Key Points
  • Utilities have to assess and rewire their loyalty programs to engage their highly aware and proactive consumers

  • Consumers prefer utility providers that offer personalized digital interactions

  • Utilities can boost consumer loyalty by integrating advanced analytics, Internet of Things, mobile, machine-learning and social media into their loyalty programs

With a deluge of loyalty programs enveloping almost every industry, it is no longer a question of whether or not the utility industry needs them. It hinges on how these programs can be adapted to enthuse, engage and retain loyal customers, and attract prospective customers.

Energy consumers are a highly aware and proactive lot today. They have two important asks to spur their engagement. One, they look for ideas and recommendations for energy savings. Two, they lock their loyalty to the provider that gives them personalized digital interactions. Loyalty programs in the utility industry thus need an elevated approach to actively engage consumers. They should focus on motivating and inspiring behaviors rather than mere transactional approaches.

Driving Next-Gen Loyalty Trends Through Technology

The traditional ‘earn-and-burn’ practice based on transactional points may have outlived its usefulness. Utilities need to leverage newer technologies for innovative possibilities. By incorporating mobile, Internet of Things (IoT) and social media into loyalty programs, utilities can introduce ‘always on’ conversations that influence consumer behaviors so that they feel closer to their providers.

The smartphone, with the right apps, provides the perfect tool for consumers to personalize their experience. Features such as location-based services and mobile wallets open up exciting reward options that can touch the instant gratification chord in consumers.

Advanced analytics sharpens the personalization of loyalty programs. Statistical algorithms can analyze energy usage patterns to segment customers for individualized rewards. Machine-learning, social and cognitive intelligence can enhance real-time dynamism and consumer experiences. IoT can provide the right ‘connectedness’ to diverse data and incentivize not just transactions, but behaviors too. For example, consumers may be rewarded for setting their thermostats to specified lower limits than their daily average.

Gamification adds extra dimensions to the loyalty experience. The integration of mobile technologies, big data and analytics set the perfect stage for gamification as an effective tool to shape, motivate and reward consumer behavior.

Duplicating Best Practices of Other Industries

The challenges around striking the right balance between customer service, regulatory compliance and cost loom large for the utility industry. Their loyalty programs should ensure significant value in terms of growth and revenues. Successful loyalty programs of other industries provide good pointers to achieve this.

  • Embedding Loyalty into the Customer Journey: Take the example of the Starbucks’ loyalty program. It effectively integrates payments and mobile technology with the Starbucks store experience. Taking a leaf from this, utilities can design apps that credit loyalty points and rewards in real time for complying with alerts and advice on optimized usage, prompt bill payments and self-resolution of issues

  • Intelligent Use of Data: Deploying sophisticated data gathering, analytical tools and techniques, differentiated rewards may be designed for the high-value and highly aware consumer — in the same manner that retail cards map their loyalty rewards

  • Collaborative Partnerships: This allows rewards redemption across a vast world of cross-industry and non-competing retail partners. By leveraging analytics, utilities can effectively segment consumers to provide redemption options with retail partners of their choice

  • Addressing Consumers’ Biggest Challenges: Amazon Prime provides loyal members free one-day shipping and digital content. Energy providers can adapt a similar approach and offer members better pricing options and packages, and newer energy products and services that address their specific needs

Ultimately, loyalty programs create winners on both sides of the business table. Consumers feel valued and see benefits in making behavior changes — such as participating in energy-saving programs, using paperless billing and self-service options. For energy providers, such behavior changes lead to better compliance (especially for regulated utilities), lower operating costs and higher sales from the grid.

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