the next generation of consumer-centric utility · [ the next generation of consumer-centric...

The next generationof consumer-centric

utility

An EXL whitepaper

Written by

Vikas KumarAssistant Vice PresidentDecision [email protected]

Gautam PunjAssistant Project ManagerDecision Analytics

1 © 2016 ExlService Holdings, Inc.

[ The next generation of consumer-centric utility ]

Digital disruption has demolished 52% of the Fortune 500 since the year 2000.2 By 2020, the

number of online-enabled devices in the Internet of Things (IoT), such as RFID chips and

sensors, is expected to reach 50 billion.3 However, the utilities industry has not been able to

keep up with the growing digital needs of customers. Below given is a quick glance at the

technologies that will disrupt customer experiences expectations for utilities:

While some of these technologies are still in infancy, they will possibly disrupt every aspect

of customer experiences. Customers will demand far more from utilities and would expect

consistent, personalised engagement.

1 “Reaching 50 Million Users,” Visual.ly website, visual.ly/reaching-50-million-users, accessed 16 February 2015

2 Wang, R. “Ray,” “Big Ideas: Dominate Digital Disruption Before It Dominates You,” Constellation Research, 17 February 2015

3 Burkitt, Frank, “A Strategist’s Guide to the Internet of Things,” strategy& (formerly Booz & Company), 10 November 2014

The digital revolution is

causing the utilities sector

to fundamentally shift

their operating model.

The proliferation of digital

devices has changed

the way customers

want to interact with

service providers. There

was a time when digital

disruption took months

or years, but today this

happens in a matter of

days. The most disruptive,

viral technologies can now

reach 50 million users in

less than 35 days1.

Technology

Internet of Things (IOT)

Virtual Reality

Digital Wearables

CloudComputing

ArtificialIntelligence (AI)

Concept

A computing concept where every physical object will be connected to the internet and can communicate in an intelligent manner

A computer simulated 3D environment which can be interacted in a seemingly real way by an individual using special equipment

Accessories incorporating computing and advanced electronic technologies

Practice of using a network of remote servers hosted on the internet to store, manage and process data

Computers and computing software capable of intelligent behaviour

Impact on customer experience

Enables faster consumer insights Enhanced and personalised marketing campaignsEnables design of individualized products

Advanced way for consumers to interact with service providersRemote troubleshooting

Consumer-related marketing strategies like gamificationSelf-service anytime, anywhere

Cloud-based app alertsEnables integrated view of a consumerEnables smarter decisions

Virtual advisorsConvergence of self-service and assisted service



utility companies need to understand the

characteristics of future consumer. Given

below are three key characteristics of the

future utility consumer:

These characteristics will remain at the

core of next generation consumers.

However, the question is whether utilities

are prepared for the next generation of

consumers?

Future energy consumer characteristics

In the not so distant future, utility

companies will receive millions and billions

of data points from customer touch points,

presenting an opportunity to make a real

impact on customer experience. In order

to make better decisions to enhance

customer experience, utilities need to gear

up and build analytics capabilities to meet

the need of next generation consumers.

Otherwise, they risk losing them to in-

sector competitors or new market entrants

from other sectors.

Next generation utility consumersThe new generation of consumers won’t

see energy as a commodity, but will treat

it like other products. There is no doubt

that these future consumers would seek

more value, personalized services or

products and seamless experience across

all channels. To deliver such an experience,

Anytime, anywhereinteraction

Seamlessexperience

Actively buying andselling energy

Electric vehiclecharging/DERs

Demands newsolutions, morevalue

Alwaysinterconnected

OmniPresent Prosumer Tech Savvy



Omnipresent

Customers are increasingly using mobile

devices. Consumers would become

omnipresent, always available across

mobiles, tablets, wearable devices,

social media, telephony, messaging and

web. With this ever growing increase in

channels, customers are exploring new

ways of interacting with the utilities. Below

is an example of a current utility consumer

who needs to interact with their provider:

With increasing penetration of digital

devices and wearables, consumers are

plugged in more than ever. Customer

expectations are being formulated by the

surrounding technologies. Soon, digital

wearables (VR headsets, smart watches,

Customer callsservice centre

Call centre agentbooks appointment

No self-service options/channelLimited booking channels

Long hold timeCall transfersInflexible dates and slots

SMS sent - Engineervisit date/slot

Customerfeedback

Email/SMS sent irrespective of customer preferred channel

IVR based surveyEmail feedbacksFew customers participate



tablets, smart TVs etc.) coupled with cloud

computing will disrupt the traditional

method of interacting with utilities. New

age utility consumers will require simple,

seamless, personalized experience across

all touch points. Below given is an instance

that shows how an omnipresent customer

would go about booking an appointment

for breakdown in near future:

