Electricity retail, customer satisfaction and the digital dividend

Published on the 11/07/2017 | Written by Donovan Jackson

NZ energy providers

Incumbents fail while digital upstarts surge ahead, Consumer NZ survey finds…

In its survey of customer satisfaction with energy providers, Consumer NZ found the big five powercos continue to deliver underwhelming service – while the ‘digital natives’ are pleasing their customers. Topping the list of the companies which have done comparatively well is Flick Electric, with 71 percent of its customers ‘very satisfied’ with the service provided. These customers were also more likely to think they were getting good value for money.

That got us thinking. The new generation powercos, like Flick and Electric Kiwi, make a song and dance about their ‘born in the cloud’ systems and processes, arguing that this makes them more agile, more responsive and able to provide good service at reduced cost (Wellington Gold Awards director John Dow said Flick Electric, which bagged a gong at that event last week, was a “groundbreaking, entirely digital business” – not entirely the case, as we soon shall see). Could Consumer NZ’s annual study point towards a ‘digital dividend’?

In a statement Consumer NZ chief executive Sue Chetwin said the annual survey found just 45 percent of consumers were very satisfied with their energy retailer. “This satisfaction rating is lower than rates we’ve found in the banking and general insurance industries, and dragged down largely by the performance of the big five – Contact, Genesis, Mercury, Meridian and TrustPower.”

Asked if its success could reflect better use of technology, Flick CEO Steve O’Connell (who has featured on iStart before) first pointed out that the top four electricity retailers for customer satisfaction are challengers. “These brands are pushing hard with digital. But on top of that, three of the four are doing something different in terms of what they offer the customer.”

Those companies are Flick, head and shoulders above. Second is Powershop with 61 percent, third Pulse at 59 percent, and fourth Energy Online at 58 percent. The five rating lowest for customer satisfaction are all incumbents, including Mercury (CEO Fraser Whineray was contacted for comment via LinkedIn, but didn’t respond) at 42 percent, Contact at 44 percent, Trustpower at 43 percent, Genesis at 40 percent and Bosco at a woeful 28 percent.

O’Connell’s point is that there is likely a little more to it than merely ‘digital’, to which every company has ready access in any event.

“In electricity supply, only a part of customer satisfaction relates to the product that they are getting. Technology is all important, but you can’t do it without people and process. What I believe we’ve done well is to blend pure digital into our platform in a way that allows us to engage with customers on a virtual basis, while recognising that customers sometimes just want to talk with someone.”

Outside the oft-cited trinity of technology, people and process, it’s also arguable that any challenger brand will be more keenly focused on service, since it has to do something special to attract customers (and despite one of the world’s most willing-to-switch customer bases, inertia is a major hurdle for new retailers, regardless of promises of cash savings and improved service).

In any event, O’Connor said that the electricity industry is a particularly difficult one to ‘go entirely digital’ because of its complexity and potential issues that arise. That’s owing to the structure of the market: most retailers (certainly the challenger brands) don’t own or operate the lines, and nor do they generate. Customers tend to be interested mostly in price and reliability, preferring to engage with their retailer or any other aspect of the electricity supply chain ‘never’.

“That means we have to have people, as we are not responsible for getting electricity to the door, so sometimes solving a problem can be three minutes on the phone, rather than 20 minutes on a web chat or email. We haven’t yet gone as far as we can digitally, but we have to be aware of that, we have to think about customers and see how far we can go before any benefits end up outweighing the costs.”

While it was a good one for Flick last week, O’Connor said it is a little dismaying that the average customer satisfaction scores for electricity retail are trending down. However, he added, “I don’t think the service is getting worse, I think expectations are lifting in a digital world. But we’d want to see the standard lifting over time as the low satisfaction rates reflect badly on the industry. It’s a bit of a wall of shame which is starting to pick out those which are doing something that fundamentally wrong.”

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