This article is the first of a short series discussing the critical role of insight driven customer engagement in a transforming energy sector.
Having recently started working in the energy sector after nearly two decades in retail, I find myself at an interesting juncture. As I transition from one industry to the other, I’ve been granted that rare thing, a brief moment of reflection. With one metaphorical foot in each sector, I’ve naturally found myself comparing the two.
What is already clear to me, having experienced first-hand the incredibly complex changes taking place in the retail industry, is that some of these same forces look set to transform energy.
Of course, there are a variety of ‘push and pull’ forces driving energy transformation, many of which are unique to the sector. These include the rapid growth of renewables, customers using less energy and generating more themselves, increased competition, distributed energy, and the emergence of connected home technology.
However, there is one key force experienced by both retail and energy alike. An inescapable driver of change, which has utterly transformed the retail sector over the past decade. You and I. The customer.
Our behaviours have changed, or more precisely digital technology has changed our behaviours. This has led to raised expectations of retailers, a demand for complexity of systems and services, which has changed the face of the sector.
Retailers no longer just sell products. Survival on the retail battlefield requires companies to compete for relationships with consumers, who now demand experience and service far beyond the product itself.
Energy is not immune to this battle for customer engagement. This may not yet be obvious to everyone, but I believe energy is shifting inexorably to a service-oriented proposition with the customer at its centre.
Intelligent customer engagement strategies are going to be critical to successful transformation.
The rise of the digital energy customer
Not only are power technologies and home automation beginning to fundamentally change how we as customers manage and consume energy, but digital technology is shifting our expectations of energy providers.
- We demand experience: our online ‘connected’ experiences of hyper customer focused brands in areas such as retail, leisure, and entertainment, have served to raise expectations of all businesses. In a digital economy where supply often outstrips demand, we can choose to interact or disengage with brands with little more than a swipe of a screen. Consequently, competition for the consumer wallet will be fierce and proposition innovation fast-paced.
- We’ll buy from whoever serves our needs best: sector boundaries have become fluid. In retail, e-commerce giants have relied on our increasing willingness to buy goods and services from whoever meets our needs, leaving some traditional sectors in tatters. Indeed, energy has seen the emergence of new ‘non-traditional’ players fishing in the same pond for the same customers.
- We’re better informed: greater consumer knowledge, means businesses are dealing with increasingly savvy customers who know what they want. More of us want to self-manage and self-serve. We seek automation, intelligent interactions, and above all convenience.
- We have multiple methods to interact with brands: the proliferation of technology has also given rise to multiple ways in which customers can engage with brands, online and offline, at home and mobile. Touchpoints have fragmented and grown in number.
Ultimately, consumers are increasingly demanding, relevant, timely, and above all valuable experiences from brands, no matter the sector.
Although what constitutes a valuable customer experience in energy might be argued to be more fundamentally important than is the case in many other areas of consumption. Indeed, the benefits associated with a great experience encompass some rather important outcomes including peace-of mind, value for money, convenience, control and self-management, and even improved quality of life.
Customer engagement is the new energy battleground
Given the strategic context in which energy finds itself, it’s no surprise that improving customer engagement is becoming a major pre-occupation. Indeed, done well, it is seen as a source of real competitive advantage.
Of course, engaging customers is arguably more difficult in energy than other sectors. Energy itself is hardly aspirational; it doesn’t gratify our senses in the same way as, food, fashion, or entertainment. We expect it to just be there, like air, water, or even Wi-Fi! This is why some utilities and connected home businesses, in particular, are working hard to engage energy customers in ways likely to better resonate with their needs and wants. Lifestyle propositions, blending messages about home comfort, smarter lives, efficient homes, automation, and value for money, are seeking to motivate energy customers on a far deeper level than has been previously possible.
Better customer engagement is the route to compelling commercial benefits: customer acquisition, retention, upsell, cross-sell, and above all advantage in a crowded market. However, like all good things it doesn’t come easily. Great engagement relies on generating intelligent and usable customer insights. Insights extracted from customer data. Customer data, which as luck would have it in this age of digital technology, is hitting many energy companies in metaphorical tidal waves.
If customer engagement is the battlefield, then customer insight is the ammunition
There is potential for a great deal of data to flow into energy businesses, encompassing all manner of variables such as personal details, household metrics, energy consumption values, and information collected by connected devices. How to best manage and activate these ‘data lakes’ for business and customer benefit is a huge subject in itself, however energy companies are increasingly looking to extract tactical and strategic insights from the data to drive customer engagement.
Some utilities (see British Gas and Eneco), alongside smart thermostat suppliers (see Quby, Nest and Hive) are using behavioural science and analytics, to develop propositions which bring to life customer consumption data, through compelling insights. These include charts on energy use over time, disaggregated appliance information, and tailored tips to reduce consumption.
There has been a proliferation of dedicated platforms and services seeking to help energy businesses better harness customer insight. Notable examples include Tendril, Bidgely, and ONZO, to name but a few. The recent news that the sustainable energy company Eneco group has acquired a minority interest in UK-based energy data analytics company ONZO, demonstrates the strategic importance major energy businesses are placing on customer insight and analytics.
As energy transforms into a service-oriented sector, customer insight will become an increasingly important means to drive engagement. Delivering consumers personalised energy experiences through the intelligent use of insight will take engagement to the next level.
This can only be a good thing for energy businesses and the increasingly demanding customers they serve.
Look out for my next blog where I’ll discuss the different types of ‘energy insights’ in more detail.
Want to discuss? Contact me on +44 131 285 1773
James Miller is Principal Customer Strategy & Data Analytics at Delta Energy & Environment and leads Delta-ee’s Customer Data Analytics Service.