The energy sector can better service the customers of the future – and improve business performance – if it uses the data it holds to fully understand what they expect, says David Peters.

Most of us take reliable, affordable power and water for granted. Never having known a time without it, we rely on our utilities to be available as and when we need them – and at a competitive price.

The online experiences we are used to in areas such as retailing, travel and media are raising the standards we expect from our utilities. We can order almost anything online and have it delivered the next day, we can receive call backs when someone is ready to help us rather than waiting on hold, and we can text our order to a restaurant before we arrive.

We are now expecting the same level of service from our utility companies. Combine these expectations with developments in smart meters, connected appliances and flexible billing, and it’s easy to see how quickly the world of customer service in utilities is evolving.

The customer of the future

Ofgem says three-quarters of all complaints are about the accuracy of bills, estimates or readings, with poor data quality often resulting in customer dissatisfaction. In such a context, customer service is everything.

Tomorrow’s customers will have even more power and choice. Many will expect control of their energy solutions and will be looking beyond the existing typical customer relationship to team up with companies that they feel they can have a partnership with. Alongside them, there will continue to be many customers who, for some time, will be satisfied by a traditional relationship.

Both of these types of customer will need to feel they are at the centre of the utility company’s priorities and will want ease of interactivity. And both are valuable targets. The traditional customer provides revenue and value that companies will not want to lose to rivals. The new type of customer will be the growing market of the future, more challenging to satisfy but key to eventual sustainability.

Reaching the next level in any customer service context requires an improved understanding of the needs and behaviour of each type of consumer and better ways of engaging them.

Developing new capabilities

The old focus of value on a few simple elements is being replaced with a broader range of sophisticated value propositions – those that give customers the personalisation and control they are seeking while delivering economies of scale and margins. And, whether it is business or residential customers, relationships have to be characterised by the ease, speed and simplicity of interaction that is now possible on digital platforms. A strong digital capability is essential to keep pace with the changing customer. Utilities must provide a superior customer experience by simplifying complex interactions, personalising interactions through the application of advanced analytics to customer data, and proactively seeking opportunities and taking actions that drive customer loyalty.

As consumers encounter more reasons to engage with their energy consumption, the window of opportunity is open for utility companies to capture the value of this increased engagement, but it could easily shut as more nimble competitors step up their activity. To capture the benefits of customer satisfaction, utility companies should consider adopting a customer value management (CVM) approach – which maximises the value of each individual customer by offering them the right offers at the right time. Clever learning algorithms and big data analytics can build consumer behaviour profiles that can optimise individual marketing offers.

Deploying a CVM approach

CVM is all about growing customer relationships and delivering the insight that they yield to derive real worth. By understanding the value of each customer and applying tailored communication strategies that maximise these learnings, a utility company can grow its customer base and the revenue it generates. Interactions become relevant and valuable, and customer experience can be easily tracked and improved, creating rich records of what a consumer wants and creating greater “stickiness”.

While marketing to one, not many, has long been a dream, the advent of big data and machine learning techniques has enabled a new order. Indeed, it is only with the help of machines that we can now make sense of the vast amount of customer information that is available, and act on it. Data streams about spend and consumption can be combined with location or mood to create a profile of the individual, matching communications appropriately. Not only this, but it can be done in real time to take immediate advantage of triggers such as running out of credit or to pre-empt complaints prompted by network problems.

As smart as the machine is though, it cannot work alone. It needs a human touch in the form of effective, creative messages that are aligned to strategy. This requires an element of best practice, deep understanding of the customer lifecycle and experience in handling the machine’s output.

We find on-site managed marketing services together with contextual marketing and big data analytics generate demonstrable incremental revenues for clients.

Conclusion

As we have seen, “technology push” and “customer pull” are converging to reshape the way in which energy is supplied, acquired, consumed and managed. Customers have more options at their fingertips, and energy providers have more data available to them from smart meters and appliances. As a result, it is more important than ever for energy providers to evolve their businesses to become energy solutions providers, and to leverage the large amount of customer data that they have access to.

Combining this information with household data and weather data, if done well, will help utilities build an unparalleled understanding of their customers and offer a compelling customer experience to deliver genuine business value.