In times of great stress that move people and societies to adapt to new circumstances, businesses that sense the potential inflections in their customers’ lives and boldly prepare for a different future not only survive, but thrive.
Take Alibaba, the e-commerce giant, for example. This once-small, online B2B marketplace chose, during the SARS epidemic of 2003, to accelerate its pivot to a B2C online shopping model to meet the needs of wary, anxious shoppers. The company now has 600 million monthly users and over $56 billion in annual revenue.
Airbnb, another success story forged during a crisis, gained significant customer mindshare during and after the 2008 recession thanks to its marketplace for homestay-style lodgings that benefitted both homeowners who had room to spare and lodgers who shunned higher priced hotels.
In our previous post, we introduced Energy 2020, the interplay of a unique combination of circumstances this year – maturing long-term energy trends, collapsing oil prices, and long-term ramifications of the COVID-19 pandemic. Driven by changing customer contexts, Energy 2020 will alter the energy industry’s trajectory. Energy companies – including retailers, T&D networks, energy solutions providers and others – that seize the opportunity to refashion their capabilities and market offerings to meet the needs of the future consumer will thrive and outperform their peers in the post-Energy 2020 world.
What’s changing for the customer, and what do these changes mean for energy companies?
The events of 2020 are influencing significant changes in consumers' lives along four dimensions: Lifestyle, Financial, Work, and Social. Energy companies must understand the type and degree of these changes, anticipate how they will alter customers’ needs in the future, and align their strategies to meet these needs.
Let’s first define the four dimensions of change.
Lifestyle Changes: The pandemic-driven lockdowns and a slowing economy are forcing people to quickly adapt to new circumstances and make visible changes to their lifestyles. This adaptation is reflected, for example, in a dramatically higher uptake of digitally delivered learning, telemedicine, entertainment, customer support, and more. An increasing do-it-yourself (DIY) mindset is also taking hold stimulated by restricted access to non-essential services during the lockdown.
More fundamentally and profoundly, there’s broadening introspection and debate on the impact of human activity on public health and ecology and the individual’s role in collective action. An industry veteran and senior customer service executive that we spoke to at a leading energy retailer opined that a reinvigorated what’s-truly-important-in-our-lives mindset will significantly influence the decisions and choices that their employees, customers, and partners make in the future.
These and many other lifestyle-impacting changes to mindsets and habits will influence customers’ consumption choices and patterns across all essential and lifestyle products and services. In the energy domain, this may reflect, for example, in greater interest in renewable energy plans and behind-the-meter solutions.
For energy companies, these lifestyle changes will trigger numerous opportunities. For instance, you can focus on driving greater customer adoption of digital channels for customer service, a topic that we will explore in greater detail in a following article. You can also seize the moment to innovate and drive the uptake of home-and-lifestyle decarbonisation solutions.
Financial Changes: Unlike the more typical recessions of the past, the economic deceleration resulting in job losses and a mood of financial uncertainty has been sharp and abrupt in 2020, catching much of society unprepared. The resulting impact on customers’ financial status and sentiment will influence their energy consumption and payment patterns. While government interventions and monetary support, in some markets, is helping customers keep the lighting and heating on, energy and utility companies will need to innovate to help consumers in the longer term.
Energy enterprises now have an opportunity to innovate in areas such as prepaid tariffs, digital payments, enabling customers to monetise their own-generation and storage investments, and customer empowerment through more flexible time-of-use (ToU) plans. Companies can also incentivise consumers to support community initiatives for energy affordability (for example, through a ‘Donate Watts’ program).
Work Changes: 2020 has dramatically changed how people work as companies have quickly enabled at-scale work-from-home (WFH) logistics and protocols. Across industry sectors, the speed of this response, the availability and maturity of supporting technology, and the adaptability of employees to working from home without impacting productivity have all combined into a collective moment of epiphany. Many of these trends will endure. A senior executive at one utility, which enabled thousands of its frontline agents to effectively deliver customer service from their homes, was emphatic that the company would not return entirely to the traditional co-located contact centre model when the current crisis abates.
Energy companies are well positioned to capitalize on opportunities offered by this major transition. For example, we anticipate the evolution of entire WFH products and services ecosystems to enable companies and employees to efficiently and securely manage this new way of working. Given your already strong relationships with residential and business customers, through energy supply and behind-the-meter services, you can play an anchor role in this new and potentially large domain.
Social Changes: The longer-term social impact of the pandemic will reflect in ongoing social distancing practices and safety concerns that impact services such as ride-sharing and essential utility functions at customer premises. Another outcome of the current situation is the greater empathy that customers have for providers of essential services, including utilities and frontline workers.
As an energy company, these changes will help transform your relationship with customers beyond a supplier - consumer construct. Examples could include enabling a sense of community amongst your customers for mutual energy-related support (a Quora-like forum, if you will, on energy conservation, product reviews, and more), collaborating with your customers to promote sustainable societies, and customer-assisted utility operations for qualified low-risk tasks such as certain types of visual or video inspections during outages.
A systematic approach to getting future-fit
To be ready for a different energy consumer of the future, energy companies must systematically analyse these fundamental changes, explore scenarios, and prioritise opportunities using a structured framework, as depicted in the exhibit below. While we have offered a few examples above, the key questions for your company to explore in greater detail are: What changes are occurring in your customers’ lives along each dimension? What new opportunities do these changes imply for each customer-facing value stream in your business model? Note that these may be opportunities aligned to any of three key goals: customer growth and satisfaction, future-ready business and operating models, and revenue and profit growth.