By Kirstin Crothers
We asked four energy retailing experts for their insights into developing successful products and services. In this analysis, we delve into the world of energy innovation, failures, and trust-building strategies in today's dynamic marketplace.
Simplifying energy solutions: the key to captivating consumer interest
For Louisa Kinnear (Jacana Energy), the obvious winner in terms of successful new energy products is solar PV. She notes that Origin Energy were much quicker than the rest of the industry to realise the impact solar would have. Kinnear says it is easy to underestimate a paradigm shift like solar, but that it offers customers exactly what they want: choice and control.
Margaret Cooney (Octopus NZ) said that ultimately consumers want convenience and to save money. A product which fits that bill is Octopus’s ability to use smart meters to shift the hot water load, which can save households between $100-$200 with no perceptible difference to their service.
Rob Morris (iO Energy) emphasises that it is important to make sure any offer is understandable and that benefits can be immediately comprehended by consumers. He says the most important question to answer from the customer’s point of view is “What will this do for me?”
Steve Hoy (Enosi) agrees with Morris that the key to a successful product is that it is understandable and desirable for its target audience. Enosi allows businesses with multiple sites to take advantage of their own on-site generation at other locations. This offer really resonates with businesses who are disillusioned with low feed-in tariffs.
“if it takes 30 mins to explain the service,
you have lost your audience”
A simple, easy to explain concept can capture the imagination of consumers. Hoy says that if it takes 30 mins to explain the service, you have lost your audience. He gives an example of an Italian project where a specific solar farm sets prices for consumers. When it is producing, they are on the lower tariff; when it is not, they pay the higher tariff. People enroll in the service because they can immediately grasp how it works and how they could save themselves money.
When energy products fall flat
Cooney noted that when products ‘fail’, it is usually because the benefits haven’t been communicated effectively with potential clients. Kinnear agrees, noting that retailers need to ensure that their frontline genuinely understand the value of what they are offering.
Kinnear’s experience with failure was a “See and Save” product for small businesses, where a submeter dongle was used to analyse what energy was being used by which devices. This data could be used to improve energy efficiency. Kinnear says the value proposition was strong and technology was available, but the project fell flat when only a handful of businesses took up the offer. Kinnear assigns this lack of uptake to two causes: the sales team didn’t understand and believe in the product; and the target audience felt the hassle of installing a physical product wasn’t worth their while, especially since at that time, energy prices were not a significant pain point.
Hoy points to Texas retailers passing on wholesale prices to customers as an example of a catastrophic failure. High energy prices in the February 2021 power crisis (when three severe winter storms swept across the United States) meant that households suddenly had bills of $500 per day in the midst of dangerously low temperatures. Hoy describes bill plans which charge varying rates reflecting wholesale prices as “untenable” under the circumstances.
Getting it right when researching potential new offerings
Hoy says it is vital to accept that people lie in surveys and that their real-life actions may not be reflected in what they say they will do. He gives the example of a solar sharing survey, where 90% of the respondents indicated they would enrol in some form of the service described. When the service was offered, only 10% actually signed up!
Cooney thinks it is important to go into testing with an open mind, prepared to polish and refine in response to what you hear.
“good research is hard to do well
and easy to get wrong”
Kinnear says that good research is hard to do well, and easy to get wrong. She prefers a stage gate model where products are evaluated and updated through interaction with actual customers. Jacana tries to get the customer perspective in the lived experience; this process giving a stronger sense of how the product will work in real life and highlighting (often incorrect) assumptions made in development.
Henry Ford's wisdom echoes in today's tech challenges
Customers may not understand the opportunities offered by the latest tech. Hoy illustrated this with the famous Henry Ford quote, "If I had asked people what they wanted, they would have said faster horses."
He says tier two and three retailers have to innovate, but need to accept that there is risk attached.
Morris notes that if consumers aren’t aware of technology, they can’t take advantage of it, but says that it is important to ensure that whatever product is offered in customer centric: resolving a problem.
Cooney feels strongly that the discovery process of testing with consumers and responding to their feedback is vital. It is reasonable to use your judgement to create the first version of a product utilising new tech, but “it would be a big risk to launch a developing product without customer engagement.”
Kinnear says it is vital to test and refine, rather than jump from theory to market launch. She emphasises that consumers sometimes view technology as a hassle, so it is important not to assume that it will motivate engagement.
The power of radical honesty: building trust
The Energy Consumers Australia 2023 sentiment survey places trust in energy retailers above insurance companies but below telecommunications companies. Asked to what extent do you trust each of following companies to do the right thing, consumers responded:
https://ecss.energyconsumersaustralia.com.au/sentiment-survey-june-2023/
Morris says iO Energy practices what he calls “radical honesty”. If they don’t think their service will save a potential customer money, iO tells them the company is not a good fit, and that they should look elsewhere for an energy retailer. Interestingly, consumers seem to respond well to being turned away – and iO is established in their eyes as truthful company. A portion of the ‘rejected’ clients return when their needs/usage change, keen to be clients of an energy supplier they can trust.
Hoy nominates Energy Locals as a company that engenders trust through transparency. Their byline is “Making energy cheap, clean, and fair”, and he describes their commitment to transperancy as an innovation.
Cooney says that trust is something that is built in day-to-day interactions, not something that can be established around a product launch. Organisations have to consciously position themselves as reliable and honest in all aspects of the business; even wait times on phone calls are part of the way energy companies can earn trust. She says the question businesses need to ask themselves is: “Are you consistently communicating in a fair and transparent way?”
Kinnear uses the example of Jacana’s VPP (virtual power plant) product in Alice Springs to explain the company’s approach to building trust. Although there was a new tariff associated with the VPP, they have customers a “no worse off guarantee”. If the product did not save them money, they would be allowed to revert to their previous tariff. Participants got the chance to save money without risk, effectively overcoming concerns that the VPP wouldn’t be worthwhile.
As these companies continue to navigate the complexities of the energy sector, they reinforce the idea that trust is not merely a buzzword but a cornerstone of their long-term relationships with customers. The energy retail landscape, it seems, is not solely about watts and tariffs but also about fostering trust through transparency, integrity, and reliability in every interaction.
Join us at the Energy Retail Excellence 2023 conference to hear from Louisa Kinnear, Margaret Cooney, Rob Morris, Steve Hoy and a host of other retail leaders from 14-16 November 2023. Learn more.
To access the detailed conference program, download the brochure here.