Energy companies in deregulated markets are often under the scrutiny of consumers and regulators but there was good news for UK energy suppliers this month.
UK energy regulator Ofgem and complaints arbitrator the Energy Ombudsman confirmed that customer complaints have fallen to their lowest level in three years.
Ofgem CEO Dermot Nolan commented that: “We are seeing clear signs that some suppliers are competing harder on customer service. This is good, as it puts pressure on poor-performing companies to up their game or lose market share.”
Energy suppliers are certainly aware that they have to “compete hard” to retain customers.
Utilities need to fulfil the core requirements of accurate billing and reliable service - and reduce customer complaints in the process. But, to meet rising customer expectations, they also need to move the conversation on to energy insights and value-added services.
Accenture’s Wytse Kaastra, Managing Director, Energy Consumer Services for Europe, Africa & Latin America, describes this type of interaction as the more fun, positive communication that will ensure customer retention and ultimately loyalty.
Kaastra comments that in continental Europe and the UK, utilities are under huge pressure to deliver better consumer engagement and satisfaction.
Utilities in Spain and Italy have a growing awareness of the need for better customer relations while in Germany and France, traditionally more conservative and slower to adopt new concepts, energy companies are picking up on the need to connect with customers, he says.
Kaastra believes customer engagement is at an “inflexion point and the reality is most utilities need to embark on more aggressive customer engagement strategies.” As a result, Kaastra expects to see business models and strategies changing this year and next.
And when it comes to ensuring a return on investment for energy management programmes, Kaastra says the case for engaging business customers is strongest as recruiting one commercial customer can have a much larger effect than a single residential customer.
The need for more detailed information on energy consumption is also greater in the B2B sector as customers may have multiple sites and larger consumption and need deeper insights for their own administration and energy management purposes.
Cloud solution for business customer engagement
A key focus of a business customer engagement strategy is to move the utility-customer conversation on, both in terms of the type of information utilities provide to customers, and the communication channels they use.
Today, digital channels such as websites, mobile solutions and email are creating new ways for utilities to speak to their customers. But, before making the shift to digital communication, utilities need to ensure that their digital channels are working “extremely effectively”.
To deliver effective digital channels, Kaastra notes that the sector has shifted rapidly in the past two to three years away from creating in-house customer engagement solutions to implementing cloud-based solutions.
With a cloud-based platform, utilities own the customer journey and design, but benefit from buying the backbone technology, which is less expensive and simpler than building your own, says Kaastra.
US tech company FirstFuel Software provides a business customer engagement Software-as-a-Service (SaaS) platform for energy providers.
Indran Ratnathicam, Vice President, Marketing & Strategy, told Engerati that one benefit of a SaaS solution is that the platform is updated quarterly. “We have more than 30 clients, which means we can afford to invest rapidly in the platform,” he says.
Commenting that “data analytics isn’t typically a core capability for utilities”, Ratnathicam says: “Many utilities are divesting their generation assets to make their businesses leaner and more efficient - so, the last thing they want to do is put more capital into hardware.”
The plug and play type approach delivered by SaaS-based platforms is suited to new entrants to the energy market such as retailers as well as incumbent suppliers. Most customers are up and running within six months and could see a return on investment seven times greater than if they had invested in an in-house solution, says Ratnathicam.
Cutting churn among business energy customers
FirstFuel’s business customer engagement platform leverages existing utility data to deliver personalised energy insights to business customers through every communication channel - including email, online, sales, and service.
Ratnathicam gives an example of how an energy supplier could use outbound email to alert a business customer that their forthcoming bill is higher than normal.
“To a small business working on tight margins, this makes a big difference,” he says. “The customer may then proactively act to reduce their energy usage and call in for tips on energy efficiency and related products such as lighting.”
Customer engagement as Software as a Service
When asked about tips for selecting a customer engagement SaaS-based platform, Kaastra says good questions to ask are about potential functionalities and the software’s roadmap over the next two to five years.
He says that ensuring your data is protected properly is fundamental for utilities and most SaaS providers, including FirstFuel, have regional data centres to ensure consumer data stays within their territory.
Another key point is ensuring the software is open to other applications that a utility may want to adopt such as sales team management or customer relationship systems.
The total cost of ownership is also a consideration as the SaaS model is the opposite of on-premise solutions. “With the cloud, the setup costs are not expensive but the yearly licence fee is an ongoing cost to be factored in,” says Kaastra.
Costs and data aside, Kaastra says Accenture’s research shows that customers respond positively to personalised consumption breakdowns. And if utilities do customer engagement right, it is proven that customers are more loyal and satisfied, he says.
FirstFuel’s Indran Ratnathicam and Accenture’s Wytse Kaastra will both present in a live energy webinar co-branded with Engerati. Register now for ‘How to engage business customers with cloud-based tools’.