Although much energy news in recent months has been rather gloomy, with the United Nations Climate Change Conference (COP26) eliciting a sometimes frosty reception and accusations of hypocrisy, as well as the unfolding energy crisis particularly affecting Europe and China, developments in the digital space give reasons for optimism.
In fact, we're witnessing a global race, across every market, on every continent, to reinvent industries and economies to become digital first, so that they can succeed and thrive in the future.
This is forcing businesses worldwide to re-evaluate:
- What they sell
- Who they sell to
- How they sell
- How they make money
Digitization is set to have a particularly profound effect on energy and utilities providers, with prominent management consulting firm Kearney even recently going so far as to say that the sector is “on the verge of the biggest technological transformation since 1880”. How can this be?
One (bittersweet) reason is that utilities have often lagged behind other industries when it comes to digitization. This lag can be explained in a number of ways: regulated markets taking the pressure off innovation, a primary focus on generation and distribution, or even the relatively older workforce in the sector.
This means that the emergence of technologies such as 5G, IoT, Machine Learning and robotics are not merely forcing them to keep up, but catch up too.
We recently explored how digitization - and effective use of digital technologies - is key for providers in deregulated and recently liberalized markets to succeed. But whether deregulated or not, there are myriad opportunities on the horizon. And where there are opportunities, there’s also the danger of not capitalizing on them.
To put yourself in good stead, you should focus on three areas: your existing architecture, new technologies and data and analytics.
Enhance existing architecture
If you are still operating with legacy architecture and rigid, unintegrated systems, it may seem like you either have to accept what you have, or start again from scratch. The former is not an option in the current climate, while the latter is itself fraught: in fact, a 2020 report by Global Data Centers found that a worrying 50% of organisations say their digital transformation projects are “always or regularly delayed”.
Nevertheless, your existing architecture can almost certainly benefit from further digitization to automate and streamline processes, and in particular use personalization to enhance your customers’ experience.
Recent research from Accenture revealed customers are more likely to buy from retailers who recognize them, remember previous purchases and tailor recommendations accordingly.
This kind of personalization has yet to become the norm in the energy and utilities sector. But if you’re unable to personalize your customer journey and sales, increasing your average revenue per user – along with your customer acquisition and retention – is a pipe dream.
Providing personalized customer journeys, recommendations and tailored upsells makes your customers feel valued, increasing their loyalty bit by bit - vital in an industry where churn rates can reach up to 35%.
If you have a platform that can automate the delivery of these personalized moments, or guide your sales team in the delivery of them, you’ll see it reflected in your increased revenues.
Embrace new technologies
As the rush for digital transformation takes root across all industries, successful players in the energy space will be those that can fully embrace new technologies and apply them to all aspects of operations, trading, services and products, e.g:
- Power and gas spot markets
- Futures contracts, swaps and hedging strategies
- Net metering
- Locational and time-of-use transmission charging
- Renewable Energy Credits
- Distributed energy resources
- Direct-to-customer (D2C) digital utilities
- Virtual power purchase agreements
- Virtual power plants
- Demand-side response
- Smart EV charging
This is not just technology for technology’s sake: digitization has led to a considerable shift in customer expectations.
A growing portion of your customers expect the same service from their energy and utility provider as they get from their retailers and banks.
This change has seen online become customers’ channel of choice. But no matter how or when your customers decide to reach you, they expect a personalized, joined-up and convenient experience with easy access to information, advice or services.
Your evolving customer base's desires are typified by the fastest growing customer segment – millennials.
Accenture also found nearly 80% of millennials would consider switching energy providers if they aren’t given a seamless digital experience. If this statistic is even remotely indicative of the rest of your customer base, incorporating new technologies has to be a priority.
Exploit data and analytics
Data is growing at an exponential rate – internet traffic has tripled in only the past five years and around 90% of the data in the world today were created over the past two years. This abundance of data opens the door for energy companies to innovate offerings to customers.
While differentiating your service offering is key, without extensive customer data you cannot communicate that offering effectively to your user base. Too often energy providers have either sat on their customer data, or allowed it to fall into other people’s hands.
With quick access to customer data, and real-time insights into their energy usage, you can better tailor packages to their needs.
Inaccessible or disorganized data is a major hindrance, so you need to get it all onto a single platform. From there you can get a single view of your customers – from their purchasing history to their usage preferences.
This will enable you to transform your sales and services, offering your customers personalization, quick access to information and frictionless customer service.
The vast majority of your customers will be happy to share their data if they see the benefit: for example 90% of surveyed consumers have stated that they will share behavioural data if it makes their experience cheaper or easier.
The more digitized your experience, the better your relationship with your customers will become:
Saving your customers money might seem counterintuitive. But using data to recommend ways they can slow their meters from spinning will build trust and increase customer lifetime value in the long run.