Right now, the energy industry is heavily clouded by uncertainty for the future. It's put suppliers and consumers alike into a wait-and-see state of mind. With reason, though. The onset of the energy crisis late last year, the new capacity tariff to reduce usage across the net, the arrival of smart meters... At the same time, smaller but more unique suppliers struggle to stay afloat. A tumultuous time, to be sure, but one laden with opportunities as well.
A perfect storm
The reason we're calling this a perfect storm, is because every supplier is dealt the same cards more or less. They're all subjected to the whims of the same market. So nobody's taking any big risks right now. Consumers on the other hand, are mostly keeping their hands in their pockets; more than anything they want this storm to just die out. Churn might have dropped across the board, but nobody's really buying either. So if you're to get more value out of your customers, you'll have to find new ways to engage and delight them. For energy suppliers in Europe, we reckon now is absolutely the time to take action and leave your competitors in the dust. But how?
Why customer excellence is key
Naturally, the industry has plenty of other fish to fry outside of reinvigorating their customer experience. Think tackling carbon emissions, dealing with peaks in oil and gas demand, the scaling of renewables, the increasing demand in hydrogen… The reason we're not further exploring these right now, is because these are long-term projects that have a mostly indirect impact on customer loyalty and CLTV, and an all-out price war just doesn't seem viable.
If energy suppliers want to stand out, they need to listen to their customer base and take action straight away. That, is customer excellence. It's the fabric you weave between yourself and the customer. The stronger that fabric, the more likely they'll stick around and bring in more value. And since a race to the bottom isn't exactly on the cards, overhauling the customer experience seems to be the most likely route.
To keep the fabric analogy going, this is actually a common thread across industries that are going through the very same digital transformation. Think retail, healthcare, and even banking. Just look at how Banx, Belfius’ latest banking experience, is moving towards an engagement platform instead of just a tool to handle your finances. Look at how a thoracic surgeon is creating better outcomes for patients by engaging and educating them asynchronously through a native app.
Areas to focus on
The next logical question one would ask themselves would be: “Okay, so I need to upgrade the customer experience, where do I start looking?” Let's think. What happens when a customer experience is a big, stinky pile of doodoo? That's right, customers will either complain or churn. With that in mind, let's take a look at a few things that are top-of-mind with customers, where suppliers can deliver new or better value.
Nowadays it costs a pretty penny just to be alive. Pandemic-related supply shortages have fueled a level of inflation we've haven't seen in a while. The rebound in demand post-COVID not only affected the cost of goods and services, but energy prices as well. Fortunately, energy inflation has gone from 32.88% in December 2022 to 5.21% in January 2023. However, Europe's natural gas supply shortages caused by the Russian-Ukrainian geopolitical conflict are still in play here.
Regardless, these circumstances have turned otherwise blissful consumers into very, very deliberate price shoppers. While their energy bills may return to normal, that likely won't apply to much else, necessities in particular. They will be more inclined to save money wherever they can, and that includes energy. People will want to optimize their energy usage the best they can, for the least amount of effort. To illustrate, we created a high-fidelity prototype to show you what that could look like in native app form.
Accessibility of customer service
Things used to be simple, right? Everyone needs heat and power, prices were low, and you only had a couple suppliers anyway. Retaining customers just wasn't as much of an issue. But things have changed and the lack of attention towards customer care is starting to show across the board. Just look up any sizeable energy supplier on Trustpilot right now; kind of a harrowing sight, isn't it?
The biggest driver for customer dissatisfaction seems to be a lack of transparency, and communication in general. Accessibility, in other words. As energy prices soared late 2022, an immense pressure was put on call centers. It could take upwards of an hour before someone would pick up the phone. And even after investing in temporary workforces, we're still far from utopia. Hence we need a more proactive and immediate approach to customer service. For instance, by redirecting people on hold to WhatsApp to increase efficiency.
