The Power of Personalization for Energy Companies
Ever since the deregulation of the energy sector in 1992, utility companies have been struggling with customers jumping from one electric provider to the next to get the lowest rate and best service, also known as customer churn.
To counter this, many energy companies have started experiencing with new methods to increase customer retention, with the most successful method thus far being personalization.
A 2019 report found that 40% of utility customers are likely to stay with their current energy provider if it offers personalized services and/or proactive energy, meaning tools that help them monitor energy usage and modify their behavior to save money.
The fact of the matter is, the majority of today’s consumers expect a targeted, personalized experience. Almost every other business they transact with uses some form of personalization, from the retail store that provides coupons based on past shopping trips to the bank that offers cash back incentives for using its debit card at stores the customer already frequents.
Utility customers want their power company to show an understanding of their energy usage habits and needs. According to a 2018 Smart Energy Consumer Collaborative report, customers want to be shown “choices that align with their personal priorities.”
Every time a customer has to choose a new energy plan, whether they are moving or their current contract is up—they are bombarded with a lot of confusing information. The reality is, they just want to know how to save energy and save money.
But half of all residential energy customers don’t know where to start and are unsure which appliances in their home use the most electricity.
Offering personalized plans based on basic data can mean the difference between retaining a customer or losing them to a provider that better understands their needs.
By combining basic customer information, like age, gender and zip code, with behavioral information, like past energy consumption and financial status, you can create a comprehensive view of each customer and offer plans and solutions tailored to them. You can also factor in interactional data. This may include how they spend time on your site (billing, plans, FAQs, etc) and their past interactions via email, phone or chat with your customer service representatives.
Here are some examples of how energy companies can utilize existing customer data to offer personalized service:
A single man who lives alone and works outside of his home uses hardly any energy during the day. When it comes time for his contract to renew, he gets a personalized offer for a plan that gives him days free, so he only pays for the energy he uses when he’s home.
A married couple has been searching their current provider’s website for sustainable energy options. Their contract is about to renew so they are sent an offer for a sustainable energy plan at the same rate they are paying their current plan.
A woman in the city who is contemplating a move has contacted her current energy provider about transferring her service to the suburbs. She is sent an email about how to easily transfer service along with an offer for a free smart home device for her new residence.
So what’s the benefit of personalization for the energy provider? Other than the obvious benefit of retaining customers, research shows that companies that provide personalized content can also increase sales by at least 10 percent. And since it can cost six to seven times more to acquire a new customer than it costs to retain an existing customer, it’s well worth it to experiment with personalization. Chances are, you can start today with data you already have.