Energy & Commodities

Energy Retail’s Future: Innovation Drives Success

Sustaining innovation: Digitizing today’s business

Focuses on existing business and customer base – with the aim to make incremental improvements by using new digital assets and capabilities.

Evolutionary innovation: New sources of growth

Uses adjacent markets to create growth. An example is how retailers are working with the automotive industry to drive adoption of EV vehicles.

Disruptive innovation: New forms of competition

Enters new markets to create competition. An example is retailers looking at ways to balance the grid and pay customers to consume energy in times of excess supply.

Every energy retailer needs to transform the cost base. According to costs analyses conducted by Publicis Sapient, the best in class are low-cost retailers that can reduce their cost base by between 50 to 75 percent. The key enablers to cut costs are reducing unnecessary contact, driving digital self-service, moving to cloud Saas base technologies and adopting agile and product mindsets.

Energy retailers have two choices about how they go to market. Do they become the branded player? In this case, the aim is to own the customer relationship, providing opportunities to cross-sell and upsell products and services. Or do they want to become the value player? In this instance, the aim is to deliver the lowest price to customers for their energy.

• The branded player
  Seeks to differentiate on service, customer experience and brand.
  
  
• The value player
  Uses auto-switching services and the platform that provides the largest and widest reach to customers.

Energy retailers can look beyond the traditional industry and deliver against a new breed of standards. Customers expect regular improvements to the experience, they expect self-service as standard and they expect a supplier to build trust, be emphatic and deliver seamless experiences. Brands such as Monzo, Octopus and First Direct who differentiate this way will become the destination for consumers, who will buy and manage their energy needs.

There are two routes in the decision-making process – drive volume or create a relationship with customers. The energy company can build a relationship with their customer through branding. If the energy company wants to drive volume and win customers over by providing the cheapest price, then it can focus on a “no frills” experience, selling energy through price comparison websites.

Retailers can provide a guaranteed outcome around efficiency, comfort and care by building capabilities in home thermodynamics and design ecosystems of hardware, software, financing and maintenance to democratize access for the mass market.

As the adoption of electric vehicles (EVs) grows, energy providers will play a bigger role outside the home. Data in the latest Publicis Sapient DLI survey reveals that home energy providers are vying for a top place incharging stations, with 30 percent of respondents saying they would consider their home energy provider to charge their EV battery. Retailers can offer a unified charging ecosystem including home charging and installation of charging points. Energy companies can enable access to charging on the road. This will need to come in the form of partnerships – but energy retailers must work toward solidifying partnerships.

Along with being responsible for expanding charging infrastructure, retailers will need to develop additional value-adding services. For example, BT Wi-fi allows customers to access millions of hotspots on the go, enabling users to access their 4G and 5G data allowances at home, on the move or while traveling abroad.

Here are four activities energy retailers can take to service EV customers:

Though more dominant in Europe than in the US, the idea of “prosumption” involves production and consumption rather than focusing solely on production or consumption. Customers will not only have the choice in where they source their energy, but they can also sell excess energy back to the grid.