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TOTALLY DIGITAL?MAYBE NOT

CONSUMERNEW ENERGY

2 NEW ENERGY CONSUMERTOTALLY DIGITAL? MAYBE NOT

At one end of that spectrum are active, engaged digital users, and the unengaged status quo at the other. Yet, most energy providers have adopted a technology approach intended to drive a mass consumer shift to digital. This approach has led to disappointed customers and disappointed energy providers. It’s time to rethink.

DIGITAL DISAPPOINTMENTSTo date, energy providers’ digital investments have focused on short-term fixes, like patching up front-end solutions, investing in back-end improvements to legacy systems and implementing a variety of ad-hoc technologies. This approach has failed to attract and engage customers, limiting mass adoption of digital channels.

While digitally-enabled customer experiences are transforming many other industries, energy providers have yet to realize

1 "Transforming the Digital Utility," Accenture, 2016, www.accenture.com.

Source: Accenture Research, June 2016.

FIGURE 1. DIGITAL PERFORMANCE INDEX.

long-term value from digital investments. Accenture's Digital Performance Index affirms utilities lag, compared to other sectors, when it comes to digital adoption. 1

Accenture believes these unmet expectations stem from focusing exclusively on digital as an overlay or technology-driven project. Often, providers duplicate traditional business processes on new digital platforms—without focusing on simplifying those

2.5

2.25

2

1.75

1.5PLAN MAKE SELL MANAGE

Top players* in utilities Top players* in other industries(i.e., energy, consumer goods, telecom, electronics & high tech)

* Top players: approx. 50 largest global companies in each industry

||

WHEN IT COMES TO DIGITAL, ENERGY PROVIDERS FACE A WIDE SPECTRUM OF DIVERSE CONSUMER NEEDS, EXPECTATIONS AND LEVELS OF ENGAGEMENT.


processes and applying agility and design thinking to minimize customer effort or dissatisfiers. That marks the start of a vicious cycle of digital disappointment. A lack of business and IT alignment around requirements leads to project delays. Expectations remain unmet for both employees and customers, fueling continued reliance on traditional channels for customer complaints.

Results from Accenture's 2017 research, New Energy Consumer: New Paths to Operating Agility, show that only 27 percent of energy consumers have made digital their new normal. At the same time, many are experiencing digital disappointment. Among consumers who chose to interact with their energy provider via digital channels, a third weren’t able to complete their request and had to follow up with a live

FIGURE 2. ONE IN FOUR CONSUMERS ARE UNAWARE OF AVAILABLE DIGITAL CHANNELS.

WHAT IS THE MAIN REASON WHY YOU USUALLY PREFER TO CONTACT YOUR ENERGY PROVIDER VIA TRADITIONAL CHANNELS RATHER THAN DIGITAL CHANNELS? TOP FIVE.

I am not confident that my issue will be resolved successfully via digital channels 63%

60%I find traditional channels more convenient to use than digital channels

38%I am not comfortable with digital channels because of cybersecurity risks

31%My energy provider's digital channels do not meet my expectations

26%I am not aware of any digital channels being o�ered by my energy provider

agent. Most surprising of all: consumer awareness of energy providers’ digital channels remains low. Among respondents who prefer interacting via traditional channels, one in four aren’t even aware of digital channels offered by their energy provider (see Figure 2).

Energy providers that struggle to engage and retain customers in digital channels miss opportunities to cross-sell products and services. And many begin to feel the pinch in financial performance. That, in turn, stifles innovation—creating a lack of investment capital for new initiatives to keep pace with changes in the market and in consumers’ expectations.

The ultimate result: disappointed consumers. And a disappointed energy provider.

Base: Respondents who value interactions with their provider through traditional channels (over digital channels).Source: The New Energy Consumer research program, 2017 consumer survey.


Digital remains vital to any energy provider’s go-to-market

strategy. But it’s just one component. Successful providers

find the optimal mix of channels that consumers demand

and deserve. And with good reason: Accenture’s cross-

industry analysis shows that high-value customers use

multiple channels—even within a single interaction—to get

the outcomes they want. To increase customer satisfaction

and retain customers, providers need to offer digital and

traditional interactions that deliver integrated, highly satisfying

experiences. Balancing traditional and digital requires energy

providers design digital capabilities with people at the heart —embedding customer centricity within the organization.

