Throughout 2020 energy suppliers and water companies have worked tirelessly to fulfill customer expectations. As providers of critical infrastructure, suppliers have a strong track record of preparing for and reacting to emergencies. However, 2020’s global pandemic has tested many utilities to extreme limits. Covid-19 has already caused far-reaching concern and economic hardship for consumers and businesses throughout the UK and the globe, and the economic outlook for 2021 is uncertain.
The impacts of the pandemic have been severe with many consumers struggling to pay their bills and requesting payment holidays. With the furlough scheme currently extended to March 2021 and unemployment rates rising, suppliers will be under intense scrutiny from regulators and consumers alike. We take a look at why customer engagement has never been more critical for energy and water companies, and reveal four ways that utilities can enhance their customer engagement strategies.
What is customer engagement?
First, let’s take a look at what customer engagement is, and why it’s so important. There are many different definitions of customer engagement, but essentially it is on-going, two-way interactions between the company and the customer. When it comes to customer engagement quality and quantity are key. It’s all about enhancing the customer experience so customers feel like they have just as much to gain from engaging with your company and brand as you do by interacting with them.
Why is customer engagement important? There’s a direct correlation between how engaged your customers are, and how profitable your business is. A customer engagement study by Ray Wang of Constellation Research found that “companies who have improved engagement increase cross-sell by 22%, drive up-sell revenue by 13% to 15%, and also increase order sizes from 5% to 85%.”1
According to Gallup research, customers who are fully engaged represent a 23% premium in terms of share of wallet, profitability, revenue, and relationship growth over the average customer. Here’s a look at the results of their research into customer engagement from across a number of different industries:
- Retail banking customers who are fully engaged bring 37% more annual revenue to their primary bank than actively disengaged customers.
- Consumer electronics shoppers who are fully engaged spend 29% more per shopping trip than actively disengaged customers.
- Hotel guests who are fully engaged spend 46% more per year than actively disengaged guests.
- Companies that successfully engage their B2B customers realize 63% lower customer attrition, 55% higher share of wallet, and 50% higher productivity.2
The more engaged your customers are, the more emotionally invested they are in your brand. If customers feel a personal, added value connection to your company their emotions will strongly influence their buying decisions and they are far less likely to switch to another supplier.
Lessons from lockdown
Whilst there was a significant reduction in total electricity demand due to many economic sectors being halted during lockdown, domestic consumption of energy and water increased as people were forced to stay at home. Water utilities had the highest water demand from domestic customers, with many households using 20% more water than usual which equates to an increase of 27 litres per person per day3. By early August 2020 over 70,000 payment breaks had been granted by the 17 water companies in England and Wales4. Similarly energy customers were struggling. According to research conducted by Ofgem in May, three in ten (30%) PPM customers were worried they might not be able to top-up because of a fall in income; just over one in five (22%) drew on emergency credit; a further 6% asked their supplier for more credit; and one in twenty (5%) ran out of credit and were temporarily disconnected.
As we head into 2021 energy and water suppliers will never have been under such intense scrutiny from the regulator and consumers alike over how they handle the on-going pandemic crisis. Those companies that provide support, maintain a good customer service and proactively engage with their customers are likely to benefit from positive publicity and brand recognition, and in the case of energy suppliers,
will potentially gain new consumers as it becomes easier for consumers to switch.
Power-up your customer engagement strategy
Customer profiles and personas are no longer a sufficient basis on which to build a customer engagement strategy. To be competitive and successful energy and water suppliers will need a better understanding of their individual customers in order to understand their consumption and to provide tailored and personalized communications and offerings. Let’s take a look at four ways suppliers can enhance their customer engagement.
- Harness data and extract customer insights
Robust and successful customer engagement stems from a better understanding of individuals households and customer behaviors. By combining basic information with behavioral science it’s possible to gain a more complete understanding into consumption patterns and behaviors.
- Personalize communications
With improved insights into individual households and consumption patterns, communications to customers can be tailored and personalized. As prices rise and the need to reduce CO2 emissions grows ever more pressing, customers are becoming more receptive to receiving advice. A survey by Enervee found that 80% of respondents think their energy supplier is crucial in helping them make better choices5. By personalizing communications and advice to individual customers to help them reduce their consumption and learn about products and services that can assist in their efforts, suppliers will go a long way to improving customer loyalty.
- Deliver communications to the right customers via the right channel
Effective customer engagement is also based on delivering appropriate messages via appropriate channels. There aren’t many industries where customers cover the entire scope of generations – from Generation Y digital natives that expect an efficient digital platform at their fingertips, to Baby Boomers and Traditionalists who may prefer written communications via post. Offering customers a choice as to how they receive communications and choose to engage with your company is essential to successful engagement.
- Invest in the right technology
Investing in your technology stack and customer platform to ensure it is capable of delivering a digitally enabled omnichannel customer experience should be a priority for 2021. Utility companies need absolute confidence that their systems can handle the on-going issues that the pandemic is throwing at them, and their customers experience a seamless and optimal service from their suppliers.
For too long energy and water has been a low interest/low engagement commodity purchase and suppliers have been able to rely on significant levels of customer inertia. But times have changed and an expectation of good customer service and proactive engagement has become much higher within the industry thanks to the fact that customers are experiencing positive and proactive service and engagement elsewhere.
It’s time to invest in your systems and technology and harness your data to engage with your customers on a much deeper level – to help support them through 2021 and capitalize on the brand recognition and customer loyalty that an effective customer engagement strategy can deliver.
Talk to us today to discover how Advizzo’s behavioral science based approach to customer engagement can help you achieve greater success in 2021.