I recently wrote about reframing the energy transition narrative, discussing the need to engage customers in order to bring them on the journey from having to buy commodity-based products based on price, to wanting to buy energy services based on value. But what does that path to customer engagement look like and what role does energy consumption data play? In this article I will help answer this by introducing our customer engagement framework and how it can help energy companies develop their strategies and toolkit to develop customer relationships and progress their customers’ personal energy transitions.
We break down customer engagement into four sequential stages – operation, engagement, empowerment and collaboration. We will discuss three of these in more detail later as we tend to ignore the first stage in the evolutionary process as it belongs to the past. It was characterised by a very functional, transactional relationship, where energy customer interaction with their energy supplier was largely conducted through a bill and subsequent payment, or any bill query which was controlled on energy suppliers’ terms and designed around the operational efficiency of their call centre processes. This stage has been largely resigned to history as companies recognise that power has shifted towards the consumer in liberalised markets.
The role of energy data
We will come to the other three stages of customer engagement in a moment. First what is the role of energy data in all this? Energy data, or more specifically the insights drawn from smart meter or other energy data, provides the vehicle to draw the customer into and through the energy transition. To do this, insights must be understandable and meaningful, so energy data presented as costs in local currency can be easily visualised where kWh will not be. When energy insights are presented in a compelling way, they form the vernacular that shapes the consumer’s energy world –the customer side of the meter. And with smart meter installs likely to reach 200M in Europe next year, there is no shortage of energy consumption data.
With smart meter data, consumers can gain access to personalised insights into how their heating costs compared to their lighting, how their spend on a weekday differs to a weekend, or how their carbon footprint differs to similar homes. In short, it helps bring the invisible or impenetrable up from the ocean depths and gives them shape and colour. And this is just the start of what consumers can benefit from as it forms the first step on the customer engagement framework from the functional, transactional relationship described earlier to customer engagement.
Exploring the customer engagement framework
- Customer engagement
Customer engagement is the stage that most energy companies are at. Here, energy suppliers are using energy insights to shine a light on customers’ energy consumption, from basic month on month comparisons to sophisticated AI-driven real-time disaggregation of energy use within the home. We have conducted customer research in key European markets and the strongest customer need for a mainstream audience is to understand their energy consumption, so suppliers are focussed on personalised insights to help understand historic use and reduce bill shock. Smart meter data is the primary enabler although this can be enhanced or substituted with other hardware. Customers in turn receive communication from their supplier which is helpful in building their awareness and understanding. This shifts the dynamic of the relationship and positions the supplier as an informed advisor.
- Customer empowerment
More progressive energy companies have moved beyond simple engagement and helping their customers understand past consumption behaviour. In addition, they are providing the tools to help customers make informed energy decisions in the moment. For example, Danish residents can use the Watts app which uses machine learning algorithms from past behaviour and weather to set personalised budgets for heating and electricity. This acts as a budgeting tool to constantly monitor actual usage against the budget set, to enable adjustments in behaviour to keep on track.
So, empowerment is moving customers from information and motivation to action. This might involve a digital energy coach, energy goal setting and tracking or providing the means to act on insights like turning down the smart thermostat a degree. So, while smart home control is currently for the more energy engaged, bill reduction is more of a mainstream consumer need and we will increasingly see empowerment for a broad customer base. Smartphone apps and similar tools will build on smart meter and other data to deliver customer solutions. Over time this will earn energy retailers the trust of their customers.
- Customer collaboration
Only the most innovative companies have advanced to the collaboration stage where energy suppliers partner with other companies like tech start-ups and aggregators to jointly create a greener energy future in conjunction with customers. Examples might include using energy insights with other data such as localised weather or tariff data to optimise new energy assets, behavioural change programmes and supporting community energy. Vattenfall, for example, has successfully completed a multi-year, multi-partner trial to optimise district heating. It involves residents having the necessary hardware and app to view consumption and adjust settings to enable heating to be controlled remotely to residents’ desired comfort level.
As distributed energy tech like solar PV, heat pumps and EV charging points are added to a home, the options and home energy network can become increasingly complex. Fortunately, prosumers who are the often the main target audience here, are intrinsically motivated in supporting a greener energy system, as well as being financially invested in it. E.ON is rolling out its Home app which provides customers with real-time solar consumption, generation, storage and grid export monitoring in response to consumers placing higher value on solutions that help them manage their increasingly complex home energy needs. Ultimately, progress with peoples’ personal home energy transitions will completely reinvent the supplier-customer relationship to one based on partnership, trust and collaboration.
At Delta-EE, we have developed this customer engagement framework and we use it as a positioning tool to plot European energy companies’ activity in this space, including energy suppliers and solution providers. Whilst positioning will vary according to company, customer type and market, the framework helps us benchmark company solutions, identify best practice and market innovation, and recommend appropriate strategies and tactics for our clients.