Most customers would prefer to use

self-service channels rather than calling

customer service. Virtual reality would

enable customer service agents to engage

with customers and leverage the power

Virtual realityassistance

Appointmentbooking

Self service through VR assistMinor fixes and checks done by customer

Booking through smart watch application Enhanced functionality (Cancellation/Rescheduling)

Engineer visit Customerfeedback

Engineer location tracker (web, app)ETA functionalitySmart reminder

Feedback using social media Virtual communitiesHighly engaged consumer

Multiple engagement points



of 3D to help them do minor fixes and

resolve the issues. Customers would be

able to track the engineer’s location and

whereabouts. Furthermore, customers

would use social media channels to voice

their opinions.

Some of the key needs and expectations

of the next generation’s omnipresent

consumer would be:

• Consumers would want to interact with

energy providers anytime, anywhere

across preferred devices and channels

• Consumers would demand enhanced

self-serve functionality, consistent

experience and personalised treatment

across all channels

Unfortunately, utilities have not been able

to keep up the pace with consumers shift

to digital channels. This gap is only going

to widen with the proliferation of digital

devices in the future. To provide a seamless

experience across various devices and

channels, utilities need to overhaul

the traditional ways of interacting with

consumers. Some of the key challenges

faced by utilities are:

• Legacy systems and processes hinder

utilities from adopting digital technologies

• Lack of visibility into end to end customer

journey across multiple channels and

devices

• Siloed departments and platforms within

the organization

52% of utilities allow customers to pay bills online through utility websites, while 34% offer bill payment features on their mobile app.

4

4 http://blog.schneider-electric.com/smart-grid/2014/07/17/new-prosumer-microgrid-key-energy-flexibility-reliability-savings/

http://blog.schneider-electric.com/smart-grid/2014/07/17/new-prosumer-microgrid-key-energy-flexibility-reliability-savings/



Delivering an omnichannel experience

There are two key focus areas where

utilities need to make significant progress

and develop capabilities:

1. Increase the adoption of digital

technologies and leverage various

channels to enhance customer

experience

2. Leverage analytics to provide consumers

with a seamless interaction across

various channels

To design the next generation channel

strategy, it is crucial for utilities to

understand the consumer preferences

and behaviours across multiple devices

and channels. Most consumers would

prefer to opt for self-service channels

for the majority of low-value interactions,

interacting with customer service

representatives only in case of high value

interactions. Since customers would

expect a consistent experience across

these channels, utilities need to develop a

consolidated view of each customer.

Web

Social

App

Contactcentre

In person

Virtualreality

Changepreferences

Energyproductsshopping

Appointmentbooking

Switchingsupplier

Receive/pay bill

Givingfeedback

Promotionalactivities

Energyefficiencytips

Dat

a la

ndin

g a

nd u

nific

atio

n la

yer

Homemove

Engineeringvisit

Crosschannelanalytics

Customersegmentation

Textanalytics

Speechanalytics

Social mediaanalytics

Channelstrategy

Personalizedcomms

Best nextaction

Real timeresponse

Tailoredproducts

Virtualassistance

Next generation customer preferred channels for interaction Analytics applications Service delivery



This would require managing structured

and unstructured data on a real time

basis. Utilities can use big data analytics

to observe the flow of all customer

interactions and unify these at each

customer’s level. Several of the key

analytics applications include:

• Cross-channel analytical tools to

understand the key channels, devices and

paths customers undertake to complete a

journey. By analyzing consumer behaviour

across various channels, utilities can

formulate effective strategies and

understand the gaps by measuring fall

out rates across multiple channels

• Advanced customer segmentation using

customer interaction across all channels

including voice, IVR, web, social media to

identify the propensity of customers to

self serve, reaction to switching incentives

across channels, their channel usage/

preferences and designing solutions to

deliver personalized communications and

effective campaigns

• By leveraging real-time speech analytics

in conjunction with textual data from

web, utilities would be able to deliver

consistent and personalized customer

experience by creating context around

each customer interaction

As next generation consumers become

increasingly mobile and digital, they will

expect utilities to deliver on par with the

experience provided by other service

providers. Utilities will need to reinvent their

customer interaction models and create

integrated cross organization processes

to deliver seamless and personalized

customer experience.



