Last Week, Ed Davey delivered his keynote speech to the Liberal Democrat conference with a focus on reforming the energy markets. Passionate about increasing consumer choice and competition, Davey has been proactive in promoting disruptive influences into the market. In his own words, this is “the only way to deliver lower energy bills and better customer service.”
The increasing feeling of dissatisfaction which consumers feel with their energy suppliers has been well documented.
This, combined with the increased ease with which consumers can switch energy suppliers has resulted in a low loyalty market where suppliers have engaged in a ‘race to the bottom’ in a bid to retain customers. But this is not a sustainable business model – in order to succeed in the post-recession market where customers demand more-for-less, suppliers must provide more value to their customer relationships.
Against this backdrop, utility suppliers have the opportunity to evolve, to become customer-led service providers. But this evolution relies on a key factor – customer trust. In 2014, 37 per cent of people surveyed trusted their energy provider to deliver sound energy management advice – an increase from 24 per cent in 2013.
If the time it takes to switch suppliers is to be halved this year, as Davey suggested in his speech, then what is to stop customers from jumping ship? The answer lies in engagement.
There is an expectation by customers, especially millennials, that service providers will communicate effectively over digital channels including email, web and social media. The consumerisation of technology, the ubiquity of the internet and the emergence of social channels has given consumers a voice and the tools to amplify it as never before.
Behavioural energy saving programmes are key here as well as to Davey’s other goal – ensuring the UK meets its carbon reduction targets. By empowering consumers with tailored knowledge about their energy consumption, Opower has helped UK utility companies such as E.ON improve their customer engagement and retention, and has helped its customers to consume less energy.
Informing customers about their energy consumption, thereby increasing their engagement always has a return on investment for companies. Digital channels provide companies with a strong opportunity to build more engaged relationships. By offering advice on how to save energy, when to use energy most effectively, and sending customers alerts if their bills will be unusually high, utility providers can help cement customer relationships and reduce the likelihood that the customer will switch suppliers.
Such ‘nudge’ techniques enable companies to offer the improved customer service which Davey is calling for, providing real value to the customer which in turn will help utility companies retain their market-share in an increasingly competitive marketplace.