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As published in Research Makes A Difference, the 2001 Annual Journal of the Council of American Survey Research Organizations.

Research Calms the Waves of Deregulation for One Natural Gas Company

By Lucy Klausner, Vice President
Polaris Marketing Research, Inc.

When one of the Southeast’s largest natural gas distribution companies found itself in a quickly deregulated market, it turned to Polaris Market Research Inc. for help in navigating the uncharted waters. Atlanta Gas Light had only eight months to transform itself from a product and services company into a services company delivering gas for multiple marketers.

Polaris began its relationship with Atlanta Gas Light Co. (AGL) in 1998 by conducting research among residential and business customers on perceived value and satisfaction with natural gas, compared with other forms of energy. Information needs grew as many unknown elements of deregulation surfaced. It became a necessity to develop a research program that focused on tying multiple satisfaction measurements to key strategic measures. It came as no surprise that the research information was widely spread throughout the organization benefiting individual departments in various ways. Two key uses of the research can be clearly shown within the marketing and customer care arenas.

Figure 1 shows some of the components covered through the research program as well as the several strategic measures used to track effectiveness. The items outlined show the areas emphasized in this article.

Figure 1: partial program overview

Marketing’s Story

In the wake of restructuring, AGL managers began to face many new marketing issues, including pricing structure, partnering with marketers, and educating customers about the new process of deregulation.

The rate structure changed from a variable rate to a fixed rate, with AGL passing its base charge to the Marketer’s bill in addition to their usage charge. Put simply, the new bill split AGL operational charges such as meter reading, gas leak calls, etc. from the Marketer usage charge, but people were still confused as to what the charges were. “This rate structure change resulted in the perception of higher natural gas prices to the consumer,” said AGL marketing manager Michelle Fallon.

The problem was compounded by issues regarding billing and servicing of customers. Customers had trouble differentiating Marketer issues from AGL issues. “We deregulated in eight months time. Most markets take years to deregulate. So we had a lot of issues that took this sleepy market by surprise,” Fallon said.

“For the first time, people started to think about their gas service. Combined with the complicated nature of deregulation, customers started to consider going to alternative fuels,” Fallon said. “They started thinking about going all electric or, in the southern part of our region, switching to propane.”

At least, that was what AGL management was hearing anecdotally. Then the marketing department performed an in-depth analysis of their customer records dating back to 1992. “We were able to determine a regular on-off pattern of customer churn on the gas system. In 1998, the pattern remained elevated, highlighting what we believed to be a customer retention problem,” Fallon said.

“The retention analysis was a great start but we needed to know more,” Fallon recalled. “We wanted to know the demographic profiles of customers who were leaving and whether they were heat only customers or more highly invested in our fuel by using multiple natural gas appliances. People don’t just wake up and say, ‘I’m going to use more or less gas.’ People need to understand the value of natural gas. They come to this understanding through the value and convenience of their natural gas appliances.”

Part of the problem, she said, was that “the value of gas over electric appliances hadn’t been conveyed as a message in recent years.” But before AGL would finance a new retention strategy aimed at improving the overall market for natural gas, it needed firmer information.

“The piece that was missing was hearing from the customers. We had strong anecdotal evidence and some statistical evidence that there was an abnormal pattern of customer churn in the market. So the final challenge was to profile some of these lost customers and find out why they left,” said Fallon.

Where Research Helped

Polaris stepped in with a detailed study of AGL’s lost customers. The purpose of the research was to profile those customers that had terminated their natural gas service and switched to an alternative fuel source. Specifically, the objective was to identify the driving forces behind their decision to terminate service and determine the likelihood that they would resume service at some point in the future.

“We discovered two distinct groups of lost (residential) customers: those who were price sensitive and those who wanted a new fuel source,” said Patricia Kurtz, the senior project manager at Polaris who handles AGL’s comprehensive research program.

Those who switched to another sole energy resource said that nothing could have been done to make them stay with AGLC. These customers were not replacing their appliances because of a desire for a new energy supplier, however. They replaced their appliances because of a need for a new appliance. The price sensitive lost customer had a completely opposite profile: they were less likely to replace an appliance, but would do so because of a desire for a new energy supplier. “Our suggestion to AGL was that they increase their communication with active customers about the natural gas solutions that are available. Key to this effort would be the identification of long term benefits to the consumer and programs that would encourage the purchase of natural gas appliances,” said Kurtz.

Fallon had already proposed a major revamping of AGL’s web site so that it could again leverage its expertise on natural gas and serve as a clearinghouse for gas appliance retailers. But upper management had not been totally convinced. “We had a strong case without the research but, afterwards, we had all the pieces synced up,” she recalled. “That was the last nail in the coffin to get this web project sold.”

