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UTILITY WEEK | 13TH - 19TH MAY 2016 | 25 Customers Market view R ecently, online switching service Which? Switch published its customer satisfaction survey. It highlighted the importance and impact of placing consum- ers at the heart of services, and ranked the winners and losers. The survey researched 8,902 energy cus- tomers' opinions of 25 UK gas and electricity companies. It revealed that the challenger energy providers were in the lead across all categories, compared with the big industry names. This included: value for money; cus- tomer service; clarity and accuracy of bills; complaints handling; and how the supplier helps the consumer save energy. It also revealed that with the amount of choice available today, unless there is a sig- nificant price difference or customer service incentive to stay with a current energy sup- plier, then consumers will move. This sen- timent is echoed by the switching rate of energy consumers. In the UK, it increased by 12.6 per cent between Q4 2014 and Q4 2015. While still too low, according to both Ofgem and the Competition and Markets Authority, switching rates continue to rise. Given this fact, there is clearly a need by UK utilities to continue improving their com- petitive positioning if they plan on becoming – or remaining – relevant. Paying more atten- tion to consumers – what they want; what they need; and what will keep them engaged – is the only way to effectively deliver com- petitive offers and value for money. So, what is the best way to achieve this? Listening equals winning. In the UK, the opportunities are plentiful for acquiring and retaining new customers, winning back for- mer ones, and cross-selling new products and services, especially for those energy providers that are serious about taking a consumer-centric approach. Achieving this is easier said than done. At the heart of it all lies data. By using data effectively, utilities can challenge the market and drive competitive marketing practices. Furthermore, by using data and analyt- ics, utilities can target those consumers most likely to respond to particular offers, seg- ment a targeted population into like-minded groups living in homes with similar energy requirements for tailored messaging, and build trust through the personalisation of offers and billing. Use data to acquire and convert sales. This process can sound daunting, but it need not be. Here are a few steps that can be taken to follow this approach. • Micro-targeting. Widely used in political campaigning to reach individual voters, it allows energy service providers to iden- tify those individuals with the highest propensities to respond to specific prod- uct or service offers. • Scoring individual consumers. This relies on careful analysis of demographics, energy usage, and contextual data. This information, combined with predictive analytics, narrows the pool of consumers designated for outreach. This dramati- cally lowers the cost of a campaign. • Segmenting messaging. Narrowing the audience greatly increases the likelihood of acquiring new customers. Propensity scoring alone has a threefold li in cus- tomer sign-ups over traditional untar- geted marketing efforts. But by adding segmented messaging, combined with a personal score or personal savings estimate, the probability of increased customer acquisition, interest and engagement increases by 5 or 6 per cent. Stay away from off-the-shelf messaging. Utilities in the US, for example, oen use off-the-shelf, lifestyle segmentation models to divide their customers into broad groups. But those models do not correlate well with energy consumer behaviour, so some service providers are forced to do a bit more ground work. They conduct primary research to collect data and develop energy-centric segmenta- tion models and messaging schemes that are customised to their service offering and geographic territory, and resonate with their customer base. Personalised recommendations, con- sumption information, individualised cross- selling offers, product bundling, proactive high bill alerts, weekly challenges employ- ing gamification techniques and other context-driven notifications, as well as ther- mostat optimisation, are just a few of the ways energy providers can continue to build trust and customer loyalty. Whether it is about comfort or cost savings, contextualisa- tion is critical. Energy simulation models pave the road ahead. Home energy simulation models, based on physics rather than regression- based approaches, are the most powerful and practical tools for personalising energy products and services. Competition is so intense that simply knowing your customers better than your competitors can be a big advantage. Utili- ties that use data and tools to better acquire, understand and engage their customers can quickly gain market share from those that do not. And in Europe, where meters are oen read just once a year, they are not just the best option, they are the only option David Tuohy, senior vice president Europe, Tendril Know your customers Customer segmentation and customised messaging are essential if you want to win and retain customers – and that means leveraging something you have in abundance: data. By David Tuohy. SWITCHING FIGURES Electricity Gas Jan-2015 191,000 158,000 Feb-2015 292,000 234,000 Mar-2015 383,000 311,000 Apr-2015 276,000 220,000 May-2015 240,000 199,000 Jun-2015 231,000 176,000 Jul-2015 240,000 193,000 Aug-2015 254,000 197,000 Sep-2015 281,000 225,000 Oct-2015 352,000 276,000 Nov-2015 345,000 275,000 Dec-2015 311,000 244,000 Source: Decc