Digital Disruption: Turning Energy Data into Intelligence
29 May 2018
Lee Morris, Managing Director & VP Sales EMEA, FirstFuel Software & Austin Whitman, VP Energy Markets, FirstFuel Software
Intense market competition means that selling electrons has become a low margin business for today's energy providers. And, a stagnant commodity market means that energy providers are resigned to compete for customers to grow market share.
To counteract declining margins and cope with the competition, energy providers are exploring new ways to grow revenue and market share through non-commodity products and services. And, they're looking to their business customer base as the biggest source of opportunity.
This shifting outlook means that energy providers are more focused than ever before on business customer sales, marketing, and customer service. The leaders are adopting cutting-edge data strategies that turn existing meter data into critical business customer insights that enable personalised communications, experiences, and service at scale.
In this video, we explore how energy providers are leveraging data to win over their all-important business customers, and how a business customer engagement strategy is helping them to reduce customer churn and grow revenue.
To learn more, visit www.firstfuel.com today.
Hello, and welcome to Business Reporter's digital economy campaign. I'm Alastair Greener. Selling energy has turned into a low-margin business for today's energy providers because of intense market competition. In addition, the market isn't growing, so energy providers are resigned to compete for customers and attempt to grab the biggest slice of what's available in the market.
To counteract declining margins and cope with competition, energy providers are starting to offer more and more products and services-- not just to residential customers but also to business customers. This means that energy providers are more focused than ever before on sales, marketing, and customer service. So they are adopting cutting-edge data strategies, like those employed by telecom companies, consumer product retailers, and many other industries.
Here with us today we have Lee Morris and Austin Whitman of FirstFuel Software to talk to us about how the energy industry is changing and how energy providers are using data to win over their all-important business customers.
When it comes to the energy sector and energy providers, what are the prospects for business now compared to, say, three, four years ago? Is there any change?
Yes, there is. So there's a lot more competition in the business energy sector. Also, alternative energies and solutions have become more affordable. And also, consumers have become much more demanding as well. So there's a great more expectation of how a customer is serviced by an energy provider.
So we've seen much more expansion in services that are readily available. And consumers have become much more savvy as looking for deals and not being so much afraid to move to alternative solutions. So all of this has caused a big strategic rethink.
And how are the energy providers responding to this rapid change?
So they've responded positively. So they've invested quite heavily in trying to correct that industry-leading customer engagement solution and bring the customers closer. And there's also been a realisation that they're sitting on an extremely valuable asset, which is data. So they're looking at multiple ways of using analytics to structure that data and better serve customers.
So what is this data that they've got?
We live in a world that's full of data. And the question is, which data is the most valuable data for determining whatever we're trying to achieve? In this case, how can we take information from electricity metres-- the metres that are attached to a building-- and combine that with information from weather stations or commercial real estate databases or information about businesses?
There's a whole, whole wide range of data that can be relevant. So we're trying to figure out which pieces of those give us the greatest amount of insight into what's happening within a building.
So give me an example of that actually in practise where you've seen that data being actually used.
You might look at two buildings that look exactly the same from the outside. The data can give us a picture of what's happening on the inside. So those two buildings, for example, are a school and a car dealership. You might look at those buildings and think they're the same size. They appear roughly the same.
But when you look at the energy data and then all these other inputs, you find out that the school is using too much energy when people are not in the school when the school is not in session. Whereas the car dealership might actually be really great when it comes to using energy except for their lights. And so that's an opportunity for the energy provider to go in.
And they're selling energy, but they can also cross-sell light bulbs-- more efficient light bulbs to reduce the energy use within that building. So data is providing this view into the building that gives us a sense of how people are using the building and how we can optimise energy use within the buildings.
This all sounds fairly obvious. Why is it only just happening now?
Well, they simply haven't had to think about it, really. They've had quite a captive marketplace where they've provided a reliable service. And consumers received a bill for receiving that service, so it's been quite transactional.
