Two energy retail trends that will shake up your business
How can energy retailers use digitalisation and automation to improve their processes and overcome the obstacles that are currently holding them back? There are two overriding major energy retail trends that should be on every energy company’s to-do list this autumn: hunting the most profitable customer and discovering the online customer journey.
Summer has come and gone here in Stockholm. In addition to relaxation, it’s been a perfect time to reflect upon the last 12 months of meetings with our clients and and reflect upon their common challenges. Overall, one thing is evident—energy retailers in the Nordics share many common challenges and are not using the right tools to solve them.
In this blog post I explain two emerging energy retail trends for tackling the biggest challenges many companies are currently experiencing—measuring the profitability of customers and understanding the online customer journey.
Trend 1: The hunt for the profitable customer
Sometimes giving bigger discounts to your customers can make your business even more profitable. How can this be? Let me explain.
Segmentation, appropriate follow up and customer care based on profitability level are all hot topics. Yet, retailers are still struggling to ensure that their customer loyalty program costs are directed towards the most profitable customers.
It is important to note that the total cost base of a customer holds a lot more in it than just, let’s say, their consumption or price levels. To determine the costs of different customers, you need to conduct a total profitability analysis and ask questions like: How does your customer typically contact you—by sending a quick email or making a long phone call? Are they paying their bills on time or always late? All of these affect the costs of different customers.
Once you have done this, it is clear that customers within different profitability levels should be treated differently. For example, if a highly profitable, long-term customer is late with a payment, you might want to consider just sending a reminder of the payment without a fee. In contrast, with a customer who is always late, you should focus on getting your money back as quickly as possible. To answer my previous question, your loyalty money should always be targeted to the right people – sometimes giving bigger discounts to your most loyal customers might be the solution for boosting your profits.
Trend 2: Discovery of the online customer journey
Many energy retailers still struggle to understand the customer journey online—starting from properly handling digital marketing to customer tracking on their website as well as contract automatization and the up sale process.
Why is the digital customer journey so important? Simply put—the energy consumer will seldom search for the most innovative products. They will more often choose the quick and easy retailer that is either showing up as a recommendation on a partner site or the first option on a Google search–or the one with a flawless customer experience.
But given that most companies have all the required data and tools right in front of them, what are they missing? The key here is to really work with your findings. Many Nordic retailers use very basic metrics for analytics: They do follow up using Google Analytics and only look at clicks and sales volumes—but this is just scratching the surface.
Instead, you have to discover where your traffic comes from: How do customers compare you with your competitors and how can you get them to stay at your site and make the contract? Taking the analytics one step further would be a great starting point for almost any retailer.
Finally: Spend your money wisely
There is a lot happening in the energy industry that will accelerate the speed at which you have to run your business. As a retailer, your key focus is selling—in order to do this properly, you have to know where your customer is and what to sell them. To analyze your customers, you will need automated and streamlined processes and a suitable platform. Your time and money should be placed where it can make a difference: automatization, digitalization and managing your assets in a cost-effect manner.
If you feel that these challenges are relevant for you, start handling them right now, because soon you will be knee deep in the upcoming Market hub regulations and supplier centric model discussions. If you are not addressing these issues now, someone else will be a step ahead of you.