Future of I&C Sales & Marketing: Customer Satisfaction

Publication Date	July 2006
Publisher	Datamonitor
Product Type	Report
Pages	14
ISBN Number	not applicable
Product Code	DAT00454

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Summary

Introduction

As markets liberalise most switching will initially occur purely on the basis of price differential as the incumbent margin is whittled away. While price will continue to dominate decisions, a narrowing of margins and the significant cost of switching will make customer satisfaction a key performance issue.

Scope

Understanding of the relationship between market liberalisation and customer service expectation.
Frameworks within which to analyse the performance of different companies in the service area
Competency groupings used by Datamonitor within the UK market in its established satisfaction rankings
Insight into the relationship between utility M&A and customer service issues

Highlights

Within immature markets, switching is largely on the basis of price as buyers exercise their new-found freedom to choose supplier. Buyers have few service expectations as they have only experience with their incumbent supplier.

As markets continue to mature and a majority of buyers have switched at least once, service and product offerings become much more important. This importance is enhanced as the variation in margin reduces and new entrant prices are not as different from those of the incumbent.

To accurately measure customer service levels and ensure that company resources are adequately targeted internally, the development of metrics that capture both the expectations and experiences of buyers within a wide range of competency groupings must be collected.

Reasons to Purchase

Develop targeted customer service practices within your utility business
Understand what buyers are likely to expect of utilities at different stages of market opening
Build metrics for assessing the expectations and experiences of buyers

Content

Catalyst
Summary
Methodology
Analysis
- Customer satisfaction (CSat) is crucial despite the price focus of the industry.
- Within immature markets, significant price differentials exist and drive customer switching.
- The development of the TPI market ensures further emphasis on the importance of CSat.
- An effective CSat measure must consider the importance and experiences of buyers across competencies.
- Satisfaction measures needs to consider customer experiences alongside their expectations.
- Many buyers require only a threshold of service to be reached.
- Datamonitor believes that there are 6 key competency groupings.
- CSat is indicative of wider business performance issues.
- When satisfaction within competencies is measured, multiple business functions are included in each.
- An understanding of performance against the breadth of the offer needs to be developed.
- As utilities expand across borders customer satisfaction performance will be increasingly linked to M&A success.
- Satisfaction scores in the UK are at least partially a function of M&A activity.
- Suppliers should consider a range of actions as markets develop.
- There are a number of important questions that suppliers should take the time to answer
Appendix
Further reading
- Ask the analyst
List of Figures
- Figure 1: Incumbent and entrant pricing behaviour
- Figure 2: Buyer pricing and service expectations change throughout each stage of market opening.
- Figure 3: The trilateral relationship between buyer, TPI and supplier has conflicting interests and influences.
- Figure 4: Customer Satisfaction Matrix
- Figure 5: Customer Satisfaction Scoring and renewal likelihood
- Figure 6: Sample Competency Verticals
- Figure 7: Satisfaction and offer breadth matrix
- Figure 8: UK I&C Customer Satisfaction, power and gas 2005-06