But now with the consumer expectation levels going up and things are expected to be moved at pace, it's kind of brought it to a head that something that needs to be addressed now. They've kind of moved into that space and understood that that's something that needs to be moved on quickly. But we're still seeing a bit of a delay on making decisions around this.
Data is obviously only as good as what you actually do with it. And you mentioned analytics. Tell me a little bit more about that and how you're able to use that to help.
That's right. Analytics is really what brings data into the realm of the human. Analytics is the logic and the technology to take those massive amounts of data that computers can understand and translate it into something that we can have building operators act on.
And so we're combining the building science, which is how a building uses energy and how we can use energy more efficiently, with the data science. And that is really advanced computational and statistical methodologies for taking the data and translating it into things that people can use.
Can't energy providers just to this by themselves?
Yes, they can. So something we've run into a lot more often now is energy providers investing in their own data and analytics teams. It's not something that can be just invested in and it happens. So I think there's a realisation that it's going to take a long time and a lot of investment for someone to create something in this space that will be insightful enough to make a customer stay with the energy provider.
It's a lot more sensible to take a solution out of the marketplace that's tried and tested and then free up that capital and resource to do other projects. So yes, they can. But there's a huge investment and time constraint in order to do this.
Let's look at this from the business owner's perspective. So let's say that, for example, I'm a bakery. And I call my energy provider, then what? How is this going to look?
So yes, you can call. But ultimately, what is now available at the fingertips is 365 days a year 24/7 access to detailed information on your business. A good example is a baker that has, say, three premises. So now he can start to analyse all three of those premises separately and start to see which ones are underperforming, which ones are doing well.
And then he can drill down on the ones that are underperforming and be in control of how he can perhaps adjust that. It may be a simple temperature control, or it may be a lighting replacement project. But ultimately, he can see how he can affect his own consumption. That's a much more enriched customer experience, which ultimately will lead to that customer staying with the energy provider for longer.
And obviously, from the bakery owner's point of view, good news. What else is in it for the energy provider?
Well, the energy provider then is addressing the first issue, which the customer expectation has gone up. So he feels that he's being invested in, which he is. But also, the energy provided is now seeing a lot more data on their customers.
So they can start to analyse tips and hints on how they can reach out with insightful information to their customers on how they can perhaps help them improve their own consumption. So the feeling is that the engagement is now a lot more on both sides. And the experience is just a whole lot more enriched.
In a world where we have all this accessibility to information and data through devices, it's all about bringing the information to the end customer. So to take the example of the bakery owner, he may be too busy during the course of the day because he's making bread. But if you can feed information to him and create new incentives and new ways for him to take action because he has data and information on a tablet or on a smartphone and not just on his computer, that's where we start to get into really exciting areas of dynamic adoption of these new energy products and services.
We're seeing the energy sector going through a big transformation. It seems set for even more disruption. Give us an indication of how you see this going. What are the trends that we should be looking out for when it comes to the energy sector over the next, say, five to 10 years?
It's about the more strategic use of energy. So it's not just reducing absolute consumption of energy but changing when we use it, how we use it, and where we use it. And so through this movement toward really fine-grained data and information about our energy use, we can be more optimised by using maybe even a little bit more energy at certain times of the day.
So electrification of end uses is a trend that we're seeing a lot of. And that means switching out the fossil energy use for electric energy use. And so if I'm a warehouse manager, I may take a propane-powered forklift and switch it out for one that's electrically charged. And even more, I may charge that electric forklift at certain times of the day that are optimal for the grid.
So I'm reducing my own costs. There can be some benefits to the grid. And ultimately, if that electricity is coming from a wind farm, we're reducing carbon emissions. So it's a real win-win-win. And that's a trend that we think is going to be expanding just exponentially over the next couple of years.
It sounds like we're going to have some very exciting times in the energy sector over the next few years and a lot of change as well, which it sounds is going to be to everybody's benefit. It's been fascinating finding out more. Austin Whitman, Lee Morris from FirstFuel, thank you very much indeed.