Accenture believes that many digital initiatives to date have been targeting the wrong goals. And they’ve been missing opportunities to focus investments that will lead to delight, not disappointment. It’s time to shift digital initiatives away from a technology-driven, “go-big-or-go-home” philosophy. In its place should be a commitment to creating experiences consumers value, appreciate and can’t live without—regardless of which channels they use.

RETHINKING YOUR CUSTOMER ENGAGEMENT APPROACH

DIGITAL CONSUMERS: A TWO-SIDED COINWhen it comes to digital, energy providers must address a wide range of diverse consumer needs, expectations and levels of engagement. As they dive into these differences, providers will discover that, broadly speaking, most consumers fall into one of two opposing segments: active digital users and sleeping giants. Accenture believes both segments can offer energy providers a great deal of value—from cost efficiencies to cross-selling and upselling of new products and services.

To unlock that value, energy providers need to operate at two speeds: traditional capabilities and digitally-enabled capabilities. Doing so makes it possible to capture the benefits of both segments. Sleeping giants offer a stable revenue base and comparatively low cost to serve. With active digital users, the stakes are higher. Engage them in the appropriate way and digital bets will pay off. Get it wrong and losses could be just as substantial.


Accenture’s 2017 New Energy Consumer research program found that up to 36 percent of consumers are neither proactive nor expect active engagement with their energy provider. These sleeping giants simply want to pay their bills and be left alone (see Figure 3). In the past 12 months, this consumer segment did not interact with their energy provider at all—mostly because they did not experience any issues (75 percent) but also because they lacked interest (44 percent) and/or incentives (41 percent) to do so. And 41 percent of sleeping giants have not received any information from their energy provider that would make them

FIGURE 3. SOME CUSTOMERS PREFER TO “SLEEP” THROUGH THEIR ENERGY PROVIDER RELATIONSHIP.

willing to engage. This group may not even have the right motivators to engage.

Compared with other survey respondents, sleeping giants are three times less likely to buy additional products and services. In addition, they show limited interest in innovative product offers, such as connected home bundles or electric vehicles.

But sleeping giants are also a very loyal group—less willing to switch providers than other consumers. Even so, energy providers should not become complacent with this segment, as disruptive technology and

their experiences with other industries could cause expectations to shift. Demographics comes into play here, too. Nearly half of millennials are active digital users. As an energy provider’s customer base ages, the sleeping giant segment will surely shrink over time.

For energy providers, the imperative is to understand what specific market trends or dissatisfiers could accelerate an awakening—and, more importantly, which of these an energy provider can successfully influence.

WHAT HAVE BEEN THE REASONS YOU DID NOT INTERACT WITH YOUR ENERGY PROVIDER IN THE PAST 12 MONTHS? TOP FIVE CHOICES

I had no issues or complaints 75%

44%I had no interest in interacting with my energy provider

41%I have not received any information from my energy provider that made me willing to engage with my energy provider

38%I had no interest in buying/signing up for additional products and services from my energy provider

36%I am fully satisfied with the current level of service I receive from my energy provider

OF RESPONDENTS HAVE NOT INTERACTED WITH THEIR ENERGY PROVIDER IN THE PAST 12 MONTHS

36%

SLEEPING GIANTS: TO WAKE OR NOT TO WAKE?

Source: The New Energy Consumer research program, 2017 consumer survey.


While sleeping giants prefer to snooze, another segment is wide awake. And they’re interested in new energy value propositions. These active digital users have interacted with their energy provider via digital channels—email, SMS, website, app or digital agent—at least once every three months over the past year.

Representing 27 percent of respondents in this year’s New Energy Consumer research, these consumers offer more value but can also introduce higher risk and costs if not managed carefully. A large proportion (42 percent) of active digital users are more interested and willing to pay for a connected home

bundled service. That’s twice as many as other consumer segments (21 percent). And that figure increases to 77 percent for active digital users (60 percent for other consumers) when the connected home is embedded with the latest technology. Most active digital users (69 percent) are comfortable with their energy provider gathering additional personal information to offer more personalized offers and experiences. Less than half of other consumers (48 percent) share that view.

