14 August 2012
The relationship between UK energy suppliers and their customers is probably at one of its lowest points since the privatisation of the energy industry.
In 2011, the industry regulator Ofgem said that a significant proportion of consumers are disengaged from the energy market¹. While most contact with a customer is in regard to ‘negative’ transactions, for example bill payment, correction, meter readings and service failures, there is little opportunity for retailers to enhance their customers’ experience.
Smart meters and the detailed data that they can provide are about to change those relationships for ever. Over the next decade all domestic customers in Great Britain will receive a new smart meter. These meters will capture detailed consumption information for both electricity and gas and potentially provide intelligent network and generation responses to changing consumption patterns.
Through smart meter data, consumers will also be able to understand how they can change their habits and adjust their homes to reduce carbon emissions and cut energy costs. This data provides the opportunity for energy retailers to change the nature of their customer relationship to a more positive one by advising consumers on how to manage their consumption and by providing personalised additional services, such as insulation and boiler installations.
Energy retailers will not have access to consumption information by right. Consumers will own that data and may choose to allow third parties to use it widely, while restricting their energy supplier to the minimum by which to bill them. Search engines, and online retailers, may take the opportunity to integrate with smart meters and provide data analysis services with the intention of identifying advertising or sales opportunities. They may also identify the cheapest energy provider and facilitate switching between energy retailers – turning energy retailers into commodities in the process.
To build great customer relationships energy companies will need to change their systems, organisation and philosophy to capture consumption information and provide customers with personalised advice, helping to reduce the financial and carbon cost of their energy consumption.
Information systems will be required to combine a rich range of data including weather, housing stock, demographics, occupancy patterns and consumption data to identify energy efficiency actions that are personalised to each individual consumer. The IT infrastructure needs to cope with the capture and analysis of data volumes previously unheard of in the utility industry and provide high levels of data security and privacy.
Customer service advisers will need to be able to talk in depth with customers on energy efficiency measures, from installing low-energy light bulbs through to the purchase of new boilers. Accessing smart meter data and providing interpretation and advice for each consumer will be vital.
Informing customers with measures tailored to their situation will mean marketing and communications will become more proactive. Smart meter data will inform customers of new products or government initiatives that may help increase energy efficiency, or provide them with information to prepare for poor or extreme weather. Exploiting new channels of communication such as social media, smartphones and even the meter itself, will be essential in reaching a wide consumer base and keeping the costs of communication low.
All of these changes are a fundamental shift from current energy retailer organisations. The personalisation of service, tailoring of advice, data analysis and extrapolation and proactive communication are a step-change from existing billing and sales operations. The challenge in capturing remote smart meter data and interpreting it correctly should not be under-estimated. Energy retailers that cannot address these changes face losing customer relationships, those who can, have the potential to create customers who truly love their energy service and grow business beyond energy provision.
¹ Ofgem – The Retail Market Review – Findings and Initial Proposals, March 21, 2011