The energy industry is one of the lowest performing for digital customer experience. With customers having had rather limited choices as to which energy company to use, few utilities have prioritized customer satisfaction or experience. Times are changing. In an era where consumers have grown accustomed to receiving up-to-the-minute alerts on the status of taxis, deliveries and their banking, interacting with their utilities, whether to check usage, pay a bill, report or receive updates on outages often seems like a step back into the dark ages. With regulatory and technology changes the market is now opening up.
Customer churn is increasing and costing businesses up to 7 times more than retention
Increasing customer expectations, coupled with regulators compelled to create competition is now driving churn as digital only providers like Ovo start to break away with digital and renewable at their heart. The number of people changing their utility supplier is increasing year on year. A survey by Ofgem, the British regulator for electricity and gas markets, reveals that 13% of UK consumers switched supplier in 2015, 15% in In 2016, 18% in 2017 and 20% in 2019. In Europe the annual average is between 12% and 15%, whilst in New Zealand it is already between 20% and 25%. Norway had the highest electricity switching rate in Europe, reaching 19% in 2017, while the State of Victoria in Australia reached 30% in 2018.
Coronavirus compounds the situation, creating both a need and an opportunity for fundamental change. Deep-seated changes are occurring as we confront our ongoing crises. Retiring dirty industries and growing clean ones is one of those. As customers expect personalization, sustainability and convenience in all areas of their lives, energy generation is being decarbonized, decentralized and democratized. As widespread industry deregulation forces competitiveness, the smart players have started to see good results from paying attention to customer experience.
There are good rewards for sticky utility relationships. Acquiring new customers is expensive. Gaining loyalty is not. One estimate calculates customer acquisition at three times the price of retention. Bain & Company believe that winning a new customer costs a company 6 to 7 times more than retention. With acquisition being in the range of $200-$400, the numbers add up across millions of customers and there is good motive for identifying and controlling churn. To beat competitors and keep customers utilities are compelled to target investment in the customer experience.
So what can help you retain your customer?
Certainly, there are good places to look. Getting the most out of your money or paying for something at a fraction of a cost is on every consumer’s mind. 80% of customers say that saving money on their electric bill is very important. 60% value comfort and the convenience of automation.
The bill is the touch point and whilst they are paid monthly or quarterly it is where the engagement starts. Simplifying and making the bill easier to understand is the first step. The next step is designing the experience in a way that helps the customer feel as if they are in control and can have an impact. Increasing awareness and engagement outside of the normal monthly or quarterly bill cycle is key. This is about making it more fun. There are good examples how paying attention to this engagement point can drive customer satisfaction and ranking. Effective customer engagement, proper utilization of digital tools and letting customers know and understand where their money goes, can really go a long way. Customers want to be more engaged in the options available to them and seek long-term relationships with their suppliers. The increase in smart home management suggests that consumers want to know more about what’s going on with their energy use and that simply having energy delivered is no longer enough. Today’s customers want to know more about the utilities they consume and how to cut costs, reduce energy consumption, protect the environment, and access new products and services. This can be made fun.
Savvy utility brands understand the need for a digital enterprise to create customer loyalty. The digital dance enjoyed by power companies and their customers has mobile engagement strategies leading the way. Here we see the likes of Apple, Zynga and Fortnite powering the way. Make no mistake. Social and Game design are leading the way on mobile customer engagement. These provide fabulous themes for which to take customers, companies and the planet on a transformation of energy and are the keys to those visionaries who want to lead.
Utility companies can use the data collected from individual silos in their business and the huge amount of smart grid systems to build better profiles, plug them into game architectures and deliver better experiences for customers. Do you think your customer wants to know if they are winning? You bet!
There are an increasing number of proof points on how the approach can improve customer loyalty, raise their awareness and motivate them to adopt new behaviours in both domestic and business context and drive digital engagement.
SAP, is using gamification to reduce car emissions and the amount spent on company cars. They’ve developed and released an app, ‘TwoGo’ which businesses can use to encourage their employees to carpool. Carpoolers can earn points, track their friends’ progress, and donate money they save through the initiative to charities of their choice
The Smart H2O project in Europe has seen sustained engagement around water saving. The SmartH2O project aims to provide water utilities, municipalities and citizens, with an ICT-enabled platform to design, develop and implement better water management practices and policies, leading to a reduction in water consumption, without compromising the quality of life, and to an increase in resource security. Thanks to its use it has been observed an average reduction in consumption of 10% in Switzerland and of 20% in Spain among the platform adopters.
A gamification project piloted in Helsinki, Nice, and Vienna delivered 15% reduction in energy costs and 30% lower carbon dioxide emissions The project consisted of an energy planning tool for utility operators and an application for consumers. The successful campaign managed to attract 80% of households in those three cities. The intuitive and simple game-like app alerted users one day before a peak in energy consumption. Customers were then able to devise their own energy-saving strategies. The app suggested possible ways to complete the mission. Those who saved energy, as detected by smart meters, were rewarded with points. Later, participants could donate those points for community projects of their choice.
New and younger customers are especially eager to adopt new solutions, and utilities can begin the establishment of relationships that begin early and last a long time. New technologies and digital solutions will begin to differentiate utility suppliers, and savvy businesses are reaching out to secure customers with new products, programs and services. Approaches based on winning will win.
Utility companies are more than just a bunch of poles, wires and billing systems. They should let customers know that. People want to do business with companies that are taking strides toward the future, whether that’s new products or lower delivery costs. Where companies take a sustainability stance with fun and social at center stage, most customers will be delighted to play.