“Companies across the UK utilities industry are facing increasing pressure to reinvent themselves. With greater choice and evolving needs, consumers are demanding more from their suppliers and utility providers need to transform their customer experience in an increasingly uncertain environment. As the utilities industry develops, the real winners will be those that adapt in time.” Simon Virley — Partner — KPMG
The utilities business model has remained relatively unchanged for the last 20 years but the sector is ripe for disruption. A tough regulatory stance on customer service, combined with the high expectations of next-gen consumers, could spell trouble for traditional suppliers slow to innovate the experiences they deliver to their customers.
Customer experience matters. The explosion of customer centricity has transformed the retail and travel sectors but the utility regulators are now following suit, intent upon using tough new scoring and financial penalties to make their message heard. Ultimately this should spell good news for the customer and the supplier but in the short term, there are significant challenges that need to be addressed.
The Customer Challenge
Strong relationships and customer advocacy have long been championed as revenue drivers for business. But how can an industry, traditionally opaque to consumers and whose essential services are often taken for granted, develop a deeper relationship with the customer?
Where there is choice, there exists little advocacy or loyalty. The utilities market is still heavily cost driven, where the lowest price often wins. With the increasing ease of switching services and newer, proactive offerings like lookaftermybills, Utilities 4.0 needs to find a way to deliver valuable, intelligent experiences and not merely service a customer’s base needs.
Where the customer has less choice, for example with their water supplier, the challenge can be even harder. Water companies in particular need to ensure they are seen as a trusted provider and not simply an only-option supplier. If the most positive interaction you can have with a customer is to send them a bill once a month, there is work still to be done.
The environment is also a key consideration. Having just survived the hottest summer on record we are all acutely aware of global warming and the ever-dwindling supply of our natural resources. People want to feel inspired to action, empowered to help, and reassured that they are not willingly part of the problem.
If water and energy companies are to become trusted providers and re-imagine the customer experience then they need to show they can meet the customers wants as well as their needs. This is the behind the meter generation. A generation that can and is contributing to a fundamental change in the nature of energy creation and distribution.
Self-generation, primarily through solar, is increasingly of greater interest. Utility companies continue to push smart meters as the answer to energy usage and greater efficiency but reception is mixed; recent studies have shown that solar power, renewables and clean energy are of much greater interest to the next-gen consumer. If utility companies are to engage with them, they need to truly understand their customer and not simply push their own agenda.
Power to the People
Democratisation and choice are major factors in improving the customer experience. Where is my energy coming from? Who am I buying it from? Is it ethical? How can I give back? How can I become more energy efficient? How can I control my spending? How can my utility company empower me?
You need only look at the explosion of new banking startups and mobile applications to see what happens when consumers are left wanting by traditional organisations too slow to keep pace with technology and consumer demand. Next-gen ‘challenger banks’, such as Monzo and Revolut, have thrived exactly because they are tapping into a pent-up frustration; if technology can enable greater transparency, autonomy and empowerment then the organisations that deliver on this can delight their customers and disrupt their competitors.
The customer experience obviously has to start with the customer. Only by understanding their needs and forming a picture of the person, people, or communities that sit at the edge of the network, can the utilities sector truly innovate.
The Role of Digital
There are several technologies that play a significant part in innovating the customer experience and are essential ingredients to what some people are now referring to as Utilities 4.0 (see Industry 4.0). Now reaching maturity, they fit together like parts of a finely tuned machine and form a solid foundation for digital transformation.
The first is not actually a technology, but an approach to problem-solving and a framework for innovation.
As clearly articulated by the Interaction Design Foundation, “Design thinking revolves around a deep interest in developing an understanding of the people for whom we’re designing the products or services. It helps us observe and develop empathy with the target user.
Design Thinking helps us in the process of questioning: questioning the problem, questioning the assumptions, and questioning the implications. Design Thinking is extremely useful in tackling problems that are ill-defined or unknown, by re-framing the problem in human-centric ways, creating many ideas in brainstorming sessions, and adopting a hands-on approach in prototyping and testing”.
While not a totally new idea, design thinking is now being used by some of the world’s top companies and has recently been championed by IBM as means to drive customer values and measurable outcomes.
Adopting a cloud computing platform is essential for any organisation that wants to be able to innovate at speed and at scale.
