Can the energy industry become as meaningful to customers as the energy it provides?

Energy is often seen as a basic commodity – after all, one electron is the same as the next, no matter who provides it. But while the energy itself may be identical, the way companies deliver it isn’t. Some brands work to build meaningful relationships with their customers and offer experiences that go beyond just keeping the lights on. These differences in customer experience can drive loyalty and satisfaction, ultimately making a big impact on a company’s success.

With renewable energy’s growth pushing costs and margins lower, customer relationships and diversification in value-added services have become even more crucial. Energy often remains invisible to most people, perceived merely as a means to power the essentials of daily life. New regulation and digitalisation has also opened the field to new players who engage customers with greater frequency and quality.

Is the energy sector bound to struggle, then? A 2023 UK survey ranked it as the worst-performing sector for customer experience, with 25 percent of respondents expressing dissatisfaction with recent service from their energy provider. The energy sector scored lower than financial services, retail, and telecommunications.

The energy experience can be a delight

Building relevance on these weak foundations is difficult, and addressing them is a necessary first step. For instance, despite the challenging context in the UK, Octopus, a British renewable energy group, has led in customer satisfaction rankings for five consecutive years. Octopus stands out by offering products and experiences that are simpler and clearer than industry norms. Their approach mirrors e-commerce standards in language, product bundling, processes, and interactions – standards familiar to customers in their daily transactions.

Taking inspiration from Octopus may be obvious, as it is to look at other neo-utilities. Free from technical and organisational burdens, these companies obsess over creating great experiences.

The energy experience can be relevant

Less obvious, however, is the next step towards relevance. A well-designed customer experience isn’t just good business practice, it is a way to honour the exchange between utility providers and their customers – an exchange that should always benefit both. Focusing on what matters to customers as they extend their relationship with energy should be a guiding principle for innovation in propositions and experiences. We must explore what is genuinely meaningful to them.

Even in this cost-sensitive, allegedly commoditised market, evidence shows that customers respond to more than just financial incentives. A study on pro-social behaviour in the electricity sector showed that framing energy conservation as a public health benefit reduced usage. Participants who were told that reducing energy would decrease pollutants and improve wellbeing lowered their consumption by 8.2 percent. Conversely, participants nudged with data comparing their usage to more efficient households actually increased their usage by 3.8 percent. This highlights that emphasising health benefits over financial savings more effectively promotes energy conservation.

Similarly, a myriad of studies show that customers are willing to pay more for clean energy. In many European markets, where low-carbon energy is already the norm, new customer priorities are emerging, such as ensuring a net-positive impact on biodiversity and local communities around renewable energy sites. Spanish startup Fundeen links renewable energy projects with local investors. This approach helps address local opposition, thus accelerating development and reducing costs. It also provides a unique differentiator in Spain’s already highly decarbonised energy market, where renewable energy is standard, and customers now seek responsible businesses that share the profits of the energy transition.

The energy experience can be transformative

Innovating at the business model level offers the greatest potential for impact. In an industry where the marginal cost of a kilowatt-hour is approaching zero, rethinking the fundamental business model is both logical and overdue.

Most energy providers make money by charging customers based on energy consumption. While models vary – such as static versus dynamic pricing – the basic mechanics are similar. By charging a premium on the cost of energy, companies make more money if their customers use more energy.

Tibber, an energy company operating in Sweden, Norway, and Germany, takes a different approach. Tibber charges customers a membership fee and the wholesale cost of energy used, thereby decoupling its revenue from customer energy use. This aligns Tibber’s interests with those of its customers, offering a quality experience and solutions that help them reduce energy usage.

Rethinking industry fundamentals

What are the gaps in your basics? Look at current gaps and benchmarks to reimagine the customer experience you deliver, that will have a direct impact in your bottom line and unlock your ability to extend your current customer relationships.

What is meaningful for your clients? It might be time to update your understanding of your market and materialize your learnings on actionable insights, more focused on evolving mindsets than static sociodemographic variables.

What elements of your business model need to be reimagined? Zoom out and consider that the opportunities for relevance go way beyond the most superficial and replicable elements of the experience.