The world is changing. Numerous disruptive forces are requiring the traditional energy utility business model to evolve and, for many, forever change the way they create value and derive growth. While many of these forces are well documented and include familiar topics such as the transition to renewables, raising customer expectations, and technology changes driven by Industry 4.0, the timing and impact are harder to predict. Utilities need to start evolving their business models and broadening their innovation programmes to keep pace with disruption.
The future-ready digital utility series explores challenges and opportunities across the entire value chain, as well as the practical next steps that will shape the transition of utilities to the next energy paradigm. The first paper in the series, Unlocking Growth in Energy Retail, provides insights into how retail energy providers can overcome challenges and unlock growth:
Maximizing customer lifetime value in energy retail
Giving customers what they want with energy as a service
To unlock growth in energy retail, utilities need to reposition from energy providers to solutions and services providers, building five core capabilities to maximise customer lifetime value.
The challenge and opportunity
Retail energy utilities in many countries are seeing their traditional markets shrink as new entrants encourage customers to switch with a growing list of enhanced services. Expanding the services and value they provide customers through an energy-as-a-service model is key for traditional utilities looking to reposition for success in the transforming energy market. Energy-as-a-Service (EaaS) moves energy retailers from a “do everything” model that merely charges a margin on energy supplied to providing bundled services using an ecosystem of alliance partners. There is considerable appetite among existing retail energy customers for an expanded product and services offering from their utility, according to our survey of 600 customers across Australia, Germany, Spain, UK, India and US (more details in our full report).
Practical next steps to unlock growth
Utilities need to start evolving their business models and broadening their innovation programmes to keep pace with disruption.
By taking a coordinated approach such as Customer Value Management, utilities can gain a deep understanding of attractive customer segments, their appetite for new services and overall profitability to determine an actionable plan.
Once utilities have a clear view of their ambition, opportunity and target customer, they should build operational excellence in 5 core capabilities that will enable them to maximise customer lifetime value.
To learn more download the first full report – Unlocking Growth in Energy Retail.