Understanding the commercial value of energy insights

As more and more utilities are developing stronger digital products to help customers manage their consumption and save on their bills, we wanted to unpick the commercial benefit for utility companies, and discuss common strategies for enhancing and improving customer engagement.

On Eliq’s first webinar of the year, which is available on-demand here, we had the opportunity to speak with David Trevithick, Principal Analyst at industry analyst firm Delta EE, who is responsible for their Energy Insights services, alongside our own Will Ephraim, Head of Business Development.

David and Delta EE have recently published a report on the commercial benefits of energy insights, built on conversations with utilities around Europe, as well as evidence provided in case studies, also published in the report.

So, where is the commercial value of energy insights for utilities?

In the recent research carried out by David and his team, benefits across three broadly applicable categories could be clearly articulated and supported by a body of evidence: cost-to-serve reduction, customer retention and cross-sell.

Cost-to-serve reduction

On their own, energy insights help drive the adoption of utility companies’ digital interfaces such as web-portals and mobile apps, taking pressure off costly call-centres, and the insights themselves can also help resolve some of the drivers for customer calls, such as asking why the bill has gone up. 

This benefit is particularly prominent in incumbent utilities, who inherently have a lower rate of digital adoption than digital-first energy companies. According to Delta EE’s research, cost-to-serve reduction is often under-estimated, sometimes overlooked in the internal business case developed by utilities for energy insights.

Customer retention

By delighting customers, and engaging them with tools that they use and value, there is robust evidence showing customers are more loyal as a result, reducing customer churn. Will Ephraim pointed out that the amount of digital customer interaction can increase tenfold, through the deployment of energy insights, from a typical ~10 minutes per year, as suggested by research by Accenture New Energy Consumer, to over 100 minutes per year, for users who access energy insights across Eliq’s clients. 

Cross-sell

Arguably, a major strategic direction for many utilities is to move from an asset-based business model for a low-margin commodity, to a more diversified model where margin will increasingly come from higher margin add-on products across the customers’ complete energy needs, but Delta EE’s research shows that this is where the future value opportunity lies, with the margin being generated from the sale of new products and services. 

David presented on the principal sources of commercial value during the webinar

So why should utilities help customers reduce their energy consumption?

From the outside, it might seem counter-intuitive that utilities, who are in the business of selling energy, would benefit from customers reducing their consumption. However, both panellists agreed that their data indicates that the loss of margin rendered by a 5-10% saving for the customer (read more about how savings are delivered in our Innlandskraft’s case study) is overshadowed by the benefits across customer retention, cost-to-serve, and cross-sell of higher-margin products. 

On top of that, David and Will both agreed that utilities today look at this as a strategic investment in their long term customer relationship, and in repositioning their businesses around solving energy needs for consumers. With the advent of time-of-use tariffs and CO2 savings through time-shifting, the interests of utilities and their customers are also becoming more aligned over time.

“If there is one takeaway, it is that energy insights can play a key role in accelerating the energy transition and at Delta-EE, we have collected a robust evidence base and model that supports energy insights business case and scenario planning to reduce risk and uncertainty in investment decisions.”

– David Trevithick, Principal Analyst | Delta-EE

About the panellists

Thank you to Alex Ross for being the moderator of the webinar.

David Trevithick, Principal Analyst at Delta-EE

David is a digital energy customer expert with both energy retailer and research consultancy experience. At Delta-EE he leads the research service Energy Insights +, which focuses on the use of energy consumption data. His research helps clients improve customer engagement and drive positive change and value by understanding the residential energy insights market, players and solutions across Europe. David is a specialist in consumer insights and data, and its application to business intelligence, proposition development, customer experience and marketing strategy. He draws from experience in multiple sectors, including five years at Centrica as a consumer insight lead, adding significant value to customers and businesses alike.

Will Ephraim

Will is Head of Business Development (UK) at Eliq: an enterprise SaaS provider of customer engagement and energy insights software to the utility industry. Eliq today serves 20+ utilities globally with its SaaS platform delivering energy insights and customer engagement software, such as applications for mobile and web that enable customers to benefit from smart metering by better understanding and managing their energy usage.

Will has over 13 years of experience in energy, having worked in several roles at E.ON and Siemens. 

 

View the webinar on-demand here.