Those are the potential rewards. The risks? Thirty-eight percent of active digital users are more likely to switch in the next 12 months than non-active

ACTIVE DIGITAL USERSREADY TO DOUBLE DOWN?

digital users. This segment is also more engaged—spending an average of 20.7 minutes a year in digital channels and an additional 16.9 minutes a year in traditional ones. Given these levels of interaction, achieving cost savings could prove tricky without the appropriate focus. Energy providers will be continually challenged to balance growth and revenue generation with cost savings. That’s especially true since active digital users are more likely to switch to traditional channels when their digital expectations are not met (see Figure 4). Forty-two percent of active digital users will do so compared with just 27 percent of other consumers.

FIGURE 4. CAN’T MEET THEIR NEEDS WITH DIGITAL? ACTIVE DIGITAL CONSUMERS WILL TURN TO TRADITIONAL CHANNELS.

WHAT IS THE MAIN REASON WHY YOU USUALLY PREFER TO CONTACT YOUR ENERGY PROVIDER VIA TRADITIONAL CHANNELS RATHER THAN DIGITAL CHANNELS? TOP FIVE

I am not confident that my issue will be resolved successfully via digital channels Active digital user

Non-active digital user

63% 63%

I find traditional channels more convenient to use than digital channels 57% 61%

I am not comfortable with digital channels because of cybersecurity risks 42% 36%

My energy provider's digital channels do not meet my expectations 42% 27%

I am not aware of any digital channels being o�ered by my energy provider 28% 26%

Base: Respondents who value interactions with their provider through traditional channels (over digital channels). Source: The New Energy Consumer research program, 2017 consumer survey.


CURB DIGITAL ENTHUSIASM? NO—REDIRECT ITIf highly digital consumers are likely to jump ship to traditional channels, and if a significant proportion of consumers aren’t even interested in higher levels of digital engagement, is it still worth investing in digital initiatives? In a word, yes.

To avoid digital disappointment, digital initiatives need to be redirected with a focus on people. And a clear understanding that digital is part of a much larger picture. Success awaits in the physical–digital blur, as digital channels can never fully replace real-life, human interactions. Even when digital user experience is effective, energy providers will need to retain traditional channels. Why? Because consumers will still prefer a live agent for certain transactions. When they want to escalate complaints, they value being heard and understood by a person. A digitized voice just won’t do.

Meanwhile, a physical location that offers a face-to-face experience—or digital–physical experiences akin to those banks and telecommunications players have developed—can engage the community and give consumers a chance to touch and feel new products and services.

Accenture’s New Energy Consumer research affirms this need for excellence across both digital and traditional channels. Sixty-three percent of consumers who interact via digital channels lack confidence that their issue can be resolved successfully. And, 60 percent value the convenience of traditional ways of interacting. Leading energy providers are focusing on removing dissatisfiers—and creating an effortless customer experience.

Accenture believes the shift to digital requires as much focus on traditional channels as on digital ones. The best approach: start by mastering “digital basics” and setting a foundation in both types of channels. Start small and build on successes, giving active digital users confidence that they can successfully complete transactions and meet their needs.

To delight active digital users—and move sleeping giants to digital channels as they awaken—make speed, convenience, ease of use, accessibility and customer-centricity the hallmarks of digital and traditional services. To get there, build an experience that is consistent, integrated and centered around the consumer.

Start with customers’ current experiences and then evolve and advance the journey through:

• Digital tuning. Design for consistency across channels and technologies. That likely means redesigning integral components, such as IVR and call scripts, flows and capabilities. Expand transactions on digital channels, such as online portals and mobile presence. Embed analytics into processes across all channels so it’s possible to test and refine concepts and designs with users. At the same time, verify consumers can move seamlessly between digital and traditional channels.

• Digital containment. Identify and tackle ways to effectively avoid or address drop-out moments in transactions. Among the possible fixes: simplify processes and update policies to work more effectively in digital channels. In addition, digital channels need to offer an effortless

customer experience. If they don’t, customers will revert back to more expensive traditional channels.

• Customer rewards. To move customers to digital channels, sweeten the proverbial pot. In Accenture’s survey, 73 percent of respondents said they would sign up for a digital-only customer service program if offered a discount on their energy bill. We’ve already observed energy providers incenting and rewarding consumers for moving to digital channels. For example, OVO gives customers discounts on their bills for managing their accounts online.2 Meanwhile, British Gas offers reward points for digital activities, such as managing your account online. Consumers can then spend those points on a variety of products within the network of partnering companies.3

TUNE UP THE OPERATING MODEL

2 "Why does OVO offer a discount for online account management?" OVO Energy, www.ovoenergy.com.

