Winning over the next generation of utility customers
The power and utilities industry is on the cusp of transformation driven by technological advances, decreasing energy intensity, heightened environmental awareness, and evolving customer expectations. Although the power and utilities business model has remained relatively unchanged over the past century, traditional electricity, natural gas, and water utility providers are not exempt from the growing influence of these transformational forces.
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Power and utilities industry is on the cusp of transformation
Exponential growth in technological capabilities and evolving customer expectations lie at the heart of a fundamental change taking place in the relationship between power and utilities providers and consumers.
Have higher expectations:
- Consumers want their provider transactions to be easy, informative, and offer the opportunity to talk with someone when they so desire.
- Although primarily motivated by price and the desire to reduce costs, energy consumers also are motivated by environmental concerns. They are consuming less electricity, leading to stagnant load growth for the first time in the industry's history. To raise revenues, utility providers will need to offer new products and services.
- Consumers express interest in Energy Efficiency programs, better information, and analytics to help monitor and manage usage, access to clean energy within the existing supply mix, or through microgeneration and aggregated distributed energy resources. However, there is a disconnect between consumers' stated interest and actual participation in Energy Efficiency programs and distributed energy resources.
Express interest in dynamic, two-way communication with providers:
- Residential and commercial consumers are interested in using various channels to communicate with their utility provider across different stages in the customer lifecycle.
Are increasingly likely to take part in a transactive platform like microgeneration or community solar:
- Consumers see their utility providers as trusted advisors; this provides an opportunity for companies to help consumers make the shift towards a two-way flow of energy and information.
- As digitally-enabled, behind-the-meter energy generation increasingly impacts utility company operations, effective two-way communication with customers will assume added importance.
Stay ahead of the curve
In light of advancing technologies, changing customer expectations, and a shifting economic landscape, we suggest that utility providers focus attention on three categories when investigating and selecting new investment opportunities to attract and retain next-generation utility customers.
- Segmentation: Acknowledge and identify the differences in product, service, and communication preferences between residential and commercial customer segments, as well as differences within these segments. Use segment differences to advance a customized mix of products, services, and communication strategies for each audience. Develop segment-specific incentives and communications to convert more consumers' stated interest in participating in energy efficiency programs into action.
- Partnerships: Partner within and outside the power and utilities industry to help meet evolving customer expectations, especially their desire for energy-efficient products and services. Use partnering and acquisitions to get in front of new transactive energy programs.
- Smart contact: Invest in integrating customer service and communications channels to strengthen the provider-customer relationship. Consider adopting a smart contact approach that aligns operations with the changing nature of customer interaction, driven by new technology and the behaviors of the connected consumer. The smart contact approach is about getting the right contacts to the right resolver, whether human or otherwise. Smart contact addresses four key themes:
1. The move towards digital action
2. The rise of the bot
3. Making personal connections
4. The agile operating model
Advancing technology, static demand, heightened environmental awareness, and evolving customer expectations pose numerous financial and operational challenges for the power and utilities industry. As well, disruptive forces are compelling utility providers to change their traditional business model and creating an imperative to act promptly and decisively.