Europe’s utilities braced for change as churn increases
Life is not getting any easier for Europe’s largest utilities.
Last week, the UK Government turned up the pressure with the Prime Minister renewing her promise to impose a cap on standard variable tariffs. Shares in Centrica, the UK’s largest player, fell to their lowest level in 13 years following the announcement.
At the same time, customers are showing a greater willingness than ever to shop around for a better deal. Research from investment bank Jefferies found that a record 163,000 customers left the UK’s big six energy retailers during the month of September, meaning that a total of 1.1 million have switched so far this year.
As a result, utilities are under unprecedented pressure to rethink their business models to tackle this rising customer churn and increasing competition, while harnessing the massive technological disruption that is also impacting the sector.
PAC- CXP Group has just published the results of a new study based on briefings with 250 senior business and IT executives at leading European utilities, which explores the strategic directions they plan to take in order to ensure lasting relevance and growth.
New customer acquisition is the biggest issue facing utilities, with 73% of participants in the study citing it as a major challenge to the business. Quality of customer service (66%), and the launch of new energy-related products and services (60%) are viewed as the two most important strategies for driving differentiation from the competition.
The study also looks at where utilities will channel their digital technology investment in the coming years and where they see the real business value in hot areas such as artificial intelligence (AI) and advanced data analytics.
More than half of European utilities have already invested in AI agents, and expect them to deliver the greatest value in improving service responsiveness (53%) and taking cost out of contact centre processes (30%). Meanwhile, 82% plan to invest in connected home propositions in the next three years, in a clear sign that utilities are looking to redefine their customer relationships by getting "beyond the meter."
An executive summary of the study “Digital Utilities: From Behind the Curve to Innovation”, which includes an overview of key findings, can be found here