Brand loyalty is increasingly becoming a thing of the past, as the digital abode gives way to a plethora of options at customers’ fingertips. Customers seek brand validation through peer-to-peer product reviews, prior to making a purchase. And interestingly, often it isn’t the best quality product that wins, it’s the best known. However, at the heart of consumer choice is trust.
In recent years, there has been an emerging technology that plays towards this priceless capital of trust, which has the potential to transform customer experience – blockchain.
Revitalising customer experience
Despite the immaturity of the technology, there are emerging opportunities for blockchain in utilities customer experience. Firstly, there is the potential of peer-to-peer energy trading. With the increasing uptake of renewable energy generation, customers have become prosumers, producing and consuming power, selling any surplus energy back to the grid as a means of income generation, thus increasing competition and grid efficiency. With the introduction of blockchain, the monopoly will no longer remain in the power of the grid, but rather with the customers. Customers will be able to buy locally produced energy, which is likely to be cheaper than buying from their utility provider. This is made possible through blockchain’s relatively low transaction costs. Smart contracts facilitate the real-time co-ordination of production data from energy sources and administer sales contracts that enable a two-way energy exchange.
Another opportunity blockchain is opening up for customers is the ability to switch suppliers more efficiently. Companies are already running pilots to explore blockchain’s potential to make existing processes, such as meter registration, more efficient and less costly. British start-up Electron is developing a blockchain platform that could allow British customers to switch power suppliers reliably within a day. This may eventually give rise to a real-time switching market, where customers are able to switch suppliers even quicker.
Trust – a priceless commodity
Most people have made at least one online purchase in their lifetime. Most will only consider buying from major brands, rather than an unfamiliar website, due to fear of fraud or scams. This is exactly where blockchain can play its part in alleviating concerns of business credibility.
By holding the keys to customer identity in an independent, trusted location, blockchain can act as the mediator to verify the legitimacy of both parties – the business and the customer. This revolutionary approach will shift the business-customer paradigm and hand power back to the customer, who has the final say over whether they choose to share their information.
Not only is the customer in control, but it will also encourage businesses to rethink their approach, and inevitably become a more customer-centric organisation. Data will no longer be a by-product of a customer purchase, but rather a privilege given to those who earn the trust of their customers.
Barriers to blockchain
However, for all its possibilities, there are significant barriers to overcome before the utility of blockchain can become a mainstream business model. The majority of blockchain applications require vast data management, infrastructure, compliance adherence, and security costs to extract value at scale. Established utilities companies can also be expected to become defensive against anything that threatens the status quo. It’s up to senior leadership to decide whether they want to hold back for the next technology breakthrough or seize the opportunity to transform customer experiences themselves.
As with any new technology, blockchain remains largely unproven, and significant barriers remain. Use cases will need to be more highly developed to convince government-backed programmes and regulators that adopting the new technology will help positively drive project efficiency and costs. Common industry standards will also need to be established alongside regulatory protection for the vulnerable.
Nevertheless, if it proves reliable and scalable, blockchain technology may ultimately accelerate the transition to what the energy industry calls a “distributed world”, made up of both large and smaller power-generation systems for homes, businesses and communities.
While there’s always room for start-ups to move in and disrupt this industry, established utilities are best placed to evaluate and make strategic bets on blockchain technology’s potential applications. If they can seize the moment, centralised incumbents may turn out to be the true disruptors, ushering in a new era of decentralised power.