In Utilities, Digital Favours the Brave

First mover takes all with a delightful digital experience 

Where’s the next competitive advantage for utilities in Australia?  Regardless of which energy retailer you choose your lights will shine just as bright and your gas heater will warm your house the same. Utilities are left to compete on price and providing complimentary products and services. With increasing competition from an influx of low-cost retailers, a key battleground for industry supremacy is providing a superior customer experience. Increasingly, customer experience in Australia means digital experience. Eighty per cent of us own smart phones and more than half of us own a smart phone, tablet and notebook. Device penetration is second to none globally, and this is making the Australian digital experience – how a customer interacts with a brand online through discovery, transaction, delivery and support of goods and services – more important than ever.

Historically, digital adoption among utility consumers has lagged, but this is changing rapidly. SAP recently conducted its inaugural Australian Digital Experience Report, which for the first time measured Australian brands’ performance in delivering delightful digital experiences. The research found that 50 per cent of those surveyed interacted with their utility online, higher than both the insurance and retail grocery sectors. Unfortunately, the research also found that consumers aren’t too pleased with these interactions.

All industries are negative; some are more negative than others

The Australian Digital Experience Report is based on nearly 7,000 digital interactions from 3,000 consumers across six industries. Respondents rated key attributes of the digital experience, such as availability, integration, reliability, interactivity, personalisation and more. Based on these ratings, consumers were designated delighted, ambivalent or unsatisfied with their digital experience. The digital experience score for a given industry was derived by subtracting the percentage of unsatisfied consumers from the percentage of delighted consumers. The highest score went to the retail grocery sector, though even this industry showed more unsatisfied than delighted consumers. At the bottom of the pile: utilities, with a score of -33 per cent.

That there’s a quantifiable gap is important. But more important is that there are considerable business outcomes tied to this gap. Of those delighted with their digital experience in the utilities sector, 65 per cent would remain loyal to the brand, compared to only 16 per cent of those who were unsatisfied. The same trend holds true for advocacy: those delighted with the digital experience delivered an NPS of 59 per cent; compared to -62 per cent from those unsatisfied.

What’s important to utilities consumers

The digital experience attributes most important to utilities consumers are consistent with those from other industries, including available anytime on my terms, cohesive, integrated and simple and respectful and dedicated to my needs.

These preferences, though, are dynamic. The Australian Digital Experience Report uncovered that the more digitally influential a consumer is – their level of activity and following on social media and in online communities – the higher they rate the digital experience. Much higher: This small but growing cohort rated their digital experience on average two times higher than the those who were less engaged digitally. Importantly, this group by far favoured the emotional attributes of the digital experience to the functional. These are the consumers of tomorrow, and to gain competitive advantage, utilities need to get past the table stakes of the functional digital experience and get to the emotional.

What utilities can do

The utilities industry in Australia is ripe for disruption. Even marginal innovation to the top digital experience attributes could quickly put a first-mover ahead of its competition. Some have already made smart investments here and are reaping the loyalty and advocacy benefits of a superior digital experience.

With a critical focus on “cost to serve” Utilities have traditionally focused on the digital experience is a way to reduce cost rather than add value. Doing digital is more than an online brochure, or recreating a physical process in a digital context. It’s about redesigning processes end to end and optimising them for digital interaction. Utilities that see “digital” primarily as a way to defray the cost of call centres need to reconsider their approach. Digital doesn’t just reduce the number of calls you receive; if done right it changes the conversation and ups the value of call-centre interactions.

Suncorp Insurance, the top performer among all brands in the Australian Digital Experience Report, has mastered the interplay of digital, call centres and other channels for their claims and policies.

This is the essence of true omnichannel engagement: seamless integration of systems that allows shoppers to browse, buy and take possession of goods and services more flexibly and conveniently, leading to more sales. For example, research from IDC shows that omnichannel buyers spend 3.5 times more than single-channel shoppers.

In addition to engaging customers through a proper omnichannel platform, utilities need to know their customers better if they are to deliver a delightful digital experience. Knowing your customers means taking in data from both traditional sources such point-of-sale data, but increasingly from less traditional sources, such as social media, signal or even machine-to-machine data. Behavioural and locational data can be much more representative of a customer’s preferences than prompted data, such as that from feedback or customer-satisfaction surveys. Additionally, breaking down data silos and harnessing the power of real-time data provide a single and timely view of the customer.

Innovations in the sector around smart metres and Internet of Things continue to gain momentum and further connects customers to how they consume energy. This will further increase the number and frequency of digital interactions between customers and the brand as they gain more control over the experience. If utilities can empower their consumers with digital, it will pay off quickly and meaningfully through improved loyalty and advocacy.

Australia experiences the highest rates of customer switching of any retail energy market globally.  By delivering a superior digital customer experience utilities can reduce customer churn and improve margins thanks to lower switching costs and reduced reliance on price discounting. And yes, a true omni-channel customer experience can include low-cost digital channels that help Utilities drive down cost-to-serve.    

The customer is in control. To compete and win in today’s digital world, utilities need to create an environment where true, digital engagement with customers is possible. And to meet and exceed customer expectations and fend off rivals, they must be able to respond to them in real-time, whenever, wherever and on whatever device consumers choose to use.