The Better Way: Digital Strategy for Energy Companies

By Malcolm Smith | DR2 Solutions

After studying millions of digital interactions with energy customers since 2012, the elements of a successful digital strategy in retail energy have become apparent.

Energy companies are employing these elements to improve their growth, profitability and valuation. Here’s what works best:

Embrace digital acquisition. Critical to growth and profitability is accessing the right customers inexpensively. Digital channels are among the least expensive pathways to acquire customers, and the quality of customer is higher in terms of income, bad debt and tenure.

Welcome. Customers are most receptive to your brand immediately after their buying decision. Digital communications are the most prompt, effective and inexpensive way to establish your brand positively with customers. Graduates of a digital welcome campaign are 40-45% more likely to respond to later offers from their energy provider.

Communicate your brand. Hoping customers go back to sleep has proven unsustainable. Customers eventually wake up, and when they do, they leave. The most successful energy retailers are reaching out to new customers digitally to establish brand, build loyalty and create a regular, positive customer experience.

Personalization. Providing customers with their own energy usage results in engagement rates 2-4 times that of other retail industries. This is true in markets with both smart meters and monthly meters. Engagement at that level is extraordinary and presents phenomenal opportunity for energy companies.

Reward appropriately. Rewards can be informational (usage data, insightful mobile apps, etc.) as well as financial (bill credits, reward cards, etc.).  Rewards don’t have to be expensive.  They should be targeted to the highest quality customers rather than shot-gunned based simply on tenure. Choice in rewards is often as valuable to the customer, and actionable for the retailer, as the reward itself.

Renew digitally. Online renewal campaigns are critical and effective. High-performing energy companies have achieved retention rates over 80%. The key is creating digital renewal capabilities to reap the benefits of sound customer service and reasonable (but not the lowest) pricing. 

Provide solutions. Energy consumers would like more than kWh and therms from their energy company. Energy-related solutions are most popular. For example, 66% are interested in energy efficiency, 58% would like smart home controls, 57% seek backup power and 47% plan to sign up for community solar within five years. Progressive energy companies are already offering these solutions and more.

Continuous innovation. Customers interact very differently with their bank, clothing retailers and coffee shops than they did 10 years ago.  They are hungry for innovation in the customer experience around energy, as well. Advances showing promise in customer studies include proactive offers of lower future prices, anticipation of customer preferences through predictive analytics, and modernized payment streams for energy related products.

It works. Energy companies that have adopted a superior digital strategy are among the most successful in the industry. They have engagement rates approaching 80% monthly. These translate into lower churn, commonly dropping between six and 20 points over one to three years.

Stronger growth, higher margin and increased valuation are the direct result of a superior digital strategy in energy.


Malcolm Smith is CEO of DR2 Solutions