3 Nectar, British Gas, www.britishgas.co.uk.

WHEN LESS IS MORENo matter the market situation or state of a digital shift program, mass approaches to digital transformation will inevitably plateau below desired expectations and outcomes. Energy providers now have access to the technology, analytics and approaches to take a more nuanced approach to understanding the customer engagement spectrum. And a surgical approach to orchestrating an exceptional customer experience across all channels.


• Digital champions. Engage front-line staff as partners in this process. Customer service representatives must be incentivized to educate customers on the digital shift—with their rewards and targets clearly aligned to these goals.

• A focus on active digital users. Aim to delight them, wherever they are. Focus on making their experience exceptional as they offer more value. Being able to offer—and measure—a best-in-class customer experience on digital channels for these consumers positions an energy provider to capture their attention for the cross-selling and upselling of new products and services.

What about the sleeping giants? They may be quiet for now, but Accenture believes energy providers must carefully awaken this group or risk losing them as customers. The imperative is to build a relationship with these consumers before someone else does. The timing of when to wake them will be based on numerous factors—from regulatory movements and market structures to asymmetric competition to demographics, as well as a host of consumer trends.

Leading energy providers are already gathering data and using analytics to further understand the sleeping giant segment, and set a deliberate, insight-oriented strategy for when and how to wake them. In regulated markets, it might be best to let sleeping giants lie a while longer. These consumers exhibit a lower cost to serve when not active, allowing a greater proportion

of operational budgets to be focused on active digital users. In deregulated markets, the imperative is to verify that these consumers are not disturbed for the wrong reason. Energy providers need to actively manage their sleeping giants to avoid losing these profitable customers to competitors—and to retain and migrate them to the potentially more profitable active digital user segment.

Once again, timing is key. First, master the basics and set the digital foundation—only waking sleeping giants when ready. Verify that tactics and digital education campaigns are in place so that awakened giants will migrate to digital with their current provider—not jump ship to competitors.


DIGITAL DO’S

Pull measures facilitate the move to digital channels

• Break down barriers, making it easier for customers to find, access and use digital services.

• Educate customers on digital services through targeted campaigns and outreach.

• Train agents to educate consumers and promote digital channels.

• Offer monetary or other incentives to encourage customers to demonstrate desired digital behaviors.

• Use gamification to make digital channels more attractive.

Push measures move customers to digital channels

• Automatically set new and existing customers to the digital option.

• Make digital the default option, working with opt-outs rather than opt-ins.

• Disable opt-outs and returns to offline channels where possible.

• Align customer touchpoints and practices for digital adoption.

Want to encourage consumers to move to digital services? Use these push-and-pull techniques.

EXECUTIVE SPONSORTony Masella Managing Director Accenture Energy Retail and Customer Services

Sean Lim Managing Director Accenture Energy Retail and Customer Services, Asia Pacific

Wytse Kaastra Managing Director Accenture Energy Retail and Customer Services, Europe, Africa and Latin America

Scott Tinkler Managing Director Accenture Energy Retail and Customer Services, North America

ABOUT ACCENTURE’S ENERGY RETAIL AND CUSTOMER SERVICESAccenture Energy Retail and Customer Services delivers energy provider customer solutions for both competitive and regulated markets globally. We help our clients achieve four key business imperatives: cost effectiveness, revenue assurance and extension, customer satisfaction and demand optimization. Guided by New Energy Consumer research program insights, our electricity, gas and water clients can realize higher value through industry specific strategy, digital, technology and operations capabilities and world-class expertise, assets, tools and accelerators.

ABOUT ACCENTURE Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialised skills across more than 40 industries and all business functions – underpinned by the world’s largest delivery network – Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With 400,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com.

DISCLAIMERThis document is produced by consultants at Accenture as general guidance. It is not intended to provide specific advice on your circumstances. If you require advice or further details on any matters referred to, please contact your Accenture representative.

This document makes descriptive reference to trademarks that may be owned by others. The use of such trademarks herein is not an assertion of ownership of such trademarks by Accenture and is not intended to represent or imply the existence of an association between Accenture and the lawful owners of such trademarks.

Accenture, its logo, and High Performance Delivered are trademarks of Accenture. Copyright © 2017 Accenture All rights reserved.

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