Since privatisation and against the backdrop of digital transformation, the Energy sector has morphed substantially from its previous guise. You could say that Energy has been quietly reinventing itself.
Technological advancement within and outside of the industry has been a significant shot in the arm for R&D. Twenty years back, ‘Dual Fuel’ (with unified billing) was regarded as radical. But suddenly, consumers were being offered true product diversification. Cue the connected home (and IoT), smart meters, an electric vehicle (EV) provision, p2p networking, green tariffs, battery and solar, connected Apps and beyond…
Think British Gas launching Hive in 2013 (one million installations and counting), OVO’s partnership with Nissan (providing a widely-available domestic vehicle-to-grid charger), Shell acquiring First Utility and New Motion (to leverage the power of the forecourt and capture a new audience for EV’s) or Flipper and Labrador landing to offer customers automated switching products (technology has enabled switching to be easier than ever).
All of this is a surely a victory for consumers: who doesn’t want choice and empowerment?
Meanwhile, Industry commentators duly describe how energy companies are on a journey from being perceived as ‘providers’ (of fuel; Gartner Analyst Keith Harrison describes this as a “tax payer” scenario) to lifestyle enablers.
Customer empowerment? Market evolution? This is a win-win!
Woah. Slow down there, Tonto.
Despite all the recent momentum, consumer apathy is still incredibly high. Utilities recently dropped to 11th of the 13 sectors tracked in the Institute of Customer Service’s Customer Satisfaction Index (just above Telco and Transport, both of whom endured a difficult year). Utility Week revealed in last month’s WNS Customer Trust Council findings that nearly one in two of us are “blind” paying for estimated usage – surely a definitive demonstration of indifference. And while Ofgem noted that customer engagement had shifted “significantly” from 37 to 41% [measured only by switching, tariff changes or tariff comparison], it’s generally accepted that the industry has largely failed to match other sectors in terms of customer engagement.
So, given all the choice, innovation and newfound customer empowerment, why is this the case?
There are several factors contributing to the lethargy. Clearly, we’re dogged by legacy perceptions (customer surveys often reporting that consumers regard the provision of electricity and gas as a ‘basic human right’). But much of the problem can be boiled down to two factors: The perceived value exchange and to put it simply, Trust.
The upshot is that Customer Experiences are often failing to live up to brand promises. Many organisations convey the right sentiment – ‘We put customers at the heart of everything we do…’ but in reality, good intentions often become empty platitudes. This is often due to conspiring factors: current infrastructure, technology complexities, organisational silos, KPIs and culture to name just a few. So, with agile competition nipping at the ankles of established players, customer engagement is more crucial – than it’s ever been. Making the point in its 2017 CIO Report Top 10 Trends Shaping the 2017 Utility Industry on the Road to Digital Business, Gartner’s Chet Geschickter and Zarko Sumic describe how “new entrants are encroaching on conventional utility business and offering creative energy solutions, thereby forcing utilities to focus on customer engagement in order to defend their turf”.
This approach – focusing on engagement to foster loyalty – isn’t indigenous to the Energy sector, of course. We’ll touch on further attributable business benefits in Part Two of this post.
We get it. Everyone knows that customer engagement is important. But help me out: what’s a brand to do?
Put simply, by increasing engagement, we facilitate a Drain-to-Radiator scenario: Engagement is the bedrock in converting those customers sucking up our time and resources – you could call these ‘drains’ – into true brand advocate (or ‘radiators’). And in achieving this alchemy, crucial metrics improve, including a significantly lower cost-to-serve.