Editor's note: Judith Karten is executive vice president and partner in Reichman-Karten-Sword, a marketing and opinion research, strategic planning and consulting firm with offices in New York and San Francisco. This article was adapted from a speech presented at the 1990 Edison Electric Institute Visual Communications Committee Conference.

Customer satisfaction - for the customer - is not always a conscious thought process. For the most part, people do not sit down with a predetermined list and, after using a product or service, check off the performance of the product or service against the items that are important to them. The company providing the product or service has to remind that customer about how well its product or service is performing-relative to the items that are important to the customer. You've seen this method used time and time again by consumer product companies. There are many advertisements that begin with "...according to our customer surveys, people want X, Y, and Z. Here's how we perform..." Traditionally, utilities have not followed this example-but there is evidence that they are starting to.

In the summer of 1989, a Northeast utility, as part of the development of its communications plan, commissioned Reichman-Karten-Sword (RKS) to conduct a survey that would provide the company with a reading on customer satisfaction. Measuring customer satisfaction is something we have been asked to do over the past few years for a number of utilities across the country. In response to these requests, we designed a customer satisfaction index that identifies the key factors that will influence customer satisfaction with the utility.

An important component in ensuring customer satisfaction is knowing what makes a customer feel satisfied. This is not something that can be decided in a vacuum. That's where people in my profession come in. Simply stated, we go to the source-customers-and ask, in a variety of ways, what makes the customer satisfied.

Much of what we find out is not surprising. Customers want fair pricing, and reliable, high quality service. But there are nuances to these factors that we uncover. We also discover a number of satisfaction dimensions that are not so apparent. Probably the single most important bit of intelligence that we can provide to our clients is information that reveals the individual factors that are most likely to influence customer satisfaction. And, in today's world at least, it is not price!

The survey was conducted among a random cross section of residential customers in July, 1989. We interviewed 820 customers by telephone and the average length of the interview was 19 minutes.

The primary purpose of the survey was to learn the importance residential customers attach to various elements in determining satisfaction. Some of the other issues we covered in the survey dealt with:

  • service quality and reliability,
  • price and value;
  • contact with the utility and the responsiveness of personnel;
  • the perceived ease of doing business with the utility;
  • the clarity of the bill and the bill inserts;
  • advertising awareness and quality; and,
  • the utility's involvement in local communities.

On the specific dimension of customer satisfaction, the survey contained at least three different ways the utility could obtain readings on how residential customers assess their satisfaction with the services received from the company:

  • One was a simple measure of satisfaction, asking customers to rate the overall quality of electric service they receive. We found that 97% gave a positive rating, with 55% rating delivery of service as excellent;
  • In another measure of customer satisfaction, we asked customers to give the utility a grade on the job it actually does in satisfying individual customers. The survey found residential customers giving an average grade of 7.9 on a scale of 1 to 10;
  • A third method we use is somewhat more comprehensive. It involves a statistical approach which utilizes not just a single question or a single series of questions, but rather relies on the entire interview in coming up with a score that we call a Customer Satisfaction Index, or CSI. In this survey, the residential CSI was 90.66.

In the opening question of the survey we asked customers to give us their general views on what constitutes customer satisfaction with the companies they deal with. This question was asked before we narrowed the focus to our client. At this point in the interview the respondents did not know that the focus of the survey would be a specific utility.

So, prior to any mention of utilities, customers told us that the top factors relate to:

  • -competitive pricing;


-overall quality of service;

-prompt response to service calls or emergencies;

-timely service in general;

-courteous personnel; and,

-reliable and consistent service.

We then narrowed the focus to electric and gas utilities by providing a list to respondents and asking customers to tell us the importance to them of each item on the list in terms of their electric and gas utility.

This is how the factors we included in the survey rank in importance:

The top three are:

  • -reliable service- 93%, very important;

-timely service restoration- 90%; and,

-concern for customer safety- 90%.

The next five most important factors are:

  • -quick response to assist the customer- 86%;

-concern about the environment- 85%;

-ensuring future energy supplies- 83%;

-keeping prices low- 82%; and

-conducting its operations efficiently- 80%.

A bit later in the interview we asked customers to rate the performance of their utility on these same factors. We found that the utility's performance exceeds the perceived importance in four dimensions:

  • -providing reliable service- 93% important vs. 96% positive;

-restoring power quickly- 90% vs. 92%;

-communicating effectively- 72% vs. 82%;

-helping with energy efficiency- 64% vs. 79%.

On one item, performance is in line with importance:

-quick response to customer questions and problems- 86% vs. 85%.

There are some items where the perceived performance is below the importance attached to it:

  • -concern for customers' safety- 90% vs. 84%;

-careful about environmental impact- 85% vs. 60%;

-ensuring future energy supplies- 83% vs. 55%;

-keeping prices low- 82% vs. 68%;

-operating efficiently- 80% vs. 68%;

-helping customers pay bills- 57% vs. 51%; and

-being active in the community- 41% vs. 36%.

