer problem and goal, the group solves issues and mishaps that are both common and uncommon in the customer’s journey. Journey mapping often focuses on existing customer interactions, such as enrolling in a program, experiencing an outage or starting service.

E Source applies elements of design thinking in its journey-mapping workshops to ensure that participants relate to customers’ needs and wants on an emotional level and identify pain points. By working across departments and hierarchies, attendees develop solutions that address stated and latent customer needs.

Journey mapping and design thinking are foundational to developing a fresh view of customer experience problems and solutions. With these tools, utilities can create a guiding vision for customer interactions, products and services that align processes, policies and systems to meet customer needs.