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23 August 2013

Smart Series: The Smart way to attract and retain energy customers (Part 1 of 2)

As a two-part mini-series, we are discussing how utilities can exploit the mandated smart-meter rollout as a catalyst for building a new relationship with their customers. In this first blog, we outline that despite a recently extended deadline of 2020 for the full rollout to be completed, there's a need to develop new propositions now.

The challenge to cost-effectively manage the smart meter deployment is huge and most of the major energy suppliers are committing significant financial, technical and human resources to this effort, with some early rollout volumes being delivered at British Gas and E.ON.  But is this enough? Which organisations will become best-known for offering transformational, engaging, trust-building and profitable propositions for customers?  Can the large suppliers defer this for a few years, or could a new market entrant or smaller player out-flank the incumbents, free from the shackles of the industry norms?

It is critical such propositions are delivered early in the smart-meter rollout, such that the early adopters of the technology become advocates of smart metering, helping the laggards engage. Critically, the urgency of this may be compounded by three additional issues:

  • Once smart-meters are installed, there is a lower barrier-to-entry for new entrants to the market. There are several consumer-facing brands known for innovation and trust who could make a real impact in the sector
  • There are a variety of switching business models which are incentivised to highlight the differences between propositions, beyond small differences in tariffs. Organisations who are offering compelling 'sticky' propositions, will happily pay commission to switching organisations to manage their lead generation
  • There are various changes to the regulatory landscape and wholesale market fundamentals which may introduce further price volatility. Accompanied by on-going political will to give a fair, transparent deal to customers (e.g. Retail Market Reform), the window for proving the effectiveness of innovative propositions and building trust with customer may be closing faster than the industry hopes.

Finally, the smart meter rollout is a 'once in a lifetime' disruptor for the utilities industry – and a perfect platform to engage with customers in a new way.  Although smart meters will inevitably have a material impact on the operating model for a utility, it is new customer propositions which will deliver the real prize.

These are not opportunities and challenges for another day. For organisations that want to sustain a long-term business as a trusted energy partner, the time to start thinking about them is now.

In the second part of this series, we'll be offering some thoughts on the approaches that can be taken to develop engaging propositions.

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