Until a few years ago, customers had a single option for purchasing their electricity, i.e. their local utility. But, with distributed generation capturing a larger market share, consumers now have a choice when it comes to choosing their energy provider. This new competition for utilities has created a customer churn. It has resulted in some utilities losing customers, while others have experienced a surge of new customers due to more attractive offerings like flexible plans and a higher mix of renewable energy.
Most traditional utilities were only concerned with the networks they operated and the assets they owned. The customer had to accept whatever energy plan the utilities decided to offer. With customer switching on the rise in recent years, consumers have now become more central to utilities. Customer retention has become the prime objective for many of these companies. But, many utilities are finding it challenging to implement effective strategies to retain existing customers and add new ones. This is addressed by looking at methods that utilities can employ to ensure effective marketing to achieve higher levels of customer satisfaction.
With the de-monopolisation of the utility sector, energy providers have to focus on retaining consumers by providing a more personalised experience
As the customer base evolves and becomes more diverse, utilities must personalise their services to every single category of customers. By adopting algorithm-driven processes, companies can tailor offerings to suit individual customers based on their behaviour, and in turn manage their needs more effectively.
Personalisation has its roots in the retail and consumer goods industry, where companies track consumer behaviour and purchasing patterns to tailor their goods and services to the specific needs of their client base. Effective personalisation has the potential to increase sales by more than 10%. Personalisation provides returns that are five to eight times better, on marketing investments for companies. Utilities should take a closer look at these tried and tested pathways, and adapt aspects of these to their strategies.
It is critical to capture the right kind of data to narrow down on what’s important to customers
Energy companies have vast amounts of information on customer consumption patterns over the decades. But, many utilities are struggling to capture the right kind of data to generate valuable insights from it. This is where advanced analytics and data management can have a massive impact on filtering useful information, and generating credible insights. The fact is, energy companies don’t even need enormous amounts of data to extract value. With most utilities successfully piloting new marketing strategies using only a handful of variables – a strategy that has resulted in a visible improvement in customer retention will work for almost all of them.
Data gathered must focus on “triggers” in customer behaviour that can make or break the relationship between utilities and their clients
Trigger-based communication is another essential tool that energy companies need to add to their existing marketing strategies. Contacting a customer at crucial trigger-points, i.e. when they exhibit certain behavioural patterns, or undertake certain activities that are essential to capturing more value from customer interactions. It ensures that customers get what they are looking for.
To cite an example, in the telecommunications industry, when a customer looks at a comparison site to scout for new mobile plans, he gets a call from his existing company with an appealing offer to extend his contract. Acceptance rates for strategies like this typically range from 20% to 30%. Similarly, when an energy customer is found looking at FAQs on a website on terminating a contract, the utility can use that as a trigger to offer a more lucrative deal to the consumer to upgrade the contract, based on specific requirements.
Formulating effective marketing strategies requires greater inter-functional collaboration
Implementing effective marketing strategies requires collaborative work behind the scenes to test and formulate appropriate methods through quick iterations. Traditionally, utilities have segregated their work into clear functions to maintain a clear, consistent way in which customers are approached. With the necessity for personalised customer strategies, this kind of compartmentalisation will not be effective anymore. Teams of people across various functions like IT, marketing, analytics and engineering will have to work together to test many strategies as possible to arrive at an optimal solution, and scale-up.
Utilities need the right kind of infrastructure to support such data-heavy marketing methods
Utilities require the right tools to implement these strategies effectively. Having access to real-time data and algorithms allow utilities to respond much faster to customer needs. It could even prevent them from losing clients.
Energy companies also need to have an IT infrastructure that is capable of storing such large amounts of data, and executing complex data algorithms. Once the insights are gathered, and it is clear what the next course of action needs to be, utilities need to have the right channels of communications available to them. For example, call centre employees need to be trained to handle these evolving demands, and understand the importance of personalised campaigns. This will help get the word out to customers, quickly and effectively.
Some interactions are more important than others. Utilities must identify and invest accordingly
Data analytics can help gather intelligence on the interactions that are more effective in improving customer satisfaction. This data can help utility executives decide where to invest, to improve consumer experience. There are some interactions, for example, that utilities have to get right. But, it doesn’t necessarily create a competitive edge – paying bills, managing customer accounts and tracking outages. There are some other interactions where a mistake can ruin a customer relationship – understanding a utility bill, restoring connections, and purchasing additional products and services.
On the contrary, there are some activities which can earn utilities a great deal of loyalty from the customer – making payments easier, setting up online accounts, and getting a greater deal of information on their utility. There are yet more cases which can alter the image of a utility one way or the other – managing usage, technical or field visits, and the quality of service right when the service starts. Gathering and understanding such information will provide utilities greater insights into the needs of its consumers, and enable energy companies to have a more satisfied and loyal customer base.