Prosumers

Traditionally, utilities have had a one way

relationship with consumers. However,

with declining costs of microgeneration

technologies and energy storage devices,

consumers are increasingly becoming

interested in varied distributed energy

resources, thereby becoming prosumers.

They are generating their own energy

to sell back to the grid or their peers. In

Europe alone, it is estimated that three

million energy users are generating some

of their own power.

It is expected that next generation

consumers would have the flexibility to

decide how much power they would

generate, whom they would sell it to and

for how much. Further, proliferation of

electric vehicles is creating a new breed of

consumers who would consume energy

at various places in varying quantities. This

would disrupt the traditional power delivery

models and would necessitate an entirely

different relationship between utilities and

prosumers.

Emerging Energy Cloud (Source: Navigant Consulting)



Some key needs and expectations of next

generation energy prosumers would be:

• Prosumers would need greater choice –

capability to generate and sell power to

peers/grid and what type of power they

buy

• They would demand enhanced energy

management solutions and dynamic

pricing programs to save on energy costs

• Additional support services such as asset

maintenance, remote asset control for

DERs (distributed energy resources)

While there is a growing realization DERs

are changing the energy landscape, there

are a few challenges that utilities face:

• Uncertainty on the number of assets and

loads on the grid, which would make it

difficult for utilities to match the demand

against available grid capacity

• Calculating the value of each prosumer

and implementing dynamic pricing

• Stringent regulations prevent utilities from

innovating and designing next generation

products for prosumers.



Delivering the prosumer experience

Next generation prosumers will demand

the choice for selling or buying power with

any consumer, just like how they can rent

homes on Airbnb. The shared economy

has already arrived in power sector.

Vandebron, a startup from Netherlands has

developed an online peer to peer energy

market place, thus letting consumers buy

electricity directly from any independent

producer. With a flat subscription fee of

about $12 a month, customers can get

onboard their platform and select the deal

that they are interested in. Customers have

the flexibility to select a supplier based on

energy source, pricing or location. They

receive energy through the national grid,

but from sources of their choice. This may

become something like an energy internet,

where anyone can buy and sell electricity

from/to anyone.

However, these setups don’t qualify as

a true peer to peer (P2P) network since

this is a connection between group of

unregulated suppliers with a network of

potential customers. What will really make

it a true P2P network is the adoption of

smart meters. Smart meters are capable of

knowing how much energy is imported or

exported and would enable consumers to

buy or sell power at competitive prices. It is

expected that once a P2P network evolves,

there may only be minimal involvement

from utilities, who might risk losing their

core business.

However, a P2P sharing economy doesn’t

mean that centralized power resources

will become obsolete. Rather, they will

complement DERs to provide consumers

with greater choice in terms of product and

price. Utilities can tap into shared economy

by providing complete home energy

ecosystems and providing consumers with

more choice and flexibility, guiding them

to lower their energy bills through smart

meter data. Demand response programs

and dynamic pricing will be at forefront for

delivering the next generation prosumer

experience.



Demand response programs

Utilities of the future will have to cope with

increased penetration of plug-in electric

vehicles (PEVs) and DERs which would

upset conventional demand profiles of the

industry. The familiar equation of varying

supply to meet a predictable demand

will be a thing of the past as demand and

supply become dynamic. Utility companies

will need futuristic solutions for predicting

and responding to the varying demand.

Demand response will play an important

role in integrating variable sources

and loads into the grid and will help

consumers lower their energy costs.

However, being able to predict the

dynamic demand requires a lot more

than good load forecasting models.

Predicting the near real-time aggregate

power demand requires intelligent ways

of incorporating predicted demand into

advanced forecasting models. By mining

historical and real time data, utilities will

be able to get an accurate picture of

current and anticipated demand. While

a better demand prediction provides the

utility companies with effective ways of

addressing demand – be it managing the

sources or employing time of usage pricing

to flatten the peak – it aids consumers in

the form of better pricing and eventually

lowers the bills.

Auto demand response programs will

allow utilities to control loads like water

heaters and ACs at customer premises in

exchange for financial incentives. Utilities

will need integrated analytics solutions

encompassing detailed forecasting,

customizable DR programs, customer

portals and powerful demand response

analytics. This will enable next generation

consumers to produce and sell their

own energy, mitigate peak demand

charges and ensure minimal interruption

through pre-determined auto control of

their devices, which would all lead to an

enhanced prosumer experience.

