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UTILITY Week 11th November 2016

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28 | 11TH - 17TH NOVEMBER 2016 | UTILITY WEEK Customers Market view E nergy suppliers are fighting for prime position in the domestic market. Dis- illusioned customers, a flood of new competitors and tighter regulations are all forcing suppliers to reassess their business models. According to UK regulator Ofgem, there were 3.8 million account switches in the first six months of this year. Today, the battleground is price. Tomorrow, it will be how energy suppliers can engage with younger consumers expecting a more per- sonalised service. It's not just a case of know- ing their likes and dislikes, but of predicting their future needs and preferences. Engaging Generation Y What's certain is that it's going to be difficult to wow the next generation of energy users. These digital natives are highly selective about who they share their personal infor- mation with. Recent research we carried out with the Future Foundation into Generation Y (those aged 16-34 in the UK) shows that nearly half don't feel comfortable sharing their data with energy suppliers. Only 18 per cent trust their provider to find them the best deal available. Yet the findings also show that Gen Y recognises that insights from the data they share can be used to enhance their lives and wider society. And the energy sector is sitting on a data goldmine. The industry is forecast to experi- ence substantial growth through the adop- tion of big data and the internet of things (IoT) in the form of intelligent assets, smart meters and appliances that drive business efficiency. Big data and the IoT are expected to deliver a £15.6 billion boost to the UK energy sector over the next five years, accord- ing to research by the Centre for Econom- ics and Business Research. At present, 67 per cent of energy companies have adopted big data analytics. By 2020, this number is expected to rise to 80 per cent. It's a data explosion that provides oppor- tunities for electric, gas and water suppliers. There is a growing emphasis on embracing technologies such as data analytics that can unearth customer insights and help suppli- ers drive a more personalised service. With 53 million meters set to be installed in more than 30 million premises over the next four years, the resulting data explosion will allow suppliers to establish peak pricing programmes. Although many regulators see smart meters as critical to achieving national energy efficiency goals, changing customer behaviour is proving extremely difficult. But an important first step is that energy suppliers can use insights from meter data to understand customer preferences and behav- iour better. For example, they could identify the types of appliances customers use and their peak usage times throughout the day. The more holistic a view a supplier has of its customers – usage, payment information, communication preferences – the better it is able to manage each customer relationship. Unique opportunity Personalisation based on holistic under- standing of customer data presents a unique opportunity for suppliers to improve cus- tomer engagement and revenue. All they need are the expertise and tools to extract valuable insights from the repository of data at their disposal. They can then lever- age data to take customers on a personal journey craed specifically for individual households. Greater insight into customers' energy usage will let suppliers highlight efficiency savings as well as incentivise behaviour changes. For example, it will be possible to rate the efficiency of appliances and light- ing in the home just by analysing changes in electric current. This will let households take energy-saving measures with short and long- term financial gains. Apps may even let cus- tomers forecast the impact on their energy bill of taking advantage of an offer. Customers back in control The next generation of energy users are demanding more control, clarity and hyper- personalisation. They expect suppliers to be proactive and engage with them on a per- sonal level. Analytics can be used to help itemise what is contributing to their bills and identify key areas where savings can be made, as well as provide relevant advice about managing energy usage. This sort of analysis builds trust with customers and can directly impact retention rates. The suppliers that thrive in the new data paradigm will be those with a detailed understanding of their customers. To win the hearts of customers today, suppliers will need to predict their needs tomorrow. Those that can do so can become more than just a household supplier. They can transition into lifestyle partners and trusted energy advis- ers that help their customers to manage their home more effectively. Alyssa Farrell, product marketing manager, energy and sustainability, SAS Big data, bigger performance Energy suppliers that can tap big data to give their customers hyper-personalised advice will escape the switch and ditch carousel to become trusted household partners, says Alyssa Farrell. UK CUSTOMERS SWITCHING ENERGY SUPPLIER May 06 Apr 07 Mar 08 Feb 09 Jan 10 Dec 10 Nov 11 Oct 12 Sep 13 Aug 14 May 16 700 600 500 400 300 200 100 0 Customers (000s) Total electricity switches Total gas switches Source: Ofgem Jun 15

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