Until fairly recently there has been a stigma attached to the prepayment of gas and electricity as it was traditionally enforced on customers on lower incomes as a way of managing their debt.
Research by Smart Energy GB published last year indicates these attitudes are changing with almost half (48%) of the British population saying that they would like to use a smart meter in pay-as-you-go mode (Smart PAYG), three times the number of people currently using prepayment meters.
Today’s prepayment customers are increasingly likely to be upwardly mobile, technically savvy, well informed and keen to take control of their spending. This shift in attitude is set to revolutionise the market and suppliers need to be on board to offer these prepayment options in conjunction with the new smart meters.
Younger generation demands Smart PAYG
Prepayment is no longer just seen as a “no choice” solution to a customer’s debt problem. It is rapidly becoming a lifestyle choice, as customers are becoming more aware of how they pay for goods and services.
The younger generation is leading this revolution as the Smart Energy GB research suggests - three out of five 18-34 year olds would be interested in using Smart PAYG and 68% would see the benefits of using a smartphone app.
This trend looks set to continue and in the future this is how most of us will pay for our gas and electricity.
Suppliers have a unique opportunity to embrace this change in attitude and to develop the best strategy for offering Smart PAYG to this new generation of customers. With closer alignment to prepayment services offered in other markets, suppliers have the opportunity to offer innovative payment channels instead of the traditional ‘over the counter’ prepayment top-ups.
Just as pay-as-you go phone tariffs have given consumers a smart way to manage their budgets, Smart PAYG can do the same for gas and electricity. Smart meters offer the chance for innovation and for energy companies to implement a Smart PAYG solution that can put them ahead of the competition.
Smart PAYG gaining momentum
The national rollout of smart meters to more than 25 million homes in England, Scotland and Wales by 2020 will transform how customers manage their energy, giving them more control of how they use and buy their gas and electricity.
Smart PAYG is starting to build momentum as several suppliers are now tendering for or trialling Smart PAYG solutions, as they recognise the opportunity for moving away from traditional energy prepayment methods.
It’s important that suppliers have a platform in place to offer prepayment options that work for today’s consumer. Early adopters, who recognised an enhanced PAYG solution as a tool for customer acquisition, not just the management of debt, are already starting to reap the benefits with customer numbers increasing steadily.
Whilst all energy companies are required to have a minimum prepayment service in place, it will be those that have taken the initiative of implementing an enhanced service early that will have the most to gain in terms of customer acquisition and market share.
Solutions to the smart puzzle
There are many different ways for suppliers to offer Smart PAYG, from cash prepay systems, which mirror traditional prepayment processes, to complete end to end solutions with multiple payment channels, well defined customer engagement strategies and proven back office processes.
Whether delivered via “in house” development teams or commercial off-the-shelf solutions, single source end to end managed service or collaborative offerings from multiple partners, there is an option to support every strategy.
With customers demanding more control and freedom of choice over when and how they buy their energy, suppliers must be prepared for the Smart PAYG revolution.
We’re currently working with energy suppliers to help them find the best solution for offering Smart PAYG. With hands on practical experience of the development and implementation of Smart PAYG solutions and services, our consultants can help companies develop a winning strategy.
Smart meters will put the consumer in the driving seat of how they manage their energy usage. Energy companies need to ensure they keep up and offer the payment solutions that today’s technology savvy generation demand; otherwise they risk losing out to the competition.