As the digital revolution, which is transforming every aspect of our lives, takes hold, there is now little doubt of the need for utilities to evolve and adapt to this new paradigm. But with customers starting to become actively involved in generating and managing their own energy and new entrants coming with competitive offerings, among other disruptions, to what and how?
The answer is to be found in utilities adapting by themselves becoming more digital, states Philippe Vié, Global Digital Utilities Leader at Capgemini, who reviews this changing environment in an Engerati briefing, The Digital Customer Experience for Utilities.
“Digital technologies are the key change enablers, and digital champions have been proven to leverage both bottom line and top line improvements,” he says. “Studies have shown that for utilities that have developed their customer experience, 17% more customers are likely to recommend the company and 12% more are reluctant to switch.”
Further, these utilities achieved a €5-10 reduction in cost-to-acquire and cost-to-serve – amounting to up to almost one-third of the average €30/year cost-to-serve for the typical European utility.
The energy services company
Capgemini’s proposal for the utility of the future is an energy services company, built on the three pillars of the customer experience, operational processes and the new business models made possible. [Engerati- From Utility To Energy Services]
To support utilities in this transformation Capgemini has developed the u2es offering, with specific services and solutions within each of the three pillars as well as transversal solutions across them.
Mr Vié says that in the new digital paradigm, the customer experience needs to move from the classic “push” to a “pull” model, based strongly on social media.
Seven key factors have been found for success of full digital offerings, he says – simplicity, a digital approach, a dedicated brand, cost control, improved time to market, personalization, and agile and autonomous organization.
He also notes that a move to services by utilities has already begun, citing as examples British Gas with its Hive Active Heating service that enables customers to remotely control their heating and hot water, and Oxxio (the low cost brand of Eneco) with its offer of a tablet to customers who sign up to its inControl offer.
“New services are a fact but the barriers to entry are low and competition is strong and margins are not high. However, it is the main market for utilities to differentiate themselves.”
Applying utility best practices
Mr Vié says that as part of its utilities work Capgemini monitors best practices in different sectors such as retail, which utilities can then incorporate in their transformation.
As an example he cites a utility that has introduced “levers” from the retail segment that has enabled it to improve its bottom line with a 15% reduction in costs and increase its top line revenue by 6%. In addition the utility improved its customer satisfaction levels, including reducing churn by 8 points, increasing acquisitions by 5 points and improving its branding by 10 points year to year.
The “levers” are individual best practices that can directly impact either the bottom or top line. Similar levers have been developed from utility best practices, including generation, transmission, distribution, energy services and energy trading.
“These are aimed to assist the transformation of energy companies and to enable them to improve their results as digital actors and as the preferred advisers and suppliers of their customers.”
To learn more about the digital customer experience and how it can impact your business, register for the briefing.