by Greg Guthridge, Accenture Energy Consumer Services
Utilities have largely delivered on the core purpose of the energy value chain: to provide safe, reliable, low-cost energy. While that purpose remains critical, achieving it is no longer enough to drive growth and success.
Globally and here in the U.S., utilities are facing fundamental changes. Energy consumers’ expectations are increasing, technological advances are creating exponential step-change and regulatory and market forces are fuelling complex, sometimes contradictory, priorities for providers.
Recognizing the fundamental shifts underway, many providers have already begun the journey to becoming more focused on the consumer. While there has been success in certain areas of the business, for many utilities, this step-change transformation remains elusive.
Even as many utilities have increased spending on consumer-centric programs, such as online self-service, there is not yet a direct translation into improved trust or satisfaction. In fact, Accenture’s New Energy Consumer research shows that consumers’ trust in utilities is at a four-year low and there is a growing gap between customer expectations and the energy experience they receive from their providers. In large part, technology is the primary driver for increasing consumer expectations, as it has unleashed exponential change in functionality and information available to the energy industry. For example, smart technology is enabling a new era of mobile applications and integration with emerging channels for consumer communications.
Partly in response to consumer demands and emerging technologies, regulatory and market forces are also influencing the landscape. Regulators seek to balance requirements to upgrade and invest in infrastructure with the cost impact on energy consumers.
Sustainability is gaining momentum on regulatory, government, consumer and corporate agendas—so much so that it is increasingly woven into the fabric of business as usual. The shift toward renewables and increasing adoption of distributed generation is creating a wave of new opportunities for utilities. For example, our research shows that as many as 77 percent of small and medium businesses (SMBs) in the U.S. are interested in products that would help them generate electricity, such as solar panels or wind turbines.
Industries are beginning to converge, driven in part by shifts in consumer behaviour, technology trends, regulatory demands and the rise of sustainability. In non-competitive energy markets, other providers are entering with products and services designed to complement the commodity provided by the regulated utility. In competitive markets, energy companies are competing against each other, individually vying for a broader share of consumer spends. Some non-traditional providers are eyeing energy as a means of increasing their share of spend and customer retention. New entrants—including consumer goods and telecommunications companies— are making bold moves into the home, offering energy audits and advice, integrated home monitoring solutions and home energy generation packages. In fact, according to our research, a significant majority of U.S. residential consumers and SMBs would consider a non-traditional provider for their electricity needs, such as a retailer, online site or a telecommunication company.
Regardless of the offerings or roles these organizations pursue in the energy marketplace, it is clear that many have the capabilities and experience to attract and retain consumers and create innovative new energy-related value propositions.
Utilities remain consumers’ first point of contact regarding energy and energy-related purchases. However, this may not necessarily be the case as the energy marketplace continues to change.
As utilities look for growth opportunities and new strategies to drive step-change improvement in consumer engagement, SMBs are emerging as a key opportunity.
SMBs report that they expect solutions from their energy providers targeted to their businesses, and although they do not feel they are receiving them today, many would be willing to pay for such solutions. To engage SMBs and capitalize on the opportunities they offer, utilities must move quickly to define and deliver value for this sometimes overlooked group of consumers.
As the marketplace is being redefined from the outside in, providers redefine themselves from the inside out. In many cases the way utilities have been built has made it increasingly difficult to respond effectively to the change and disruption that defines the evolving marketplace.
Siloed business units, rigid processes and fractured customer experiences are increasingly visible.
Increasingly, business as usual is not an option. Yet in a marketplace filled with disruption and uncertainty, utilities are challenged to develop long-term strategies and practical next steps. Within this environment, utilities should look inward to unravel years of operational history that have led to layers of complexity. Providers should relentlessly focus on simplification, flexibility and agility. Using this lens, providers will need to build four core competencies that will create a basis for success, regardless of how the evolving marketplace unfolds.
While there is no single “right” roadmap, focusing on delivering operational excellence, optimizing consumer interaction, creating lasting consumer engagement and extending the value proposition will holistically define successful energy providers of the future. These competencies are keys to remaining relevant and profitable and to delivering on the shifting expectations of consumers, regulators, governments, shareholders and to society at large.
In this environment of disruptive change, utilities have incredible opportunities to become dynamic, consumer-focused organizations at the leading edge of shaping a new energy marketplace. This is a pivotal point and the decisions made today will define the role of energy providers in the future.