Customers couldn’t care less about energy. Electrons from company X have no more value than those from company Y.
So far, the main differentiators between energy suppliers were:
- In most European countries, the majority of customers don’t know they can switch or couldn’t be bothered to, so there is no need to think about alternatives. But this is changing fast and switching awareness is growing.
- How much an electron costs – why wouldn’t you go for the cheapest option?
- The trust in the brand – we could simplify this as a binary choice: “did I ever have a problem with my supplier?” If not then the brand remains mostly untouched (well, except the usual bad publicity for being a dirty energy generator)
- Whether these electrons come from a renewable source: there is indeed a – relatively small – market for green focused customers
We have over 60 energy suppliers in the UK and almost everyone in our Edinburgh office (~30 people) has a different one. It has become a competition for who has had the worst billing experience with theirs! I won’t name any but it’s stunning how difficult it looks to be to do a simple subtraction multiplied by the price of energy! Very few suppliers seem to get this right. And even those with a fixed monthly cost are full of surprises.
My colleague Valts is ahead of everyone else so far, as his experience ended up with no bill in 6 months (despite some active chasing) and a tough negotiation on the final bill when leaving that supplier.
According to the small sample of our Edinburgh office, it looks very likely that a lot of households will have a bad first experience with their newly appointed energy supplier.
In my own last switch, I considered mostly 2 criteria: the price (I’m still not willing to pay a premium to finance the new IT system of one of the big 6!) and how likely that company is to provide good service.
I did a very quick investigation on each of the companies giving me the cheapest deals on switching platforms, following this process:
- Do they have an App? If not, then it’s a no-go
- How much are people complaining about the App?
- If customers look happy enough, what does the App look like? If it looks like a Beta App, or something you feel will be a nightmare to use, then again, no thanks!
You know who I ended up with? One of the big 6! I could NOT find an ideal deal, price-wise, with a slightly sophisticated digital service. So, I will be paying an extra £30-40 a year to a legacy IT system, but this will increase my chances to not have to spend hours on the phone with an energy supplier.
But why am I telling you this?
I’ve been analysing the energy consumption insights services offered by European energy suppliers. One of the key takeaways from this exercise is that very few companies are offering consumption insights services. But when speaking to them, a lot of energy suppliers are making this a priority for the next year or two. Why? There are a few reasons:
- In most countries, the completion of smart meter rollout is getting closer every day. Therefore some energy suppliers want to incentivise customers to share data (in return for a better service) which could be monetised later on.
- Large energy suppliers have the financial muscles to build robust Apps / software to provide consumption insights to their customers. They hire / have people who can do that in-house, or they can appoint one of the many energy insight analytics companies in the market (the likes of Onzo, Bidgely, Opower etc.) to carry out the task.
- Smaller energy suppliers are battling for market shares, competing mostly on costs and rarely providing a great service (with some exceptions).
- And because of my story above!
There are plenty of customers who discover they can switch, but a lot of the experiences are quite poor. There is therefore an opportunity to raise the company profile by offering better digital services, and energy consumption insights should be at the heart of that! Once customers are satisfied, they will be unlikely to take the risk to switch again, even if there is a similar service around the corner.
Take the example of music streaming services like Spotify: it learns about your preferences over time, saves your favourite tunes, and suggests music you are likely to enjoy. So despite having a free access to Amazon Music through my Prime membership, I will be loyal to Spotify. Similarly, energy suppliers will build a history of data and consumption insights, which will result in increased customer stickiness (as long as the energy prices don’t sky rocket…)
I am therefore certain we will see a new wave of digital services involving energy consumption insights. The customer adoption might be slow to begin with, but the winners are likely to be those who visualise and act on this future now.
Some companies are already well positioned: Eneco, Engie in France, E.ON in Sweden and a few others have developed quite attractive digital services, and won’t stop improving them.
So if you are an energy supplier thinking of investing in an energy consumption insight service for your customers, you might think about making a decision sooner than later. Your competitors ahead of you are currently equipping themselves to grab the customers desperate to have a good digital service with decent energy prices.
And the suppliers who don’t build these services fast enough are therefore likely to slowly lose customers… and the data that comes with them!
Get in touch if you'd like to find out more about our Customer Data Analytics Service.