As many traditional industries, the energy market is facing significant changes due to digitalization, IoT, new technologies, mobility, social media and changing consumer behaviours and expectations. As the competition in the retail electricity market is fierce, the players need to rethink their customer acquisition and retention programs. From a consumer perspective, switching electricity suppliers is quite easy, and although price still is the main criteria in choosing a supplier, other attributes are rising in importance.
According to a recent Industry Study by Epsi Rating in Finland, 63% of the respondents had been reached in the past 6 months by other than their current supplier. It is safe to say that electricity suppliers are highly active in contacting prospective customers, which makes sense as one-quarter of the respondents stated willingness to negotiate and possibly change electricity supplier within the next year.
However, the results also show a substantial drop in interactions with current customers: 24% of the respondents were in contact with their current supplier as opposed to 37% in the previous year. The customers themselves initiated three-quarters of these contacts. As active communication is seen important and customer interactions are a great opportunity to affect customer satisfaction actively, it is fair to conclude that there is room to improve in this area by the suppliers. Especially so, as the results of the study show that small local electricity providers clearly outranked larger players in customer satisfaction and one of the areas that contributed to this difference was customer service interactions.
It is a well-known fact that acquiring new customers is multiple times more expensive than retaining existing ones. From that perspective, building loyalty and leveraging advocacy are well-grounded.
According to Teleperformance’s Global CX Survey 2016 in Energy Utilities Sector:
Customer services attributes correspond to 44% of the impact on the intention to stay with the brand. Those consumers that had a positive experience when interacting with customer services presented +11 % higher loyalty intention compared with the ones that did not interact. Others with a negative experience when interacting showed a lower loyalty intention -23 % compared with the ones that did not interact. In addition, our findings indicate that customer services attributes correspond to 35% of the impact leveraging Brand Advocacy. The potential impact of customer acquisition and retention is even higher as 12% stated having posted or shared about brand’s customer service on social media.
It is clear that putting the customer in the centre and providing high quality, consistent and effortless customer service can be a clear differentiator for electricity suppliers. It is not an easy task as investments are required not only in omnichannel customer experience capabilities but also in data analytics and security due e.g. to fast increase of IoT and connected devices. Moreover, this is only from the technical perspective – from the customer service agents, the digital business transformation will require learning new ways of working, entirely new skill sets and even adoption of a new customer-centric culture.
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Photo by Axel Antas-Bergkvist licensed under Creative Commons Zero