Although the number of energy suppliers has gone down slightly in the last couple of years, there are still around 60 suppliers competing in the UK domestic energy market – a market that’s currently in a state of transition. Climate change is prompting an increased focus on renewables; power transmission and distribution systems are facing a shake-up; and the energy price cap introduced in 2019 now limits the amount suppliers can charge for a kilowatt hour of electricity or gas.
Combine these factors with the steady rise in customer churn, and the fact that energy suppliers don’t earn profits from the gas or electricity they supply to customers, it’s easy to understand why they’re increasing their focus on growing their top line through new business models and revenue streams. We take a look at how utilities are doing this, the various challenges they are facing, and how proactive customer engagement and a personalized service experience can help.
Preventing customer churn
According to figures published by Energy UK in January 2020, 2019 was another record year for electricity customers switching suppliers. 6.4 million customers moved to a new supplier. That’s an average of 12 switches every minute and represents an increase of 9% compared to 2018’s record figure of 5.8 million. With switching at an all time high it’s evident that competition continues to flourish in the market.
Declining margins and an urgent need to prevent churn by transforming their relationships with their customers are forcing utilities to seek opportunities to provide value-added products and services. New technologies have allowed even greater diversification into hardware products – such as smart thermostats, energy storage systems (batteries), photovoltaic (PV) installations, electric vehicle charge points, efficient lighting systems, motion sensors, video doorbells, cameras and other home products, as well as maintenance services, white label partnerships to deliver insurance and financial services, and reward and loyalty schemes – to name but a few.
The challenge is, today’s generation of energy consumer is more demanding than ever before. They want autonomy in terms of how and when to use their energy, the ability to interact with their service provider when, where and how they choose, and personalized products and services. A blanket approach to cross-selling and up-selling additional products and services is simply not going to cut it.
To successfully diversify and transform, energy suppliers must therefore engage with their customers on a new level – delivering an effortless and personalized experience – one that is meaningful to the customer, timely, and delivered through the most convenient channels in a continuous, consistent and relevant manner. The problem is, many utilities do not know their customers well enough and are not engaging with their customers in a manner that will successfully influence their broader consumer behavior.
A personalized approach
Delivering a personalized customer experience is not only key because businesses can profit from it, but because customers expect it. As consumers are exposed to more personalized advertising through digital and other channels, their expectations increase. According to research conducted by McKinsey, 74% of customers find mass marketing frustrating1. With the ability to personalized marketing campaigns, significant improvements can be made in the success of upselling, cross-selling, and customer retention.
Despite the advantages of a personalized and targeted approach, many energy companies lack the data and wherewithal to successfully engage with their customers. In a recent survey of energy retailers conducted by McKinsey, 67% of participants said their biggest personalization challenge was using the right tools to find and merge the data1. That’s where Advizzo comes in.
Introducing Advizzo’s customer engagement platform and approach
Advizzo works in partnership with water and utility companies to deliver improved customer engagement through our customer engagement platform. Through the use of data science and behavioral science based techniques we help individual households to reduce their water and energy consumption. As part of our product roadmap we are gearing up to use our customer engagement platform and approach to help energy companies to achieve better success with targeted marketing of their complementary products and services.
How can we help?
Having the right data is the first step to a successful personalization strategy. Our software platform combines a utility company’s billing and meter data with third party data. We can also enhance our knowledge of individual customers and households by encouraging customers to complete an online home survey, and by using smart meter data. The more we know about individual customers and households, the easier it is to profile and segment them.
That’s why the fact that up to 92% of customers involved in an Advizzo engagement complete the online home survey, is such good news. And the fact that more than 70% update the audit at least once a year, ensures our insights and actions are based on up-to-date, quality data. Read more results in our Annual Survey review.
If you’re interested in finding out how we can help you to utilize your customer data to profile customers and identify customers at the risk of churn, and different consumer groups, then get in touch. We’d love to help you better understand your customers and their product preferences, to achieve greater success with your retention and promotion efforts.