Auto demand response programs will allow utilities to control loads like water heaters and ACs at customer premises



Dynamic pricing

With distributed generation feeding into

the grid, advanced pricing models are

needed. Dynamic pricing models have

the potential to bring great benefits to the

consumers. With a growth in DERs, utilities

will need to know how valuable is the

energy produced by various sources of

renewable energy.

Time of Usage (ToU) pricing institutes a

price schedule for electricity usage, under

which electricity is least expensive when

loads are low and most expensive during

peak hours. ToU is based on the fact

that peak loads follow the same pattern

every day. By altering rates at different

times of the day, providers can incentivize

customers to adjust loads, either manually

or through home energy management

systems.

Critical peak pricing is a dynamic pricing

model by which utilities inform the

customers when loads are approaching

annual peaks and rewarding customers

who respond by reducing their loads.

In real-time pricing (RTP), utilities alter

pricing forecasts dynamically in varying

time intervals throughout the day,

reflecting real-time production costs to a

great extent. RTP requires customers to

have smart home energy management

solutions to respond to dynamic price

changes. Moreover, RTP is well suited for

grids with renewable sources like solar and

wind energy, as power outputs from these

sources are also quite variable.

The age of prosumers will present

a key challenge to utilities who are

accustomed to unidirectional relationship

with consumers. They would need to

manage new interdependent relationships

with prosumers. Demand response

management, dynamic pricing and

predictive asset maintenance will play

a key role in managing and exceeding

prosumer expectations.



Tech savvyThe adoption of smart meters, smart

devices and other technologies are gaining

momentum. Utility consumers have

already begun to leverage technology for

complete home energy management and

automation.

In today’s world, customers are becoming

increasingly busy with a need to organize

their lives. Imagine a scenario where a

customer wakes up at 8:00 am in the

morning and the home starts its morning

routine of adjusting heating, setting lighting

and hot water preparation . Beyond just

learning consumer preferences, smart

homes will manage everything from energy

consumption to climate control. This is

a snippet of how connected homes of

future would help consumers in managing

their day to day needs. Next generation

utility consumers will expect everything

to happen automatically and seamlessly

in the background without them telling

anything.

Some key needs and expectations of next

generation tech savvy consumer would be:

• Next generation utility consumers would

want completely automated solutions

that would deliver convenience, control

and financial savings

• More personalized and self-directed

engagement through use of advanced

technologies

“The number of connected devices in the world will reach upwards of USD 25 Billion by 2020. By some estimates, this number might be closer to USD 100 Billion.”

5

5 Armstrong, L et al. (2014, July 17). Game of Homes. MaRS Discovery District.



While no single provider owns the

complete connected home value chain,

many technology giants have entered

the market with their connected home

offerings:

The reality is that companies are already

pouring in millions of dollars to develop

technologies that can integrate the digital

and physical world. While many service

providers are aggressively moving into

this market, energy providers will be most

preferred by consumers for providing

complete home solutions since smart

energy will be at the core of every

connected home. Utilities can leverage the

potential synergies between home energy

management and home automation to

provide end-to-end connected home

solution to consumers.

Google acquires NEST at $3.2bn which makes smart thermostats

Staples expands availability of home automation products to 500 of its stores

Samsung acquires SmartThings, a start-up on smart home platform

Connected homes & IoT hot topics at CES 2015

Apple launches HomeKit, a framework for IOS to connect with smart devices

Home Depot announces launch of new line of connected home devices

Qualcomm acquires CSR in order to improve its reach in IoT

Connected homes - Key developments in 2015



However, there are a few key challenges

utilities need to overcome:

• Managing a huge volume of data

generated by smart meters and devices

• Supporting an ecosystem of connected

devices

• Designing connected home products with

simple user interfaces, ease of usage and

easy installation

Delivering a smart home experience

Utilities already have a way into connected

home market with smart meters and

thermostats. Energy has become a

foundation for delivering new value

propositions. Energy that can be measured,

controlled and managed would be a key

component of the next generation smart

homes. There is already a device and that

allows consumers to measure the energy

consumption of individual appliance by just

holding the device up to a power cord. The

app calculates the power consumption

by measuring the electromagnetic field

generated by the appliances. This is only

a first step towards delivering complete

home energy management systems.