The cloud has been evolving at a truly rapid pace over the last ten years and many organisations fail to understand the impact that the latest incarnation of cloud computing will bring. Platform as a service (PaaS), serverless computing, elastic computing and a plethora of ‘lego brick’ cloud services, means that it is faster and cheaper than ever to build applications at astonishing levels of complexity.
It is no exaggeration to say that systems that would have taken years to build previously can be delivered in weeks or months; ideas that would have taken an impossible amount of compute power to even consider exploring can be prototyped in days, for almost zero cost.
The Internet of Things really is a thing. Smart plugs, Smart thermostats, Smart water meters; these are only just beginning to scratch the surface; the real potential of this technology is often overlooked.
Small devices, some no larger than a button, are being routinely used to record data in real time and stream it to the cloud for storage and analysis. IoT is a technology that is useful because of what has come before. Big data, cloud computing, low power communications protocols and the miniaturisation and reduced costs of hardware have all contributed to its enablement.
IoT can be put to work across the entire organisational spectrum. It can make the network smart, it can make field workers and equipment more intelligent and it can provide greater insight into a site or individual. From drones and phones to wristbands and smart vans, from sensors underground to the intelligence behind the meter, IoT ultimately allows organisations to improve operational efficiency and the customer experience through data gathering, actionable insights and connectedness.
Intelligent applications refers to a new wave of software, across mobile, web, cloud and embedded devices, that sits atop the intelligent cloud and the intelligent edge.
These applications make use of cognitive services, machine learning and artificial intelligence to make sense of the vast amounts of data and processing power now at our disposal. The impact that artificial intelligence (AI) and machine learning (ML) will have on all of us should not be underestimated.
Two decades ago, Google created a search engine that made it easy to find information anywhere on the world wide web. The problem of search had been solved and the search market exploded. Subsequently, many application developers went on to re-imagine a host of other problems, reframing them to ask “how can I make this problem a search problem?” If a problem could be reframed such that search was the answer, it could likewise be solved.
Today, machine learning and data science have largely solved the problem of finding complex patterns in huge amounts of data. When we start to re-frame our problems into problems that can be solved by spotting patterns in data, we have a powerful new way in which to find the solutions.
Companies like Microsoft, Amazon and Google are now commoditising AI with a plethora of new cloud services, ready for developers to build intelligent applications with relative ease. Sentiment analysis, image recognition, video analytics and text to speech are just a handful of the cognitive services, powered by machine learning, available today.
Finally, and to come full circle, the power of the cloud and of AI and ML is beginning to find its way back to the very devices that have enabled it. Edge computing, or the intelligent edge, allows machine learning models, developed with vast amounts of data and cloud computation, to be installed back onto discrete hardware, sensors, phones or devices. These devices, often only intermittently connected to the internet, are said to exist at the ‘edge’. It is this ‘intelligent edge’ that holds so much promise for the smart network and the connected customer in the years to come.
With so much technological innovation at hand and with industry 4.0 looming, we are now living in the beginnings of the fourth industrial revolution. The utilities sector has been seen as slow to innovate in the past but in-fact there has never been a better time to innovate than today.
Innovating the customer experience means first understanding the wants of the customer as much as the needs. It means choosing to re-imagine the type of relationship that a customer can have with its energy or water supplier.
Next-gen customers desire empowerment and enablement. While some may simply want a more frictionless experience with a focus on speed and transactional efficiency, some will want a more meaningful and personal interaction. Giving the customer greater autonomy and insight over their environmental impact and becoming a trusted provider has the potential to move suppliers up the value chain.
Meeting a customer’s wants will drive advocacy and loyalty. Understanding a customer better allows organisations to provide personalised and tailored experiences. In turn, this will create new opportunities for services and revenue while at the same time increasing satisfaction and reducing regulatory penalties.
The application of design thinking and the advances in cloud computing, the internet of things, artificial intelligence and machine learning provide Utilities 4.0 with all the tools necessary to disrupt itself instead of waiting to be disrupted. In the end, innovating the customer experience and improving operational efficiency will be good for the customer, good for the environment and good for the bottom line.
Interested in hearing more? Watch this space for news on our upcoming “Intelligent Experiences: Utilities” event with our friends and partners Microsoft.