Will Big Data and Hyper-Personalization replace research projects on Customer Experience in the energy and utilities sector?

But is quantitative data enough in the services sector? Let's take a look at the Energy & Utilities industry to see if Big Data trends can displace traditional qualitative research.

Click to zoomImage > Can Big Data Replace Traditional Research

Legislative changes in the Energy Law, which came into effect this September, are, in a way, forcing energy companies to shift from strictly operational to customer-centric operations. According to the amendment, consumers will, among other things, be able to use a comparison engine to compare the offers of electricity sellers, and the change of seller can take place in less than 24 hours.

As Hycom's research confirms, today's consumer pays particular attention to feeling special and important, and wants to feel that the brand is responding precisely to their needs. And while it is possible (and worthwhile) to refer to quantitative data when selling products, in the case of services, which must be delivered without interruption, operate in the background, so to speak, purchasing information about online behavior is insufficient. In addition, the supply of energy or utilities is regulated by the government regulator's rules, which limits the ability to make significant changes in offers or prices. Unlike the retail sector, the energy and utility industries cannot freely manipulate prices or make quick changes to respond to individual customer needs. In addition, the compulsory presentation of prices in a particular way, using specific words and phrases, is a hindrance, so that formal provisions affect retail customers' misunderstanding of the offer.

So how to fight for the customer? According to Hycom's research, trust in the vendor and service provider plays a key role. Respondents in in-depth interviews emphasize that any interruption in electricity, water or gas supply has a real impact on their lives or businesses. Imagine a vendor to whom a day-long, unannounced power outage causes goods in freezers or refrigerators to thaw!

Transparency is also an important consideration when choosing a utility provider. What is it for customers? If only the clear presentation of data on the invoice for services. It would seem obvious, but a gift horse to anyone who understands all the items on an electricity billing document. It turns out, however, that there are ways to present formal documentation in accordance with regulations, but also to ensure that customers feel informed.

The 3 main reasons why hyper-personalization doesn't work in the energy and utilities sector:

1. Homogeneity of offerings
   
   The fundamental problem is that there is little differentiation in product offerings. While in e-commerce it is possible to customize product recommendations according to user preferences, in the case of electricity, gas or water, the supplier cannot provide a "better" or "worse" version of these services. The customer wants reliable delivery, and price differences are mainly driven by government regulation, not individual consumer preferences. Moreover, trying to create complicated, individualized offers can only create confusion among customers, who often have trouble understanding existing tariffs anyway. Of course, energy companies are trying to differentiate their offerings to build a unique value proposition. They often do this through value-added services, which are designed in accordance with the Design Thinking methodology, which of course is based on qualitative research of customers and their needs.
   

2. Data security and privacy issues
   

   Data related to energy consumption is sensitive data, according to the law (Article 4(1) of the RODO), as it is possible to read the measurements from a smart meter that is assigned to a specific location.

   Since, by design, hyper-personalization relies on a large amount of detailed customer information, it can thus violate the fundamental right to security, which is particularly relevant in the context of the growing number of cyber attacks on critical infrastructure. This problem is recognized not only by companies, but also by customers themselves. As Hycom's customer experience (CX) research shows, on the one hand, smart meters make people's lives easier, while on the other hand, they are perceived by customers as an invasion of their privacy. Thus, hyper-personalization, which relies on the processing of large amounts of consumption data, can provoke negative reactions if customers feel that their data is being used without their consent or in ways that do not directly benefit them.

3. Lack of customer engagement
   
   It should come as no surprise that such basic services as electricity and utility delivery do not require users to interact directly with the vendor/supplier on a daily basis. In the words of customers, "it's important to have electricity in the socket, water in the tap and heat in the apartment." This lack of ongoing contact between the customer and the company makes it difficult to collect the data necessary to hyper-personalize and make changes to offerings or customer service.

Why does Customer Experience research support the energy and utilities business better than Big Data?

Customer Experience research counts the entirety of customer impressions they have when interacting with a company and its product or service. Only by combining quantitative data with knowledge from in-depth customer interviews can you uncover the actual feelings of your audience, both positive and negative. Thanks to such interviews, you gain extensive knowledge, for example, what is important to customers and at what point; what they want to receive information about, how, when and through what channels; which procedures are completely incomprehensible to them and cause them to become frustrated and thus lose trust in the brand... In a word, you can understand the real essence of the problem. To complete the whole picture, data from various channels - online, phone calls, points of sale. It's also worth remembering the perspective of front-line employees and any actors involved in the selection of a vendor, such as developers, property managers, etc. This 360-degree approach allows you to:

• Understand the emotions and needs of customers. This knowledge helps better build positive relationships with customers, and as we all know - a satisfied customer is a loyal and referral customer. In the situation of freeing up the market of electricity sellers, the referral aspect is of particular importance. The decision may be influenced not only by price, but also by the quality of service or intuitive online self-service.

• Identification of pain points, so-called pain points. This allows the company to decide to make changes (sometimes small adjustments are enough) that will realistically improve the quality of service. For example, having worked for a company for years, one doesn't notice the fact that records on annual billing for photovoltaics don't clearly indicate who owes money to whom - whether the customer to the company or the company to the customer.

• Building trust and loyalty. Customers who participate in surveys feel listened to and important. They are willing to share their insights, both positive and negative. Understanding customers' expectations and values helps build the right communication and relationship with the brand.

In conclusion, while Big Data and hyper-personalization provide valuable quantitative data that can effectively support many industries, in the energy and utilities sector they cannot fully replace the qualitative element of Customer Experience projects. The key elements that influence customer satisfaction, their specific needs and expectations, require a deeper understanding of emotions and experiences that can only be heard in face-to-face conversations. It's worth taking advantage of them while a human being, not an algorithm, is still ultimately deciding the choice of energy and utilities provider.

Hyper-personalization - a method of combining data to create individualized offers and marketing messages, among other things. It uses quantitative data about customers collected from various sources - stationary purchases, online behavior (e-commerce, socialmedia, search engines), but also geolocation or hard demographic data (age, gender, place of residence, education, material status, etc.). Analysis of this data allows, for example, to predict the consumer's next purchasing decisions, and thus develop offers that precisely meet his taste.

As of September 7, 2024

• Access to an online comparison of electricity sales offers and additional services provided by the energy seller.

• In the case of a change of energy seller - implementation of the change within 24 hours of notification.

• New model for the sale of reserve electricity

• Comprehensive contracts for the supply of electricity and gas

• Possibility to conclude contracts with dynamic electricity prices with any seller serving more than 200,000 customers,

• The possibility for consumers and micro-enterprises to associate within the Citizen Energy Community. OSE's activities include generation, consumption, distribution, sale, storage of electricity, but also electric vehicle charging services.