Go beyond the bundle and build the energy future: Why strong partnerships are the difference between a retailer existing and thriving in a competitive market

Time to ditch the bundled offering

Over the past decade the energy sector has shifted from commodity energy retail to ‘commodity plus’ - a mix of some digitisation of customer experience, discounts and offers, and service bundling.

Unfortunately almost every retailer now offers this, so we are operating in a low-differentiation marketplace. This has been compounded by very few retailers being able to operationalise ideas to realise the new energy economy.

As a result, the critical question energy retailers are stuck on is how can they get truly competitive differentiation in the market, which is also great for business and customers?

THE CUSTOMER HAS THE POWER

Thanks to the rise of the internet and subsequent information revolution, customers are more sophisticated than ever before. They have better access to more information to inform their decisions and can easily share their experiences and make recommendations.

Their experience expectations are now being set by leading technology companies that they engage with everyday, such as Google, Apple and Netflix.

This means energy retailers can no longer win by offering a better label, a slightly bigger discount, or a home appliance.

With the pandemic driving much of life into the digital realm in the past two years, expectations of digital experiences have grown.

To really stand apart, companies need to rethink their role in the customer’s life or work, and keep pace with rapidly-changing expectations.

CREATE CUSTOMER VALUE OVER THEIR LIFETIME

To start this journey correctly we need to step away from the practice of squeezing as much value as possible out of each customer during their lifetime with a company.

This needs to be flipped and the thinking regeared to the value that can be created for a customer during this time.

The central idea needs to change from being customer centric to lifestyle centric. Thinking about a customer’s lifestyle and how it changes over time drives more creative, long-term planning.

What could this value look like? Companies really need to understand what their customers value based on their life stage and segment, or in the case of business customers, their performance goals.

If an offering is truly tailored and valuable to the customer then they will be willing to pay for it - much more so than offering a blanket discount.

Coming up with great ideas is a positive first step, but they also need to be brought to market. You cannot provide a fantastic offering if you can’t bill it.

In this era, retailers will not win if they don’t have a tech stack that enables speed to market and provides customers with a truly seamless experience.

MAKING IT ALL HAPPEN

The million-dollar question is, how can retailers achieve all of this? The short answer is partnering with a provider that has the right technology.

Successful delivery of transformational change requires collaborative and highly communicative partnerships with your software vendor.

Unfortunately energy is one of the last movers when it comes to working with data in a truly value-additive way. In some corners of the energy sector, there are key parts of the retail process still being done on PDFs.

Access and usability of customer data are crucial for gaining the insights needed to provide enhanced customer experiences, including new product design and optimisation at an individual customer level.

Data is also the lynchpin of predictive analytics and staying ahead of the customer. It is not enough to simply collect data, you also need the capability to use it.

The key point is, our lives are now so digital that if energy companies want to stay relevant they have to meet the customer where they are.

SPEED IS THE ESSENCE

Retailers can only offer responsive and valuable customer propositions if they can move with pace.

Something we do well at Flux is work with clients to develop proof of concepts (POCs) to build high quality, low risk investment cases and accelerate innovation.

To do this successfully, a business must be tech enabled, not constrained. The best option is to find a system your business can run in parallel with its existing system. Waiting for a replatforming means - inevitably - that your business will fall behind.

Another key is to have an interoperable tech stack. Interoperability in the energy retail context means that a business’ core energy retail system is able to talk to the new energy technologies that are emerging.

Expectations of interoperability are already set. If a retailer’s experiences are standalone, and won’t play nicely with others, they will find themselves on the edge of the playground soon enough.

We are already seeing the likes of Tesla, Google and Apple playing on the periphery of where energy retail sits, and they will step in further if there is inaction by the incumbents.

If you have an idea of where you need to be by 2030, then do a stocktake on the tools your business can deploy to get there. If you want to lead the market, you need to embrace new ways of selling energy that are reliant on working with partners who understand what you want to achieve. Talk to us today about how Flux can be the partner to help you achieve these goals.