Could the label “Telco” soon be a thing of the past? Rip Gerber, who attended the latest Mobile Word Congress (MWC), thinks so. “Telco 2.0s are media, technology, [and] consumer, engagement,” companies, says the Chief Marketing and Alliance Officer at Vlocity. It’s no longer about good telephone service, it’s about offering customers the media environment that fits into their lives.
Considering a change of terminology in the sector indicates a new direction in thinking, one which enables Telcos to finally break free of the chains of the past, which have boxed them in and opened the market to OTTs (‘Over-The-Top’ providers bringing additional services to the market).
This should sound familiar to Utility providers. After all, they too are no longer just a commodity pipeline yet they remain shackled by terminology that sends the wrong signal. Could changing the ‘Utility’ label, pave the way for a shift in perception of the service offering and be just what the doctor ordered?
Low levels of engagement
According to HomeServe’s recent report, The Engagement Opportunity for Utilities, Utilities are not perceived positively when it comes to their level of engagement and care, with the highest score barely making it past 30% in most countries.
It’s clear that Utilities have to think differently; swapping their traditional engineering-based mindset for a more consumer-centric approach but where to begin? A look at other sectors who have undergone a similar process might be a good place to start.
Following the engagement path paved by others
Over the last decade, organizations in the telecom sector have had to grapple with many of the same challenges facing Utilities today: changing consumer expectations, increased competition, new regulations, and new technological demands.
They were able to bank on their extensive infrastructure and their existing billing relationship with customers but were less equipped to deal with the speed of technological innovation in a world of nimble start-ups with their finger on the pulse of consumer desires. So, what did they do and what can Utilities learn from the actions taken in that industry?
Building on the old to provide the new
“No organization can avoid coming to grips with the rapidly evolving behavior of consumers,” argue McKinsey & Company’s Tom French, Laura LaBerge, and Paul Magill. “They check prices at a keystroke and are increasingly selective about which brands share their lives. They form impressions from every encounter and post withering online reviews.”
Telco providers used the changing landscape as a jumping board to modernise and streamline their offerings. In doing so, they found ways to increase their reach into their customers’ lives.
Telcos went “from fixed line providers to multi-offering mobile, internet and entertainment companies over the past two decades,” explains the PwC report, providing a transformation model for Utilities. Many telco providers already faced with dwindling land-line and stagnating mobile markets, were also hit with competition from over-the-top voice applications that made a huge dent in their revenues.
Those who succeeded through the transition realised that they needed to put the focus on the customer. “Technology is in many ways meaningless if it isn’t enabling a customer to do something,” explains Gavin Patterson, the CEO of the BT Group.
Not only did the BT Group invest heavily in new technology by rolling out its fibre network, but it also launched the BT Sport network, acquired the rights to prized content (i.e. Premier League) and purchased EE, the UK’s leading mobile network. In other words, this venerable old organisation thought laterally and firmly embraced the new landscape. Perhaps facilitated by changing its name in the early 1990’s from British Telecom, which firmly placed it in the past, to BT to set the stage for what it was to become.
The key to success in the telco industry has been to use existing strengths as a spring board. “They widened their technology and product offer, building on the advantages of assurance and reliability that came from the physical phone line service to develop adjacent and relevant propositions to customers,” explains the PwC report.
Similar results can be achieved in the utility sector by developing and incorporating products and services that add value to customers’ everyday lives but that are not completely out of the provider’s comfort zone. The goal should be to develop offerings that are an extension of current products but that stretch the existing utility relationship with customers.
New entrants can open up opportunities
The Internet of Things is now making consumer demands more realistic and could provide utility providers with a way into their customers’ everyday lives as well as provide a strong selling point to entice new generations of technophiles like Millennials.
But providing “a seamless and consistent customer journey across every touchpoint and integrating the technology necessary to do so is one of the greatest challenges facing utility companies today,” says Thunderhead.
Technology has also given a boost to tech start-ups, who earn their living understanding consumer expectations, and are now offering alternatives to traditional consumption patterns and habits. KPMG even predicts that customers will soon be able to purchase energy on-the-go no matter where they are.
The “unbundling of energy markets can open up a new world of ‘Energy2Go’ that mirrors developments in the telecommunications sector – in the process revolutionizing the business model for energy companies,” explains Miroslav Proppé from KPMG Poland.
Technological innovations developed in-house or in partnership certainly have the potential to help Utilities become more relevant to their customers but is that sufficient?
Helping homeowners when they need it the most creates bonds
Ultimately, in order to make the transition to a more dynamic ecosystem successfully, Utilities will need to delight their customers. Utility customers want more flexibility to explore new forms of energy and storage. They want more real-time information to manage their consumption. They want their provider to be proactive in developing new technology that will improve their quality of life.
That said the primary function of Utilities is to develop and maintain a reliable network that delivers energy, gas, and water. Their specialty is not to design the latest app or web platform, argues Utility Dive’s Robert Walton. “But as those ancillary tasks play a larger role in how they connect with customers,” they’ll need to reach out to partners who can help them develop the products and services that make them more relevant.
Home assistance opens the door
Creating or partnering with tech companies to develop and implement smart products is clearly an important focus for Utilities, as they sail towards a more complex future, but it must be balanced with customers’ everyday needs. The Engagement Opportunity for Utilities report found homeowners are concerned about the risk of breakdowns, the cost of repairs, and the difficulty in finding reliable, trustworthy trades-people.
Since consumers already expect providers to take charge of making their systems more efficient, a focus on everyday issues might yield much better engagement results for Utilities and could be attained with a different kind of partnership.
A majority homeowners across the global surveyed by HomeServe found the concept of home assistance – a service that covers unexpected Utility malfunctions such as water leaks and blockages, gas faults, and power failures – appealing (65%), and 57% said they would be likely to buy. Home assistance services have the potential to delight customers when they need it the most, in times of crisis, and 64% of homeowners all over the world see Utilities as a suitable provider of home assistance.
Another possible product extension, a Home Expert Portal, was also very appealing to homeowners. The Web Portal would simplify the process of finding a suitable and reliable trades-person by matching customers with available experts, allow them to ask for a quote and book an appointment, as well as guarantee the quality of the work. Almost 70% of homeowners were interested in this proposition and 63% would be likely to buy showing the appeal of such a product.
So far, utility providers haven’t been perceived as engaged or caring by homeowners. Learning from the Telco sector, Utilities can build on their strong position of trust; identify home service partnerships which extend their relevance and connections in their customers’ homes and hence drive engagement strategies which make themselves invaluable – at the time when customers need them the most.
The Millennial generation, as more reluctant DIY-ers, present an opportunity as an audience for home services.
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With a complex, heavily regulated environment and aggressive green agenda, the outlook for Utilities in Australia presents challenges but also great opportunities for those wishing to extend their relevance in customers’ homes.