New, disruptive technologies
Most European countries have deregulated their energy markets since the late 90's or early 2000's. This opened up opportunities for new entrants, who are generally quicker to act on emerging trends and technology. However, this newer, smaller players tend to struggle when churn is low. At the same time, this recent onset of new technologies and regulations–like smart meters and the capacity tariff respectively–create new points of leverage for established suppliers.
Take the Dutch NextEnergy as an example; they're leveraging data from smart meters to let consumers optimize their usage on an individual level. All through a single, convenient app.
Sink or swim
So far, no big surprises. But there's a reason behind all of this exposition. The point we're trying to drive home is that energy suppliers are in a prime position to double down on their digital transformation. Every large supplier is in the same boat, so whoever acts now can leap ahead of the competition. They must make a choice; it's either sink or swim.
But as many of us know, innovation commonly manifests itself as an uphill battle the larger and more layered an organization becomes. Fortunately, there are ways around that. Long story short, don't handle digital innovation like you normally would. By ‘normally’, we mean:
- Spending months creating a business case filled with assumptions.
- Trying to get big budgets allocated when all you have is an idea and some research.
- Creating a multi-year roadmap that's really just one big to-do list with no goals.
- Only involving end users at the very end of the road when the product is finished.
Because that is how you sink. Instead, learn to swim. Here are some pointers:
Get something out there
When an idea floats to the top, think of the smallest thing you can create to prove its added value to customers. Want to redirect people to WhatsApp when call centers are overburdened? Spend a week designing a prototype and evaluate it with real customers. Want to make a subscription service that offers personalized tips to save energy? Start with a landing page and a form, put some ads behind it, and measure people's intent. A design sprint is a great format to conduct this kind of fast-paced market validation, even when your idea still needs shaping. After all. it's customer feedback that should be the main driver for progress and next steps, not some arbitrarily defined roadmap.
Only fund proven ideas
In most large organizations, teams receive their budget for a full project up front, based on that multi-year roadmap we mentioned earlier. However, this budget usually gets allocated before any kind of validation has taken place. This makes for a needlessly risky investment, making it even more difficult to kick-start any innovation projects in the first place.
So why not treat digital innovation projects like start-ups do? They are hustling to de-risk their idea as fast as possible–making it more business viable every step of the way in order to get more funding. Allocating funds based on milestones is more commonly known as ‘metered’ funding.
Get the right people involved
For best results, allocate a dedicated, multidisciplinary team to each promising idea you might have. You guessed it, do it like a start-up would. This team shouldn't be more than 5 people in size, and they should be able to make decisions on their own accord–free from the constraints of company. Ideally, this team has a product manager, designer, one or two developers, and a strategist if you're feeling fancy. If this is not feasible for your organization, they are plenty of third parties that have these kinds of teams on deck specifically to unburden you.
Start small, think big
It's pretty apparent at this point that we're at odds with the process most companies use to build their digital products. Not that we can blame them; the more stakeholders involved the more set in stone everything has to be. But this waterfall-like way of working is just not a great fit when everything around us is changing as fast as it does. Your genius idea might be complete garbage six months from now, and the turnaround time for any major project is usually measured in years.
That's why, and we cannot stress this enough, start by creating a minimum viable product first. Define some make-or-break assumptions about the project, and use that to the determine a minimal feature set. Do a soft launch or a beta release–get those customer feedback juices flowing, and then start iterating. Worry about scale later. You want to impact your business KPIs today, not 2 years from now. Go agile.
Two things should be clear after reading this article. One, if energy suppliers want to create a competitive advantage, they should double down on creating the best possible customer experience. Number two is that we also recognize how difficult it is for a large organization to revert to a mentality and methodology that's more akin to a start-up. Innovation at scale is hard. We can make some high-level suggestions, and it all makes perfect sense on paper, but actually getting started is another feat altogether.
That's why we're offering a free roadmapping workshop to any energy suppliers who might be interested. Over the course of an hour, we'll define your most urgent challenges, conceptualize or refine a digital solution, and start plotting things out on a new roadmap. One that covers multiple iterations, complete with milestones and success metrics.
If that sounds something you'd be interested in, send a message to Pieter on LinkedIn!