The customer satisfaction index is based on a computation that groups all questions in the survey into a small number of manageable and meaningful categories. This is done through a process called factor analysis.

This step in the CSI computations served to sort the questions in the interview into seven categories:

  • -social responsibility;

    -rate sensitivity;

    -concern for customers;

    -awareness of company communications;

    -perception of value;

    -contact with the utility; and,

    -opinion of the monthly bill.

After grouping the survey questions into these seven categories or factors, the next step in the CSI computation is to determine which of these factors are related to customer satisfaction. This is done using a process called stepwise regression analysis, which is a technique that can determine which factors are related to another response category, in this case customer satisfaction.

There are three factors that are related to customer satisfaction:

The first factor-concern for customers-consists of three items: (weight = 55%)

  • restoring power as quickly as possible during service interruptions;
  • responding quickly to customers' questions and problems; and
  • providing reliable energy service.

The second factor-social responsibility-is comprised of four items: (weight = 30%)

  • being careful about their impact on the environment;
  • ensuring sufficient future energy supplies;
  • taking an active role in solving community problems; and
  • helping customers who need assistance to pay their bills.

The last item-perception of value- is made up of two items: (weight = 15%)

  • the rating of value received for the money spent on electricity; and
  • the rating value received for the money spent on natural gas.

The weights suggest that, while all three factors contribute to the CSI, the greatest opportunity to influence the index is by changes in the "concern for customers" factor which accounts for 55% of the CSI score.

As I mentioned, this factor consists of reliability and response components.

Obviously, this utility performs quite well in the reliability and response components, and therefore is able to achieve a high CSI. The identification of reliability and response as key influences tells the utility that these factors should not be tampered with. I know that a few years ago some utilities-as a way to control costs-considered offering different levels of rates for different levels of reliability and response. Our advice to our clients was-and still is-to not tamper with these service dimensions. Reliability is the utility's prime product and the quality of one's product should not be tampered with.

To maintain the high CSI, the utility needs to ensure high reliability and quick response. To improve the CSI, the utility needs to work on the second and third factors-social responsibility and value.

The value of the CSI is that it not only provides a score on how well the company is doing in satisfying its customers, but the CSI also identifies the factors that contribute to customer satisfaction. This knowledge puts the utility in a better position to understand customer wants and needs and to develop targeted and differentiated customer communications. On a number of the items where performance for our client fell below importance, the percentage of the customers responding "not sure" was rather high.

It is possible that, if customers knew what the utility was doing in these areas, the positive ratings on performance would go up. In other questions asked in the survey about providing electric and gas service, response to emergencies and request for service, the quality of the company's employees and its communications are rated quite well. But, these are topics in which customers feel knowledgeable by their "direct" experience with the utility. Topics relating to the environment-a hot topic for the '90's-working to help solve social problems-another important topic for this decade- and the utility's efforts to ensure future energy supplies are ones where customers do not feel as knowledgeable.

That customers do not feel knowledgeable about the utility's efforts in these areas was highlighted in a series of focus groups we conducted last summer for an Edison Electric Institute Committee.

The purpose of the group discussions was to learn how a specific segment of people-the middle income and mid-age group in different areas of the country- rate their electric utility on service and various aspects of service. Included in the topics we planned to discuss were: the environment, future supplies and community involvement. All three topics were brought into the discussions by the participants; that is, the moderator did not have to introduce the subject. The bottom line here is that these customers expressed concern and said they did not know what their utility was doing in these three areas. They said they wanted to know. And, more important, these customers said that if they did know that their utility was doing something, they would probably think better of the company!

Over the past few months we've added another dimension to the customer satisfaction research we conduct. The factors that influence customer satisfaction provide half of the story-and customer expectations about the services provided by the utility provide the other half.

We recently completed a survey for another Northeast utility where we asked customers directly about their expectations for the utility's response on specific non-emergency services. This information will be used in a variety of ways at the utility:

  • it will help to further refine the customer satisfaction dimensions by telling the utility how their customers expect the company to perform;

  • it will assist the company in setting up internal service standards that include the realistic expectations of customers;

  • it will enable the utility to develop communications that inform customers about what they can expect from their utility;

  • it will allow the company to provide service that meets or slightly exceeds customer expectations. By doing this, this utility will be better able to manage its resources.

If utilities are to adopt some of the consumer product industry's marketing methods, they need to be able to differentiate themselves and teach people how to make judgments. Utilities now enjoy a high level of customer satisfaction but this is not top-of-mind for customers. Utilities must communicate to their customers that they are in fact satisfying them in the areas that they feel are most important.

In most of the focus group research we conduct customers tell us that they basically "do not think about their utility company"-unless they are asked about the company directly-as in the focus group. These people explain to us that the utility is "just there...that they take them for granted...that they rarely, if ever, have a problem with service." One could look on this as a positive. I see it as a negative. Customers have an image of their utility as "boring." Further, customers are hard pressed to name the specific services that energy utilities provide. But those few who can quite often have a much more positive and upbeat image of their energy utility. And, they are typically much less critical about price and other sensitive issues.