Clive Rumsey, commercial director, Read Group Company strategy, Customers, Energy networks, Energy retail, Technology, Opinion

Incumbent energy companies must make much better use of the data at their disposal to understand their customers if they are to see off technologically savvy challenger brands.

Over the past few years we have seen a record level of investment in data analytics by utilities. Smart meters are now used by a quarter of UK households, giving both businesses and customers a more comprehensive view of their energy use. Yet arguably there is much more that utility companies must do to ensure they are using the wealth of data available to drive business success. For example, 500,000 energy customers switched provider in November 2018. That is a wake-up call for the utilities sector to do more to build healthy, long-lasting customer relationships.

As 2019 unfolds, there are likely to be three significant developments in the role of data within the sector that utilities should be aware of. These are in the realms of customer service, the longevity of customer relationships, and the kind of talent businesses will need to attract and retain.

Revolutionising customer service

The quality of customer service has been a long-standing issue for energy companies. Now, with a raft of digital-only challengers entering the field, competition for customers is heating up. There are more than 60 companies outside the big six operating in the UK, meaning the market is more crowded than ever. And crowded markets leave no room for complacency from established players.

In order to stay competitive, 2019 must be the year that utilities better use the vast data they hold to revolutionise their customer service offerings. By deepening their understanding of their customers, utilities can create a lasting, meaningful experience for those who use their services.

For established players, this might mean thinking like a challenger business – those companies that are exceptional at using data to build genuinely valuable customer interfaces, unrestrained by legacy systems. First Utility’s app, for example, is more highly rated by switching and price comparison website Uswitch than any offering from the big six.

One simple way data can be used to improve customer service is by personalising communications to a customer’s preferences. Our research has shown that a large majority of customers would like to be shown ways in which they can reduce their bills and energy usage. The same research indicated that over a third of consumers want to be contacted by direct mail. Using data to find which customers fit into which category is vital, enabling tailored communications to leave a lasting impact.

Maintaining lasting relationships

Improving levels of customer service aside, there is also room for utilities to seize on emerging technologies, such as predictive analytics, and apply these to customer engagement to create deeper and longer lasting relationships.

Predictive analytics could well become a major theme in 2019, with levels of investment soaring in the utilities sector year on year. Using data-driven analytics powered by machine learning, providers will be able to make instantaneous decisions regarding demand forecasting and pricing based on the swathes of data they have accrued on previous customer behaviour. But the very same technologies can be applied to customers themselves – after all, having too many customers that are dissatisfied or falling into debt is just as damaging to utilities firms as power outages.

Using data sets, utilities can identify vulnerable customers and offer help at a point of crisis. This could be, for example, by offering payment plans to a customer who has fallen behind with bills, or non-financial support to someone who has recently been ill – by making a customer’s meter more accessible, for instance. For example, at Read Group we are working closely with the University of Leeds to construct a model that predicts the likely locations of vulnerable adults, helping companies to respond quickly and appropriately to a person’s changing circumstances.

Building a long-lasting relationship could be as simple as offering a reduced rate to an unsatisfied customer. A third of customers do not trust their provider to give them the best deal, and a fifth do not trust utility providers altogether. What better way to restore trust than meeting your customers’ needs – be it through non-financial support or a lower monthly bill?

Competing for the best talent

It is clear that data has the potential to revolutionise the utilities industry, but for businesses to take advantage of this opportunity they need to have the right talent in place.

Excitingly, this has already begun. More data specialists are realising their potential to deliver a revolutionary impact in the utilities sector, with changing market dynamics forcing the big six to invest in staff who will help them become more agile, flexible and resilient. For instance, the chief information officer and digital officer of National Grid, Adriana Karaboutis, was previously the chief information officer at computer technology giant Dell until entering the utilities sector in 2017.

When such a level of talent enters an industry, it is a clear indication that it is ripe for digital and data transformation. This year is bound to see similar high-profile appointments, especially as the role of the chief data officer evolves along with the data landscape. These appointments will be crucial to ensuring data is used strategically across a utilities business – the challenge for companies in the sector will be finding and attracting the right people as competition heats up.

Data is undoubtedly going to be a central preoccupation for utilities. It is set to become a business differential, separating the winners from the losers. The organisations that perform best will be those that recognise data’s fundamental importance to customer engagement. Or, in other words, the ones that go all the way towards adopting the latest systems and recruiting the right talent. Many utility companies have yet to scratch the surface as to what data can achieve, but if the sector is to drive customer loyalty, and if established players want to remain relevant, data must be the first and most important step.

 

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