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Software partnerships are a journey. Not without their ups and downs along the way and full of challenges to tackle together. Not many companies get the opportunity to partner along every step of the way, from concept to exit, as Flux did with Powershop UK (PSUK).
Flux was a new entrant to the UK energy market back in 2016, but it had the ambition and evidence to prove it could help enable a challenger retail brand. This was coupled with a team of specialists aligned to PSUK’s ambitions and bringing these innovative new products to life quickly and competitively.
During its growth in the market, PSUK gained customer trust, and introduced unique propositions that stood it apart from the market. When the retailer was acquired by E.ON Group in 2019, the PSUK and Flux teams utilised their strong relationship to ensure all customers were migrated smoothly and promptly in line with their new owner’s strategy.
David Winter, founder and Managing Director of PSUK, shares how the journey happened and why it was important for everyone involved to share such a strong partnership vision.
SEPARATING FROM THE PACK
When PSUK launched in 2016, the energy market in the UK was dominated by large incumbents with a handful of embryonic challengers.
Prior to launch, David was heading up product development at large retailer npower (part of the Innogy and RWE Group). He says back then there were no real moves by any of the incumbents to pursue bold energy transformation projects.
The retail model back then prioritised attracting new customers at high volume with cheap acquisition rates via price comparison services then attempting to recover margin via renewals and out-of-contract rates. David acknowledges this was unsustainable for the incumbents.
“It was about trying to reach new customer segments through new propositions and new, less price-sensitive channels.
"At the nexus of the strategic challenge you can aspire to provide whatever you want to customers but, fundamentally, technology is your key enabler."
As smart meters were becoming more common across the UK and new competition was emerging, David looked into transformational opportunities for npower - which was struggling with customers experiencing poor service due to issues arising from an unsuccessful IT project.
“Npower had invested about half a billion pounds into its existing system. It was customised excessively, it got increasingly complicated and people were brought in whose background was not in energy.”
With this experience fresh in the company’s memory, David recognises how carefully he had to approach suggesting partnering with a nimble software-as-a-service company from New Zealand.
“Npower was owned by a large European parent, so anything we wanted to do had to be agreed with them.
“Fundamentally, they had to trust that we had our story straight.”
GAINING AND MAINTAINING TRUST
One of the first steps the team achieved was getting the green light from the board to build a business case and flesh out a more defined concept - that required substantial leadership.
From there, David says the Flux team was involved very early on - uniquely integrated even - ensuring the solution they could provide was appropriate, configurable, and reflected where the business was and its requirements.
“They were very helpful in providing credibility, clarity and performance.”
These initial steps showed David and his team that Flux was different from their experiences with other software providers.
"My experience in buying IT products is you get a really hard sell, then they all disappear and you're left with implementation teams that aren't up to much. Flux was prepared to put its money where its mouth is on this."
Coupled with this was the proof of concept Flux had, being conceived with the launch of Powershop New Zealand and being the software provider for its ongoing operations.
“The clincher was that Powershop was running a retail business, it wasn’t just software,” David says.
David says the true success story lay in its customers’ positive CSAT score and preparedness to advocate for the brand, which was totally unheard of in the UK energy category.
“At the time npower was the worst for customer service in the industry, as you’d expect with all the IT problems. At the end of the day, you can sell a software service all you want, but the outcomes that customers experience and the resulting behaviours from that is a really key part of that story. Technology driving experience in the energy industry is really the biggest thing.”
Once the foundations of the partnership were in place, David says what really made it sing was how Flux and PSUK worked together to bring new offers to the market.
“Flux brought in people who were intelligent and good at problem solving. It’s actually quite magical when everyone switches into game mode, coming up with great, creative and sustainable solutions.”
He says this approach enabled PSUK to build out an innovation and transformation story, rather than just recovering npower’s customer satisfaction scores. That was achieved, though, with PSUK being awarded third place in a 2019 Which? survey rating energy retailers.
“That was a really good point of validation,” David notes.
With a great partnership established, PSUK got into the work it really wanted to do, including building white label functionality.
PSUK already had energy deals with two sports clubs. These small-scale connections allowed Flux to quickly stand-up a proof of concept (POC) for running a white label, enabling subsequent business development.
"This is an example of Flux's ability to work very quickly, cost-effectively and collaboratively," David says. "We got some POCs running within six to eight weeks and on the Flux side the customisation of the app, and the experience for customers, was absolutely fantastic."
Having a watertight POC allowed PSUK to partner with supermarket giant Sainsbury’s to create a white label energy offering for its customers, building a route-to-market.
Flux also supported PSUK to introduce Smoothpay - an automated payment tool which allowed customers to have more control and clarity over how much they could pay towards their energy bill each month.
David says Smoothpay was “transformational” at the time, given other retailers only offered an inflexible direct debit option for bill payments. “That is one thing I was really proud of.
"IT projects usually cost four times as much as you thought it would, they take twice as long as you thought it would and they come out with half the spec, and you don't get that with Flux."
He says when a retailer has big projects it needs to land, knowing the software will be delivered on time is critical.
“With those big clients you can’t afford for a whole month to go wrong.”
He says finding solutions to the energy opportunities that are coming up in the UK market are much harder to achieve without flexible software.
TOGETHER TO THE END
In 2019, npower was acquired by E.ON and all PSUK customers were migrated to E.ON Next as part of a group-wide consolidation.
Even with the end in sight, David says Flux worked closely with PSUK during this time to ensure their customers were shifted smoothly to the new platform.
David says an important consideration for a board looking to take on a new software provider, or agreeing to any service contract, is what the options are if the company is acquired or needs to exit the market.
“There is a lot of M&A in our sector, that’s life. It is a good sales point up front to not be landed with these systems for 25 years.
“Flux is a good team with a great attitude. They really want to get stuff done. They’re positive, they want to solve problems and they’ve got the tech to make it happen.”
Flux’s ability to partner with PSUK and help bring to life the innovations it envisioned proved the value of working together in a genuine way, and maintaining that mindset for the duration of the partnership.
Our experience working with PSUK is one of the reasons why we pursue strong, sustainable partnerships over a rapid growth strategy. Contact us today to learn how a partnership with Flux might work for you.
Kate Barker brings 10 years' experience as a journalist, including time reporting on the energy sector, to her role as Flux's Content Marketing Specialist. Kate is based in Porirua, New Zealand.
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