An open letter to Victoria’s electricity retailers.
In a tall building somewhere in Melbourne-town, Ministers and bureaucrats are probably making the final touches on their response to the recent independent review into Victoria’s energy retail market.
The review found the energy retail market is essentially failing us – the consumers – who rely on it each day to supply an essential service. The high prices and low innovation we see from the sub-sector that bills us for power, are the consequence of a market that is simply not working as it should. I surmised this is largely due to the homogeneous nature of the product, and impenetrable pricing, the subject of my previous blog on this topic.
However, a market review of this kind, focused as it is on consumer outcomes, represents a challenge as well as an enormous opportunity for energy businesses. Afterall, any company owes its existence to serving people something that meets a particular need. A review of this nature is focused on which of those consumer needs currently remain unmet. Businesses that heed this advice, may, in their own interest, but able to attract the vast numbers of disgruntled consumers being prodded into action and more active retail choice by governments of all persuasions.
Three ideas – opportunities – for business to consider, found among the review’s 11 recommendations, include:
1. Make pricing and contracts clearer.
Be the company whose prices are easily understood, whose contracts are clear, and who makes people’s lives easier. Consumer engagement in energy has, for more than a decade, been marred by a lack of transparency, turning to confusion, helplessness, and often rage, about bills. People don’t understand them, and feel disempowered when trying to choose between the companies that provide them. In the absence of informed choice, people are trying to leave the market altogether: going solar as an escape from bills that rise in juxtaposition to shrinking consumer consumption. Rather than spending on door-to-door sales, use the latent skills your company possesses to offer customers door-to-door energy assessments that identify areas where they can cut consumption as well as provide the best retail offer from your company. Consider the value you create for the consumer with every expense you create for your business. Where you can create more, with little extra investment, do it.
You’ll become the company that people choose because they understand what you are selling. The company people want to tell others about, given their surprise at being finally able to understand something previously opaque to them. Create platforms – virtual and physical – where your customers can advocate to others about how your company is the one that finally made energy easy.
2. Help people understand their own consumption.
Energy retail companies have access to a lot more information about our usage than we do, as customers. With the mandatory installation of smart meters across Victoria, our energy usage data is collected every 30 minutes; and it is sent periodically (several times each day) to the retail companies managing our bills.
Research shows most people don’t understand how much power they use, when, or what for – and a low understanding about consumption contributes to poor energy retail choices. How wonderful to be the company that alleviates this consumer pain point by digitising, innovating, and adapting a service offer to include:
- Average daily, weekly and/or monthly usage patterns as part of each bill – giving people (finally) a picture of what they are paying for. To see how much power is used even when not at home (by the fridge) or on the weekend (when you use the dryer) or in the evening (when you watch TV and run the dishwasher).
- Alerting customers by SMS or mobile notification when their consumption/bills reach a set threshold in a given month or quarter; so bills are never again a shock.
- Guesstimating the best opportunities for a consumer to reduce consumption, based on their usage patterns and providing them with tips specific to their energy use to help them save.
By using data and knowledge to offer new services that address the emotional pain of disempowerment in the energy sector, not only might companies attract new customers, but they may attract those willing to pay a premium for the chance to (finally!) understand where their money goes, and feel like they can control it.
Not only that, but by evidencing a service designed to respond to consumer needs, you might also become the company that begins to turn around the reputation of the sector – from one that is distrusted, to one that is an expert partner in daily living.
3. Make the support for people on low incomes known.
As an essential service, regulation necessitates that energy companies must do a lot for people on low incomes; simply switching off for those who cannot pay is an option of last resort. And mostly, already, many companies do provide support for people on low incomes. But I’d hazard a guess that outside social services and policy circles, this is not widely known.
Opportunities in the space are therefore two-pronged.
(a) Act proactively to support people on low incomes – beyond your regulated requirements – to help those who otherwise suffer disproportionately to access electricity and live comfortably.
Give people who present a health care card a “cheaper than your otherwise cheapest available” offer (e.g. on provision of health care card details). Then give them the government subsidies too.
Offer older people ways to heat or cool their home cost effectively – so they can maintain comfort and health without fear of energy bills they cannot afford.
Leverage the expertise within your teams, as well as the government incentives available to disadvantaged groups, and for energy efficiency. Partner with social services, local government, and any others to create physical places, pop-ups and workshops where your vulnerable customers can go to access support services that help better manage energy usage and bills.
Do it not just to be generous (as that is rarely a sustainable business model) but in ways that support your vulnerable customers to pay their bills, pay on time, and feel good about it. Make it a business strategy, and a social impact one – that delivers a social good as well as a financial return through taking care of its customers.
(b) Tell people what you are doing to make energy accessible, to protect the vulnerable and to act as an ethical citizen. Show us that you are a company that cares – because you are walking the walk. Measure it, report on it. And make it a part of your purpose to offer energy to everyone – it’s an obligation, but it can also be your mission.
By deciding when and how your company can put customers first, you protect yourself at least partially from government interventions that seek to do the same.