The consulting firm Navigant’s research6

predicts that the market will develop

along a fixed path from paper bills to

standalone home energy management

to complete automation. Complete home

automation would comprise of embedded

sensors, in-home displays, computing

power along with neural networks to

support all of it. This network will work

only when all devices become self-aware

and share data with other devices. The key

question is how can utilities differentiate

themselves from the competition

and uniquely position to support the

connected home market. Analytics

can help utilities in providing the next

generation connected home experience.

Some of the key analytics applications in

the connected home market are:

• Home device analytics will enable utilities

to collect data from smart devices and

proactively diagnose and resolve issues.

Through anomaly detection algorithms,

utilities would be able to predict the

breakdown of appliances based on their

power consumption pattern as well as

diagnostic data received from the smart

devices, and could thus proactively

schedule the maintenance activities for

these devices.

• Home network analytics combines

predictive analytics with closed loop

processes to analyse the home network

data and resolve network issues. With

machine learning, it can identify new

patterns and resolve issues before the

customer even notices them.

6 Navigant Research: Home Energy Management Report

Neighborcomparisons

Co

nsu

me

r e

ne

rgy

savi

ng

s

Connectivity

Socialnetworking

Neighbortracking

Consumptiontrends

Automaticdevice control

Device-leveltracking

Consumptionestimation

Bill-to-dateinformation

Meter-basedconsumption

TOU pricing“orb”

Home automationcontrol

DR response/load control

Auto pricingresponse

Consumptiontrends

Paper billsWeb portal Standalone HEM

In-homedisplay

Networked HEM

Development path for Home Energy Management (HEM) and Automation (Source: Navigant Research)



• Identify customer usage patterns,

behaviours and motivations by analysing

data from numerous smart devices and

provide next generation of solutions

and services like gamification. Through

this, consumers could compete with

their neighbours for a more efficient

home. Yet another example could be

recommending insulation measures by

analysing data from sensors throughout

the home.

Given the rapid pace of development

in the connected home market, utilities

need to consider solutions to deliver

convenience of set and forget services.

They need to leverage close relationships

that they already have with the consumers

to develop innovative solutions and thus

deliver a truly effortless experience for next

generation tech savvy consumers.

Designing next generation customer centric utilityOver the last decade, utilities have been

incrementally improving the existing

business models. But, with increased

penetration of technology and increasing

customer expectations, next generation

utilities would need to accomplish

necessary transition to business model

innovation. Utilities must build the

capabilities to meet the growing consumer

demands for personalized services, tailored

products and new value propositions. On

the way to delivering a next generation

consumer experience, the importance of

analytics will consistently rise. An analytics-

based ecosystem will be at the core of next

generation customer centric utility.

Regulators

Analyticsengine

NetworkInfrastructure

Smartgrid

Smarthomes

Prosumers

ElectricvehiclesSmart

meters

Smarthandhelddevices

Meetingregulations

Reporting Web Socialmedia

Virtualreality

Phone Digitalwearable

Capacityplanning &automation

Locationvisibility

Integrateddatabase

Multi-layered

analytics

Intelligentknowledgemanagement

Multi-layeredanalytics

Customers

Contact centre agentsField engineers

Next generation customer centric utility



Finally, as customer expectations are

ever-evolving, utilities should be able

to measure and track various customer

experience metrics and evolve accordingly.

By embracing and deploying advanced

analytics systems, utilities would be

able to monitor and track real-time

customer experience metrics and deliver

personalized, consistent experience to

customers.

Increase in shareholder value

Acquisition

Ke

y b

en

efit

sS

trat

eg

ic K

PIs

Op

era

tio

nal

KP

Is

Retention Operation Efficiency

Increased market share

Increased brand equity

Increased sales

Brand mentions (tweets,conversations, emails, andposts), web traffic, conversion rates, Average Order Value (AOV)

Pages per visit, shopping cart abandonment, campaigns effectiveness, products per order, average revenue per user

Increased loyalty

Increased share of wallet

Increased advocacy

Churn rate, Net Promoter Score (NPS), Customer Satisfaction (CSAT), Customer Effort Score (CES)

Sentiment analysis, complaint resolution time, cost per channel, engineer availability, channel accessibility

Increased agents &engineers productivity

Decreased operationscost and increased ROI

Cost per sales, marketing costs, servicing costs (recalls, reworks), cost per interaction, self-service rates

Cost of acquisition, contact centre metrics (AHT, FCR), cost per retention, content effectiveness

Strategic KPIs – Provides high level business information Operational KPIs – Day to day monitoring parameters

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the next generation of consumer-centric utility · [ the next generation of consumer-centric...

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