Retail Energy Communications – predictions for 2023
Energy Retail is a hot topic right now in Australia amid soaring wholesale prices. In this opinion piece, Richard Vaughan, GM Zipform Digital, shares his view on the importance of communications within the energy retail industry and the possible changes the everyday Australian could expect to see.
For the lay person, Energy Retail is the sale of electricity and gas to the end use customer, and is the final link in the supply chain.
Chart demonstrating the Energy Retail supply chain of generation to retail market
The question of why the future of this industry should matter to the everyday Australian is simple – it’s a significant part of the cost of living. Demand for energy is inelastic, meaning that a price change does not significantly impact the demand, because energy is a necessity in the provision of a standard of living that Australians have come to expect.
With the recent energy crisis fresh in our thoughts and after attending the national Energy Week Conference in late June, the future of Energy Retail is on a difficult path. With the cost of living increasing in Australia due to multiple factors (both global and domestic), retailers need to be communicating to their customers more frequently, clearly and in a media type that is preferred by the end customer (the consumer of energy).
There were many presentations by industry representatives such as AGL Energy and Aurora Energy at the Energy Week 2022 conference, all of which indicated that retailers ultimately need to build trust with the end customer.
That is now much harder than before in this current climate. It would not come as a surprise to many that customer engagement is the first step in the process to build a relationship with the customer. I believe that trust can be established through being empathetic, accurate and most importantly, authentic, throughout all communications.
Operational communications will continue as normal
Invoices and bills still need to be distributed, and I can’t imagine a customer is ever happy when receiving them, no matter what the media type. As a bare minimum they should be easy to understand and provide all the information that is needed. We see millions of energy bills each month and continue to be surprised that these basic principles of customer engagement are not always followed. Mainly due to regulation and the amount of information that is mandated.
My prediction for 2023 is that there will be more service communications being generated and distributed by Energy Retailers. These will be communications such as service letters, payment plans, concessions and hardship documents, and have a different tone, being more conversational.
A great example is how can the retailer help “you” the customer and not so much about “us” (the retailer), which we see in marketing communications pushing out brand and advertising orientated messages.
In my opinion, very few customers would be likely to leave a retailer or change to other provider because of over communication, and I can see that increasing the amount of service communications will significantly help improve customer engagement levels in the next 12-18 months.
Retailers will still need to continue their journey to reduce the cost of serve through digital self service capabilities, reducing high-cost channels and adopting agile and product mindsets.
The roadmap ahead
I believe that end customers (consumers of energy) will see new products being released in the next 12 months to cater for the growth (not to mention need) in renewables.
This may be in the form of more options for virtual power plants, EV supporting products, additional choices around sourcing the type of energy to be consumed and driving peer to peer marketplaces for selling excess energy.
This could be achieved through building and solidifying a strong partnership network to expand services available from retailers.
I’m incredibly excited by what lies ahead for Energy Retail. It's likely that that there will be an increase in service communications and a reduction in traditional marketing communications (including the traditional cross sell and up sell). It will be an ongoing challenge to increase customer engagement in this environment, however there are more digital channels available which retailers can embrace as part of this journey, and with the market challenges at hand I predict that it will be delivered in a more empathetic approach to help build trust.
As well as the more traditional digital channels such as email and SMS, I see the use of video increasing to help deliver a softer communication type that is less confrontational.
Personalised video has been around for nearly five years but used to come with a prohibitive cost which did not prove budget friendly. With the cost of entry to this channel significantly decreased over the past 12 months, more customers are now accepting the use of digital communications, and I would encourage Energy Retailers to look to this technology as an innovative solution, particularly for hardship communications.
It’s important to note that there is a percentage of customers who will always want to receive their communications printed and sent by post, who are not capable or interested in digital channels. There is a sense of trust established in the more traditional paper communication, especially when our inboxes are full and our mailboxes are empty.
We live in a world of cyber security concerns, with email accounts being compromised and the risk of losing personal identifiable information through email intercept strategies. There are no online security issues to be concerned about with print and mail.
Building trust and ultimately customer engagement is without doubt a significant challenge for Energy Retailers in 2022. It has been encouraging to be involved in conversations where this is a number one priority for many of our clients, and even more so knowing that we already have the tools ready to provide assistance during this challenging period.
Richard Vaughan has spent more than seven years as General Manager at Zipform Digital and takes a hands-on approach when it comes to building a top performing team and ground-breaking technology to deliver results for clients.
Over more than 20 years, he has developed an exceptional understanding of the latest trends and innovations in the Energy Retail market, which are reflected in the solutions designed and delivered by the in-house team of experts he has brought together at Zipform Digital.
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