Customer engagement and trends within the EU energy market

Whilst the digital transformation of utility operations intensify across Europe, energy companies are struggling with the consequences of climate change, rapidly changing customer expectations, and increased penetration of distributed energy resources.

What role can digital-enabled customer engagement play to improve customer experience, utility services and address some of the pressing challenges such as soaring energy prices?

Håkan Ludvigson, the CEO of Swedish AI-powered energy customer engagement platform Eliq, shares his thoughts around the topic.

What role does customer engagement play in addressing the current energy crisis in Europe?

With these extremely high energy prices, I’d firstly like to express my sincere sympathies with consumers struggling to pay their bills and heat their homes this winter, as well as with those who have lost their jobs as their energy supplier has gone out of business. 

Aside from the profitability issue due to high wholesale market prices, and rising levels of bad customer debt, the energy crisis poses two main challenges for utilities at the moment:

1. Communication difficulty with customers where engagement and trust is low. It’s always difficult to be the bearer of bad news, and price rises, energy crisis or no energy crisis, are not perceived well by customers as they don’t understand or trust the reason.

This drives:
a. Additional costs for call centers and rising number of complaints
b. Very high levels of churn (resulting from #1 and #2) in some markets, and (paradoxally) difficulty to acquire customers in others (such as in the UK where most suppliers don’t even take new customers right now).

2. A cash flow problem in countries where customers pay a fixed monthly bill, with only one annual settlement. Customers just owe their suppliers much more money than usual. The mitigations to these are to change customers’ monthly payment levels which further amplifies #1 by making it even more difficult to communicate.

Customer engagement through energy insights provides a path to mitigate both of these issues. If the only time your customers interact with you is when you ask them for money, raising prices is not easy. But with a strong proposition within energy insights, where customers engage regularly, suppliers find customers to be more understanding and feeling more in control of what is happening. 

For example, our energy supplier clients report that it has been easier for them to communicate with the customers who engage digitally via the Eliq platform, because (a) users feel that their utility is offering them a tool to reduce their usage with smart alerts, advice and ability to set a budget, (b) these users were able to track their account balance regularly since they log in 4-6 times per month and can see their debt to the utility gradually building up – so there is no moment of shock when they see they are suddenly hundreds of euros behind.

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Interestingly, we are seeing suppliers increase the promotion of their customer engagement tools like their mobile app, as a way to broadcast the message that they wish to help their customers reduce their consumption. 

Describe the important role played by customer engagement in the achievement of the Green Deal and Fit for 55 packages and in the energy transition?

So there’s a bit of a disconnect here for customers. There has been a massive rise in climate awareness and willingness to contribute to the solution among customers, and the energy consumption of homes and small businesses represent a massive part of the world’s CO2 emissions – yet customers don’t recognise their utility company as a solution provider or even their partner in speeding up the energy transition in the homes and reaching net zero. Customers put more of their faith in consumer and lifestyle brands like Ikea, Patagonia and Tesla to deliver a solution alongside governments. We believe the historical lack of willingness from utilities to engage with customers is the reason for this.

But we now see users who engage digitally with their utility through energy insights applications really start to shift their perception about their utility and feel more hopeful about their ability to contribute to a better energy system. And utilities are mobilising quickly to position themselves as a solution provider for their customers’ journey to net zero.

Are utilities in Europe fully leveraging customer engagement and reaping its full potential in enhancing services?

“Fully” is perhaps not the word I would use, but some European utilities have started to make a real difference now. As opposed to a single, poor monthly interaction, most of our utility clients now have weekly, positive interactions with a meaningful part of their customer base, in some case more than half their total customer base, which really changes the dynamics of the conversation. Aside from providing customers with actionable energy insights via their app or web portal customers can also to track their PVs, access insights about CO2 data in the grid and even charge their car when the energy system is more green.

What factors are hindering utilities from engaging with consumers and how can they be addressed?

There’s still the idea that customers will not and should not have to care about energy. That it’s the job of governments and perhaps utilities to solve. Clearly, customer engagement via energy insights should not be about customers lives more difficult, but today’s consumer is screaming for solutions for how they can take more control and actually be part of the solution to climate change.

Strong evidence is piling up in favour for customer empowerment and customer engagement, and with more energy providers implementing successful customer engagement strategies, this barrier is being broken down. I think analysts such as Delta EE are doing a great job sharing some of that insight of how customer engagement drives the business value within the industry.

Eliq will be showcasing their solutions at Enlit Europe in Milan from 30 November to 02 December on stand number 8.F90.

In partnership with research firm PwC and utility Jersey Electricity, Eliq will host a discussion to explore the value of digitally engaged customers in achieving carbon-neutrality targets.

The other factor I believe is in the way is the industry’s extreme focus on price. Energy providers have been almost incapable to win customers by other means than price. Price comparison websites are perpetuating this notion that the only thing that matters on energy is price. What we believe suppliers need to do is make real investments in innovation, in new energy-as-a-service offers and other non-commodity products.

About Håkan

Håkan Ludvigson is CEO and Co-founder of Eliq, a Swedish AI-powered energy customer engagement platform, enabling energy providers to build applications that help end customers manage their energy consumption, driving customer intimacy, loyalty and upsell. Before Eliq, Håkan was a co-founder of Acosense, a data analytics and sensor technology company in the Industry 4.0 space. Håkan is based in London, UK.