The drive for net zero is creating a need for radical changes to service strategies in the utilities sector. This was the starting hypothesis put to a group of senior energy and water company representatives at a recent Utility Week roundtable, hosted in association with Capita.
And it’s one with which the assembled individuals – all holding responsibility in their respective organisations for aspects of customer service or proposition development – largely agreed.
The UK’s ambition for carbon neutrality by 2050, combined with other climate change driven trends such as water scarcity and biodiversity loss, imply a need for behavioural and lifestyle changes on a society-wide level, they said. All of us must start using less energy and water, and using that which we really need more efficiently. In the case of energy, there’s also the option for consumers to pitch in by proactively leveraging assets like electric vehicles, solar panels, small-scale batteries and more to help the grid run more efficiently.
To enable this shift, our expert group said they acknowledge the need to engage differently with consumers and to offer them new things – from personalised energy and water management advice to the installation of technologies to help them be more efficient. Or options that make it easy for them to take part in energy flexibility services to the grid.
But, they added, knowing what to offer, to whom and when and how, is a thorny challenge they are struggling to grasp. At the root of the problem facing utilities is a lack of up-to-date and granular data on their customers. To varying degrees, they lack insight into the level of concern and understanding that individuals have about the climate crisis or the extent to which their age, income and other personal circumstances influence their willingness or ability to take actions motivated by sustainability. Without this intelligence, it is hard for utilities to come up with effective marketing, communications, education and sales strategies for net zero-focused products and services.
It’s a blind spot companies are working hard to address. For both energy and water utilities, the roll out of smart meters is a foundational step, giving firms a better idea of consumption patterns and, to a degree, the ability to infer from this information what usage needs an individual or household has.
Increasingly, firms are also harvesting data on customer engagement behaviours, tracking their activity across company apps and online self-service tools to build a picture of the channels they prefer to use to achieve different outcomes and what kinds of information or resources they tap into.
With regards to the latter area, there was agreement that the pandemic has provided an unexpected fillip to the endeavours of utilities to understand their customers better. One roundtable participant in particular said the first national lockdown, which prevented its high proportion of prepayment energy customers from completing their habitual meter top-ups in corner shops, precipitated a mass adoption of its account management app and, consequently, a huge increase in the volume of data available on consumer behaviours. After using initial data insights to rapidly deploy new affordability and vulnerable customer support services, this energy company is now keen to take a longer-term view on what its new wealth of data should mean for service strategy.
This experience resonated with other roundtable participants who agreed that the pandemic has prompted a welcome wave of “digital upskilling” across significant chunks of their customer bases. They agreed that sustaining this new level of digital engagement and leveraging it strategically will be crucial to their ability to deliver truly personalised advice and support to customers, and to engage them in propositions which they are in a good position to take up.
While utilities are working towards this endgame, however, several roundtable participants talked about the need to make opportunistic “quick wins” with easy to identify customer demographics. This included a focus on installation of energy efficiency measures and targeted efficiency advice for customers in social housing – often delivered in partnership with local authorities or landlords.
This kind of focus has the double benefit of ensuring that those customers who are most likely to struggle with affordability are the ones helped first to reduce their spend on energy and water. As one participant was quick to point out, however, it’s an approach that doesn’t really bring utilities a closer understanding of those customers’ personal challenges and motivations. Nor will it help them develop compelling propositions for investment in things like low-carbon heating technologies for the mass “able to pay” market.
For this segment, the biggest issue for utilities is overcoming the undeniable barriers of cost and disruption which come hand in hand with many new low-carbon technologies or home interventions. None of our group had firm ideas about how they can counter these objections from customers, except that education, coupled with very focused communication strategies, were unanimously agreed to be essential.
For customers with busy lives, utilities need to make sure they can cut through the noise and help customers prioritise their available options to become more efficient and sustainable. “Tell customers what’s important and keep it simple,” summed up one roundtable attendee. This principle should be backed up with a clear goal to “empower” customers rather than preaching to them, others added.
“We need to step away from telling customers what they need to do,” said one water sector representative, “and move towards enabling them to take informed decisions.”
As is often pointed out in industry forums of this nature, not all customers trust that energy and water companies have the right motivations in handing out advice. With this in mind, the group was clear that third party partners should play a role in future customer service and engagement strategies.
There was also burgeoning interest in the potential for harnessing “communities” to do utilities’ work for them and promote the rationale of moving to more sustainable modes of living or investing in home improvements or new technologies.
Virtual customer communities
One energy company representative was particularly hopeful that orchestrating virtual customer communities, in which experiences, advice and motivation can be shared between individuals with similar predilections, could create a virtuous domino effect of net zero education and encouragement. And one, furthermore, that could be monitored, building further insight into how customers with certain characteristics might respond to different service propositions.
As the roundtable drew to a close, participants were asked what one single change or improvement they would like to achieve in their organisations in the next six months to create greater clarity about future service strategy. The varied answers reflect the scale of challenge and uncertainty utilities are grappling with as they try to adjust for the net zero future: from improving internal understanding within the customer service function and beyond, to the scope of advice and support utilities can offer, to leveraging smart meter data better and even advancing their use of 5G to create “true smart homes”. But for any of these endeavours to take hold, understanding what matters to customers and how to influence them remains the fundamental building block.
Download Capita’s Road to Net Zero report here.
Download Readiness for Net Zero, go to here.