Big data customer analytics key to high-performing energy companies


Energy suppliers are fighting for prime position in the domestic energy supply market. Disillusioned customers, increased competition due to a flood of new entrants and tighter regulations are forcing suppliers to reassess their business models. According to UK regulator Ofgem, there were 3.8 million account switches in the first six months of the year. Today, the battleground is price. Tomorrow, it will be how energy suppliers can engage with younger consumers expecting a more personalized service. It’s not just a case of knowing their likes and dislikes, but predicting their future needs and preferences.

Engaging the data generation

Homeowner controlling thermostat via tabletWhat’s certain is that it’s going to be difficult to “wow” the next generation of energy users. These digital natives are highly selective about who they share their personal information with. Recent research we carried out with the Future Foundation into Gen Y (those aged 16-34 in the UK) shows that nearly half don’t feel comfortable sharing their data with energy suppliers. Only 18 percent trust their provider to find them the best deal available. Despite this weariness, the findings show that this emerging generation recognize that insights from the data they share can be used to enhance their lives and wider society.

And the energy sector is sitting on a data goldmine. Experts say the sector is set to experience substantial growth in the adoption of big data and internet of things (IoT) as the industry opts for intelligent assets, smart meters and appliances that drive business efficiency. Indeed, big data and the IoT will deliver a £15.6 billion boost to the UK energy sector over the next five years, according to research carried out by the Centre for Economics and Business Research. At present, 67 percent of energy companies surveyed have adopted big data analytics. By 2020, this number is expected to rise to 80 percent. This data explosion provides opportunities for electric, gas and water suppliers. Already, companies are embracing technologies such as data analytics, which will unearth customer insights and help suppliers drive a more personalized service.

Delivering a hyper personalized service

With initiatives such as the smart meter rollout – where 53 million meters are set to be installed in over 30 million premises over the next four years – the energy sector is on the cusp of a data explosion.

Many regulators have insisted that smart meters are critical to achieving national energy efficiency goals. In reality, while smart meters give suppliers the opportunity to establish peak pricing programs, changing customer behavior is proving to be extremely difficult. Energy suppliers can use insights from meter data to better understand customer preferences and behavior – an important first step. This could include, for example, the types of appliances they use and their peak usage times throughout the day. The more holistic a view the supplier has about its customers – including usage, payment information, communication preferences – the better it is able to manage each customer relationship.

Personalization based on holistic understanding of customer data presents a unique opportunity for suppliers to improve customer engagement and revenue generation. All they require is the expertise and tools to be able to extract valuable insights from the repository of data they have at their disposal. Suppliers can then leverage data to take customers on a personal journey crafted specifically for individual households.

By having more insight into their energy usage, energy providers can highlight efficiency savings as well as enticing them with rewards to change their behavior. For example, it will be possible to provide insights about the efficiency of major appliances and lighting in the home just by analyzing changes in electric current. Analyzing this data will help households take energy-saving measures with short and long term financial gains. Maybe you can even forecast the impact on your quarterly energy bill by taking advantage of an offer, via an app on your smartphone.

Putting the customer back in control

The next generation of energy users are demanding more control, clarity and hyper-personalization. They expect their provider to be proactive and engage with them on a personal level. Using analytics they can help itemize what is contributing to bills and identify key areas where savings can be made, as well as providing relevant and personal advice about managing energy use.  This builds trust with the customer and can directly impact retention rates.

The suppliers that thrive in this new data paradigm will be those that have a detailed understanding of their customers. Winning the hearts of customers today, means predicting their needs tomorrow. The suppliers that are able to do so will become more than just a household supplier. They can transition into lifestyle partners and trusted energy advisors that help consumers to more effectively manage their home.

Find out more about how analytics can solve key challenges faced by the energy industry by joining us at the SAS Energy Forum in London on October 11.


About Author

Alyssa Farrell

Product Marketing Manager, Energy and Sustainability

Alyssa Farrell leads global industry marketing for SAS’ business within the energy sector, including Utilities, Oil and Gas. In this role, she focuses on the SAS solutions that help optimize our energy infrastructure by applying predictive analytics to complex data. She currently serves on the Advisory Committee of the Research Triangle Cleantech Council and co-leads the Program and Communications Action Committee, as well as a Working Group of the Utility Analytics Institute. She is a member of the Society of Petroleum Engineers (SPE). Farrell regularly speaks with trade associations, analysts, and the press about the opportunities organizations have to effectively manage a sustainable energy analytics strategy and drive healthy economic growth. Prior to joining SAS, Farrell was a senior consultant in the Deloitte Public Sector practice. In this capacity, she was a project manager for state-wide and county-wide systems implementations and was responsible for user acceptance testing, change management and training, and middleware technology selection. She is a graduate of the Eller College of Management at the University of Arizona, where she earned her MBA degree with a concentration in Management Information Systems. She also holds a Bachelor of Arts degree from Duke University.

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