Customer expectations are constantly rising, and personalization of services has gone from being optional to becoming a key imperative and a business driver. Today, companies must invest in creating differentiation through personalized products and services in a manner that engages customers and convinces them to come back for more. This is true of every business: be it e-commerce companies or airlines, each consumer must be treated uniquely to improve customer engagement.
The utilities sector is no different. As electricity moves from being a commodity to experience, customer engagement in this sector is poised to take off with customized services. Several companies have already begun realigning their offerings and services to meet the increased demand for customization. They may not be leaders in embracing transformation compared to other industry sectors, but the transformation has well and truly begun — and customers stand to gain by embracing the change. Positive experiences translate into improved loyalty and opportunities for cross-sell and up-sell, and with the increased deregulation of utilities, a positive experience is essential to keeping ratepayers from defecting to the competition.
Utilities, often seen as conservative and slow-moving, face a number of challenges in their journey to offer robust customer experiences. As a result, the industry is spending hundreds of billions to replace and upgrade infrastructure, rushing to meet consumer demand for higher quality power enabled by construction of a more modern grid.
With increased competition, deregulation, and renewable energy alternatives, utilities are also investing in facilitating better digital experiences to meet consumer demands. To encourage more consumers to use online services, utilities need to blend data and analytics to create personalized digital experiences and anticipate customer needs. It also means creating digital experiences that are innovative, simple, and empowering for customers. As per a consumer survey, 73% of digital users are more likely to sign up for home energy generation products and have 41% more trust in their energy provider.
Utilities are in a state of flux with waves of transformation sweeping through the sector. Several disruptive trends are making an impact on the companies looking to take their customer experiences to the next level and improve their profitability. These trends are:
Deregulation: The deregulation of the electricity market is a step toward encouraging competition among utilities. Today, in more than a dozen states and the District of Columbia, retail customers can shop around for the best deals on electricity, sometimes in the same way they shop around for a cellphone provider. This ensures that consumers benefit as various companies vie for their attention. For instance, though the annual average price of electricity in the US in 2016 was $10.28 per kilowatt hour (kWh), that in Louisiana was about $7.41 per kWh, showing not all costs were passed on to customers. The deregulation of the electricity market is a step toward encouraging competition among utilities
In deregulated markets, utilities must divest ownership in generation as well as transmission. They are only responsible for distribution and maintenance and billing customers. Deregulation opens the doors for flexible energy choices in terms of contract, market risk exposure, efficiency solutions, and price structures. Companies in deregulated markets can make sure that they monitor their energy consumption and are on the correct utility tariff. Consumers could also go for ‘green’ — or renewable — options among those available, thereby reducing their carbon footprint.
Prosumers: Active electricity consumers, frequently called ‘prosumers’ because they both consume and produce energy, could make lasting changes to the electricity distribution landscape. There are various types of prosumers: consumers who produce electricity at their houses using solar panels, customer-led groups, businesses whose primary function is not to produce electricity, and public institutions. The number of prosumers has risen in recent times because of the fall in the prices of key technologies such as photovoltaic panels. The improved performance of the solar panels, subsidies, and more consumer choices are the other contributing factors. The profitability of prosumers depends on how much electricity is produced and consumed.
This may, however, pose a threat to traditional utilities who produce energy and maintain grids. But it is also important to remember that prosumers could be the solution for the energy deficit in major cities in developing countries.
The energy marketplace: The evolution of the smart grid, the rise in the use of renewable energy, and new electricity management technologies offer the potential for efficiency improvements achieved through a market-based transactive exchange between electricity producers and consumers. The transactive exchange offers a method for both producers and consumers to match and balance electricity supply and demand. There are several advantages of this model, including better utilization of grid assets, greater grid reliability and resilience, increased choice for consumers, and higher use of renewable energy sources.
- Smart cities and hyper-connected homes: Smart cities are aimed at using communication and technology to streamline the use of resources, including electricity, and improve governance. Smart cities and hyper-connected homes generate massive amounts of data, which companies in the utilities sector can leverage to improve services and conduct maintenance. Smart meters have become the top IoT device among utility companies in the last several years. By 2021, Internet-connected devices will account for more than half of the world's 27 billion gadgets, according to Cisco. In the energy space, those will include water heaters, electric vehicle chargers, pool pumps and more—anything that consumes energy which can possibly be used to shift demand to off-peak and less-expensive times.
Getting ready for the future
HCL is at the forefront of enabling utilities to adapt to disruptions and the evolving scenario. HCL is playing an important role in upgrading and digitalizing IT platforms for utility companies, helping in the modernization of their IT infrastructure and helping them transform to a 21st century enterprise.
Among the disruptions, the rise of the prosumers may be the most important development. This signifies a shift in how electricity is generated, distributed, and consumed in the future. There may be challenges, but an interdependency between utilities and prosumers is here to stay — and both will benefit.