The future of customer engagement
Utilities should stop applying the same tired tactics for customer engagement, writes Laura Sandys
The largest change in consumer lifestyles is being driven by the digitalisation of all our lives. The effective analysis of big data offers consumers, suppliers of all products, and systems’ designers a revolutionary change in the granularity, specificity, accuracy and ability to tailor the supply to the exact demand of that particular consumer. It feels however that the energy sector is still on the early part of the journey to understand and respond to the implications of this digital consumer revolution.
The prize for energy is the optimisation of the system while also designing the service around the consumer and their behaviours, rather than the current system that demands the consumer to become energy experts – or even interested in energy.
"Smart energy meters are a very limited response to the data revolution"
So what will the consumer of the future look like and want? Probably not energy at all.
For decades the energy sector has been talking – and spending money – on “engaging with the consumer” trying to cajole them into being active energy consumers. Sometimes energy “engagers” have sounded like Englishmen abroad – “if I shout loud enough they will understand me”. While many reading this will be super geeks loving being in control of their smart meter and monitoring capacity and cost across the system, very few “normal” people read Utility Week and only a few more understand what a kWh does.
Recent research shows that people are more ready to pay for convenience than for stuff. Time and consumer bandwidth is becoming more valuable. This has been seen over decades in the food sector. Whether desirable or not, the demise of the butcher, baker and candlestick maker has been replaced by the super convenient multi-product supplier – the supermarket and with new digital retailers “siloed” providers are under even more threat.
So if energy is not a daily obsession of the consumer might they not prefer a seamless home product with the in-home data “portal” as holding the key consumer relationship delivering, switching and optimising all in-home products. Will this or other new business models mean that current energy brands have little or any consumer value? – very possibly.
Energy suppliers might become predominantly a B2B business or possibly the data companies themselves will buy energy directly from the system operator with no need for the “wholesaler”. Energy might well become an “invisible” service and energy service companies might be squeezed out of the system as intermediaries procure directly.
Many of our utilities are working through this dilemma and are aiming to reinvent themselves around in-home services. The question for them is are they ambitious enough about what a real and total home service could look like and will they be best placed to provide the consumer with the “brand experience” that goes with trusting a third party to shape your life services. This is the big challenge ahead – not between energy companies but between energy and much more consumer trusted and engaged brands
What is clear however. is that the data is where the value lies – to both the consumer experience and the system optimisation. It will be possible with the right level of data to not just optimise utility of services in their own siloes but optimise across different data sets – an integrated optimisation service. Take for example Alexa who will order the groceries, change energy supplier, know how far you drive to work and optimise your battery charge, alert you when you are reaching the top end of your mobile phone usage and inform your service suppliers when you are going on holiday.
Smart energy meters are a very limited response to the data revolution and with the increased uptake of omni-providers in home the limited data flows from smart meters will not be able to retrieve the wider level of integrated and total information possible today in other sectors. New entrants will have almost complete behaviour patterns and will be able to achieve close to 90 per cent just in time accuracy on individual lifestyle after a 24-month data set.
In this new world there will be different threats to consumers – that of data capture by Alexa and her friends. Portability of data must sit at the heart of consumer regulation but might not need a set of energy specific consumer measures – more a Consumer Regulator making sense of the bundled and invisible product components.
To be frank –none of us know what the new consumer will want or be offered – but most certainly the energy sector has some big challenges ahead in relation to their “consumer” facing business. What we can be certain of is that by 2025 there will be multiple energy consumer archetypes, masses of data and very different consumption patterns. The challenge to the energy sector is to react to such a wide range of consumer demands – and while we are well know for wanting one Silver Bullet – the future lies in multiple solutions!
Laura Sandys has been appointed to the advisory for government's Cost of Energy review. See Utility Week's round-up of the personalities involved in this high profile investigation.