The significant shifts that are taking place in the energy sector to achieve decarbonisation targets have been enabled by modern technology. But energy is not the only sector to undergo massive technology-driven transformations - you’d be hard pressed to find one that hasn’t. As a result, customers of all sectors are more sophisticated than ever before. They have better access to information to inform decisions and can easily share their experiences and make recommendations.
What’s interesting is that the big technology companies that consumers engage with every day such as Google, Apple, and Netflix are setting customer experience expectations across all sectors. Consumers don’t necessarily differentiate between sectors; if one delivers exceptional digital experiences then the expectation is that all sectors can. This means that previous customer-winning tactics used by energy retailers such as offering a better label, a slightly bigger discount, or a home appliance are becoming increasingly ineffective. Customer experience is no longer about short-term incentive, it’s about long-term value.
Moving away from commoditisation
No doubt, Covid has accelerated the digital revolution and the expectations of digital experiences have also increased. This has forced businesses to rethink their role in the customer’s life or work to keep pace with the disruption that is happening all around us.
And the energy sector is not exempt. An industry that has largely been commoditised, we are seeing a shift to ‘commodity-plus’ - a mix of some digitisation of customer experience, discounts and offers, and service bundling. However, almost every energy retailer now offers this, so the marketplace is still low-differentiation. 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 to deliver value for both customers and the business?
Creating value over the customer lifetime
This journey starts with a change in approach - stepping away from the practice of squeezing as much value as possible out of each customer during their lifetime with a retailer and instead identifying the value that the retailer can create for customers. It’s about understanding how the customer’s lifestyle changes over time and catering to their needs through creative, long-term planning.
To identify what this value could look like, energy businesses must first understand which life stage each customer sits within, 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 far more loyal (and therefore valuable to the retailer) - much more so than by offering a blanket discount.
Creating a value-adding programme of customer care and great supporting marketing programmes to promote it is a positive first step, but these new solutions also need to be brought to market. You cannot provide a highly tailored, diverse offering if you can’t bill it - and this is the challenge most retailers come up against because the legacy systems they have in place simply cannot adapt to change at the speed and level of complexity that is now required.
Today, energy retailers will not be competitive if they don’t have a tech stack that harnesses data to identify what each customer set needs, enables new products to be brought to market at speed, and provides customers with a truly seamless experience.
Technology is a key enabler
The energy sector is one of the last movers when it comes to working with data in a truly valuable way. In some corners of the energy sector, there are key parts of the retail process still being undertaken using spreadsheets and PDFs. Access to and usability of customer data is 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 in a meaningful way.
The million-dollar question is, how can retailers achieve all this? The short answer is partnering with a provider that has the right technology to support them today and into the future.
Successful delivery of transformational change requires a couple of key things:
- Modern, cloud-based technology that is highly configurable and doesn’t confine product development innovation to the limits of the tech
- A collaborative and highly communicative partnership with your software vendor
Customer-centricity is now so ingrained in service businesses that if energy companies want to stay relevant, meeting customers where they are has become table stakes. And if technology is a key enabler of this highly disrupted sector, then strong and successful partnerships with your technology providers is paramount.
Flux's approach to delivering table stakes
We know that energy retailers can only offer responsive and valuable customer propositions if they can move with pace. Something we do well at Flux is work with our clients to develop proof of concepts (POCs) to build high quality, low risk investment cases and accelerate innovation.
Our approach is to help make our clients’ businesses tech-enabled, not constrained. A key aspect of this is having 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 verging on the periphery of where energy retail sits, and they will step in further, especially if there is inaction by the incumbents.
And this is just the beginning.
If you have a vision of the future of energy that you’d like to mobilise then it’s worthwhile to do a stocktake of the tools currently in use across your business so you can identify what changes you need to make 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.
Flux Federation connects those who make, move, and sell energy, equipping organisations in the sector with the power to drive change. Where ability to adapt to market shifts is vital, innovation in products and services is expected, and shareholder returns are imperative, Flux’s next generation software sits at the heart of energy businesses driving success by enabling management of greater complexity, reducing cost to serve, and delivering new capability at speed.
We’re not just here to deliver great software, we’re here to mobilise visionary companies leading the transition towards the future of energy. Talk to us today about how Flux can be the partner to help you achieve your goals.
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