There’s no doubt that competitive energy retailers are facing unprecedented challenges. The world they operate in is changing – and changing very rapidly.
The next few years will see smart metering become a reality for millions more homes, creating numerous possibilities for service innovation. At the same time, more and more consumers are embracing microgeneration technologies and starting to adopt electric vehicles.
What customers want from their utility company is changing, too. As well as paying a fair price for their fuel, people are coming to expect the same high standards of customer service from their energy suppliers that they enjoy from their favourite retail brands and mobile service providers.
Who will be the leaders in this new reality? And what will their businesses look like? Some very innovative companies are already entering the energy retail business, bringing new and potentially disruptive business models. Some of these players could really shake up the status quo and may be tomorrow’s market leaders.
The basic business of energy supply is undifferentiated – the gas and power consumers use in their homes is the same irrespective of the company supplying it. So how can competitive energy retail companies stand out from the crowd?
QRL trends impacting billing and customer care
Offering the lowest available tariffs is one approach, which helps suppliers top price comparison leader boards and win new business. But being competitive on price, even if not the cheapest on the market, comes at a cost – it squeezes profit margins. What does this mean for supply businesses?
Automate and get lean
For one, it drives a keen focus on lowering operational costs and improving efficiency. Core business processes are coming under increasing scrutiny, in a quest to streamline operations and drive down costs.
Automating key processes and removing manual intervention can substantially reduce operational costs. In many cases, process automation also improves customer satisfaction, as key interactions with the utility become less glitch-prone and run more smoothly.
Automation can also help new entrant suppliers scale their businesses more efficiently, by reducing the need for extra staff as their customer bases grow.
Get the billing right
One process that energy suppliers have to get right is that of customer billing. The business benefits from accurate billing are undeniable – bills get paid faster, fewer customers phone in with queries, happy customers are less inclined to churn. But get the billing wrong and it can take years for a business to fully recover from the fallout and regain customer trust.
Get noticed with value-added services
More and more energy retailers are turning to value-added services to boost their revenues and margins. For some of these companies, electricity and gas supply is just one part of a much broader proposition – they may offer bundles combining energy with broadband, mobile and insurance, or package energy supply with home energy efficiency products and services.
The permutations are very diverse, but many embrace the idea of using noncommodity and value-added services to create well-differentiated propositions aimed at forging sticky and long-lasting customer relationships.
Are your business support systems ready?
One of the many ways in which energy suppliers are gearing up for the road ahead is by upgrading their billing and customer information systems to cater for the new services and business models they envisage.
Systems flexibility is a must for competitive energy retailers, so that they can rapidly introduce new offerings, bill for a wide variety of service types, and create compelling service bundles. They are also looking for solutions that can deliver a modern customer experience, including a variety of self-care options and multi-channel communications. And particularly among the newer entrants, there is a growing interest in hosted or Cloud solutions.
This article first appeared in Metering & Smart Energy International Issue 3 2016.
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