Expert Interview about Digital Transformation in the energy sector

Expert Interview about Digital Transformation in the energy sector

The digital transformation has also entered the energy industry and determines the agenda of the companies. Processes need to be adapted to changes in customer behavior at a rapid pace, as the competition is just a click away. Sven-Patrick Schymik, b.telligent's EVU expert, answers in five questions which challenges energy supply companies currently have to face and how this can be mastered.

Sven-Patrick Schymik
Principal Consultant, Practice Group Leader Energy

1) The digital transformation is on everyone's lips and there is no industry that does not focus on this topic in one way or another. How relevant is the topic of "digital transformation" in energy supply companies?

Utilities need to capitalize on the opportunities offered by digitization so as not to be overtaken by competition - even newcomers from other more progressive industries. There are some new players in the market who are purely "virtual" and have a much slimmer digital integration. It allows them to react much faster and more effectively to customers and competitors. The use of digital distribution channels from a speed and cost perspective (sales optimization), a well-integrated customer self-service and the ability to automatically collect consumption data are probably classic opportunities that can be lifted in the context of digital transformation. In this context, the topic of network companies is becoming increasingly common. These technological topics are certainly already there. However, it is seldom considered that the specialist topics of the sales companies often still have a lot of catching up to do. Even though the comparison is not heard with pleasure, utilities should not only focus on other utilities and their status, but also on other industries that have been around digitalization for some time and with success. An example is the telecommunications industry. The same is increasingly acting as a competitor to the energy industry.

2) Once again, the energy industry faces enormous challenges. Customers are becoming more confident and demanding. They want individual offers tailored to their needs. Are energy suppliers equipped for these demands?

Often there is still a lack of foundations in the companies. Although there are separate efforts, such as online portals that should provide the first steps of a self-service. However, these are neither linked to CRM nor embedded in overall analytics (functioning web tracking, etc.). For example, when a customer calls the service, they may want to look at the "incident" one day later in their contact history. The other way around, the agent wants to see which request the customer has submitted in the portal or which upgrade he has booked. If these data are not linked within the scope of legal admissibility, it is difficult to understand a customer holistically and to offer targeted and personalized service accordingly. Ultimately, more and more customers are becoming aware of how easy it is to change their energy contract. Often this is moored in the service and not only at the price.

3) The customer pushes himself increasingly in the focus of energy suppliers and can no longer be reduced to individual metering points and meter readings. He wants to be self-determined in any place at any time to gain insights into his profile and independently make changes to the personal data but also the desired services. Long queues for service calls or days of waiting for confirmation of a contract change are out. How well can utilities implement these needs and what can they do to increase performance with this type of requirement?

Changed customer behavior requires a high degree of individualization in companies. The question is whether companies can or want to offer that. For example, today's energy customers are increasingly concerned about the issue of environmental awareness, as well as the individualization of products but also transparency (comparability with other offers). If one uses a lack of transparency as a means of "customer loyalty", customers today have a clear expectation that all relevant information can be obtained transparently at a glance. This includes, for example, that in important letters such as invoices, the relevant content is processed appealing and not confusing. 

15-page cover letter are often used to try to prevent a change, as it is difficult to compare prices with other offers in the market. This view is certainly a little black and white, but often still common practice. In my opinion, transparency and a well-integrated service make it easier to hold a customer, rather than "prevention" and "confusion" strategies.

4) In May 2018, the EU GDPR will enter into force, consumer rights will be strengthened, and if not complied with, companies will face penalties of up to € 20 million or up to 4% of global business turnover. How do you assess the situation at the energy suppliers? Are the personal data already stored in such a way that compliance with the EU GDPR is not a challenge?

I think energy suppliers have a lot of catching up to do here, too, as active customer relationship management often does not exist and thus there is no focus on customer data - apart from the billing data. This means that the data regarding CRM are either incomplete or not existing in the way required by the EU GDPR. In order to be prepared for the competition in this industry, this is the basis, in addition to the organizational, procedural and strategic aspects, in order to be able to offer more efficient sales and service in the future and above all to act in accordance with the law. If opt-in information is incomplete or the data source is incomprehensible, then these companies will have an even bigger problem than in 2012 after amendment of the Data Protection Amendment due to the level of fines, penalties and claims. Many companies have not responded to this change to date - probably because the penalties were much lower than the effort and cost of overhauling the business.

5) What do you recommend to the energy companies to prepare for the future? Where should they start?

For distribution organizations of the energy supply companies, the focus is above all on sharpening the company-wide understanding of CRM, especially against the background of future challenges in commodity and non-commodity sales, marketing and customer care. A strategic reorientation towards the customer should take place which also provides a systematic organization and optimization of customer relationship processes. A validation and systematization of the CRM approach or the review of the customer relationship strategies and the existing functionalities of the system and process landscape of the private customer distribution of the sales company are absolutely necessary.