The new web site includes an energy library with information ranging from how much insulation to use in the wall or the floor to help determining what size water heater is needed for your family. It offers an interactive fuel-neutral energy audit to help determine the energy efficiency of a home and make recommendations on how an individual might improve that efficiency. And, if a customer has a specific question, an email to the energy advisor will get a response within 24 hours.

AGL has also partnered with manufacturers of quality natural gas appliances to offer turnkey sales and installation through the AGL Store.

“We have totally redefined the way we speak to the customer through our web site,” Fallon said. “But it is just a start. We are trying to go even further to deliver customer value. And we’re getting there with the information that comes in through our customer care centers and through our market research.” 

Customer Care’s Story

AGL also looks to Polaris for ongoing information about consumer attitudes about natural gas in general, as well as perceptions of AGL in the wake of deregulation. Polaris measures various attributes of the services customers receive from call center employees as well as AGL’s field representatives. Advanced statistical analysis tells AGL managers which attributes are most important in driving overall perceptions of quality from the call centers, the field reps and the company in general.

“We measure consumer attitudes toward AGL on a quarterly basis by talking to customers who have contacted AGL’s customer care centers, as well as customers who haven’t had much contact with AGL recently. Periodically, we’ll look at the attitudes of various people like building contractors who influence customer’s energy choices,” Kurtz said.

AGL’s customer care center employees have embraced the quality measurements regularly provided by Polaris.

“Everyone in senior management gets a copy of the Polaris reports,” said Paulette Carter, who directs the center for AGL. “We meet and talk on it once a month and once a quarter we check to make sure we’re making progress.

Figure 2: customer care feedback loop

Where Research Helped

Ongoing tracking of customer contact helps manage important call center issues such as repeat phone calls, three-way phone calls between AGL and the marketer, excessive hold time, and complaint management.

Repeat Phone Calls

“I know, for instance, that if I have to have a repeat phone call, my overall quality rating goes from 83 to 57. That’s a huge drop. My staff can tell you those numbers. My whole organization knows that. So if they hear about a repeat phone call, it sets off alarms,” Carter said.

When customers tell AGL operators that they’re calling for a second or third time, the operators probe to find out why they had to call again.

“We want to know whether the customer service representative gave out the right information in the first place, or whether the repeat calls were caused by some incorrect information from the field service representative,” Carter said.

It’s important because, thanks to Polaris’ research, she said, “we know a repeat phone call degrades the customer’s perception of the entire organization.”

Three-way Phone Calls

Deregulation brought a new issue to the customer care environment, the three-way call. “We found out that our customers were confused when we had three-way phone calls with them and their marketers to set up service,” she said. “Under deregulation, to set up a new account, the customer must give their information to the marketer and then we get on the line and we have to get the same information again for our system. The customer gets confused and doesn’t know who they are talking with.”

As a result of this feedback, Carter said, “At certain points in the call, our people will clearly identify who they are. You know, it’s not like you’re at a garden party where you can see everyone’s faces. We’ve added some branding when needed so the customer is clear on who they are talking with.”

Hold Time

Polaris’ research also gave AGL valuable insight as to how to handle the nasty little problem of keeping callers waiting on hold for customer service representatives.

“One thing critical to quality that came out of the research was that our customers don’t mind hold time; they just don’t want excessive hold time,” she said. The research helped them understand just how important hold time was to customers. Then the call center installed equipment that measures exactly how long each call is holding and helps make sure no call is kept on hold past the acceptable range.

Complaint Management

Carter says she pays close attention to the complaints and problems registered by customers through open-ended questions.

“With the verbatims, I can really see where we have failed the customers,” she said. “Sometimes the complaints are not actionable, they’re not something we can do anything about.

“For instance, there’s nothing I can do for people who are still confused about deregulation,” Carter said. “But, if you tell me you expected the field service representative to be there in two hours and they don’t come for two days, I can do something about that.”

In Summary

Although the waves continue to pound the surf, continuous measurement and company-wide feedback have enabled Atlanta Gas Light to gain strength within the marketplace. In both cases, marketing and customer care, research continues to aid in the development of new strategies for customer retention and the continuous improvement of overall customer service.

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Reprinted with permission by Research Makes A Difference, the 2001 Annual Journal of the Council of American Survey Research Organizations.

Lucy Klausner is a former vice president of Polaris Marketing Research Inc. For further information, contact Polaris Marketing Research at 404-816-0353. Polaris is a full service marketing research firm, headquartered in Atlanta, specializing in customer satisfaction and lost customer research.