Energy and utilities is probably the only business sector in which suppliers attempt to give their customers as little of their product as possible.
This is caused by a number of factors: concerns over the environment, ethical consumption, public PR for big businesses, and a general move towards enabling customer choice. Combined with the unavoidable fact that energy is not infinite, energy and utility providers do have to err on the side of minimalism. Here are 4 reasons why:
1. Environment & ethical consumption
In the past few decades - and especially in the years around the pandemic - doing more with less has become both morally and financially essential; energy and utilities companies are navigating increasing and intensifying climate change impact, forcing them to discard wasteful and outdated practices, equipment and systems that repel environmentally conscious consumers and businesses, and put them under financial strain.
But opportunities to deploy cost-effective and energy efficient measures are out there. Utility providers - e.g. water and wastewater - are typically able to reduce electricity consumption by 20-40%. Doing more with less not only leads to improved efficiency and lower emissions, but also better financial performance.
An energy system that produces zero emissions is increasingly within reach. The Biden Administration has set its sights on slashing the utilities sector’s carbon emissions by 80% by 2030, with the help of utility-funded energy efficiency programs amongst other initiatives.
Such programs place a binding target on producers to meet a defined level of energy savings within specific timeframes, with Canada and the US combined spending $9 billion in 2017 on such programs. On top of this, replacing inefficient pumps with smart pumps, leak reduction and pressure management technologies to streamline operations in an eco-friendly manner also helps to create an enabling environment for energy efficient utilities. Doing more with less allows energy and utilities to respond to the impacts of the current and future pandemics, creating a more sustainable business model.
2. Maintaining positive PR for big businesses
The utilities industry needs to evolve its transmission capabilities across the grid or risk losing the support from customers. Driven by evolving customer desires, energy and utilities providers are juggling digitizing their customer experience, becoming more efficient, decarbonizing and meeting new mandates.
Millennials are now shaping how successful utilities are in attracting and retaining customers. This new generation of customers expect personalization, speed, ease of services, and most importantly require social accountability from the businesses they purchase from. According to a 2021 study by GreenPrint, 75% of millennials are willing to pay more for environmentally sustainable products and services. Consumers are more eco-invested than ever, continuing to put pressure on companies to focus on sustainable practices, with 64% of consumers working from home checking their energy consumption at least once a month and 70% being interested in energy efficient solutions.
A survey by SAP and Oxford Economics found that energy and utilities executives are more likely to have made sustainability related changes to their operations than any other industry. Consumers hold the key to a greener future, expecting providers to demonstrate a holistic commitment to sustainability that includes support for local and global sustainability programs.
According to the Green Business Bureau, 96% of employees report that their company’s sustainability program helps to improve their relationship with their employer, while 64% of organizations have generated revenue increases from sustainable operations and have experienced enhanced brand value through positive environment, social and governance (ESG) perceptions.
The added brand value from doing more with less allows for energy and utility providers to match their bottom line with their green line.
3. Enabling customer choice
Deregulation and liberalization are putting energy and utilities business under pressure; traditionally utilities were used to dealing with a customer base with limited alternatives. In a previous blog looking at how utility providers compete in a digital-first world, energy companies fall short when it comes to meeting the evolving needs of digital energy consumers.
In a world where options are endless, energy providers now have another incentive to explore doing more with less, with 91% of consumers more likely to purchase from providers who tailor their recommendations accordingly. Consumers now expect a similar level of service to what they receive from other industries such as telecommunications and banking.
Due to the increased cost of energy, customers are also looking for alternative energy solutions that require less consumption and are more energy efficient. Consumers are now demanding more and more from energy providers, urging them to become more than just suppliers. In a recent interview with IDC, Associate Research Director Jean-Francois Segalotto stated that “in competitive markets the business of energy supply has changed to the point that selling energy is no longer the [primary] goal”. How the industry maintains relationships with their consumers will change once energy and utilities create a value proposition that is customer centric, focusing on what drives satisfaction.
4. Digital services
With 68% of consumers concerned about climate change, consumers no longer want to be a passive buyer of energy but rather an active participant. Today's self-aware and digitally-native consumers want a seamless experience and are prepared to ditch a supplier that falls on this metric - with 89% of consumers having switched to a competitor if a business doesn’t provide a good customer experience. Consumers want to have control over their energy consumption and crave the independence of self-monitoring.
One way to meet such needs is by implementing a mobile app that allows consumers to monitor their energy output directly. According to Accenture one-third of consumers expect increased functionality on web and mobile channels from their energy providers. Utility mobile-apps show promise as a digital self-service solution, becoming a must-have to retain customers.
Even as early as 2013, a report by The American Council for an Energy-Efficient Economy found that providing homeowners with real-time energy consumption information can lower their usage by 9.2%.
According to a customer experience futurist, customers crave self-service options and being able to have all the information they need conveniently in one location. Furthermore, industry research shows that customer loyalty increases by an average of 15% when a utility launches a mobile-app.
The greater insight on consumer energy consumption allows utilities providers to create a customized energy-saving offer to customers, increasing efficiency, and creating a new channel for engagement and loyalty - doing more with less.
CPQ is progressively enabling mass-market personalisation of energy and non-energy products and bundles for a larger customer base. As such, CPQ will become a quintessential part of CRM for B2C energy suppliers.