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Energy companies customer churn customer retentionAs European Utility Week takes place in Amsterdam this week, global cloud-based software company Opower has released a report quantifying the value of engaged consumers to European energy companies.

Opower claims that utilities can increase the return on their customer relationships by 20% to 50% with engaged energy customers adding €40 per household annually to European utilities’ bottom line, according to ‘The Value of the Engaged Energy Consumer’.

Consumer churn

Across Europe, utilities are facing a new set of challenges, including flat energy demand, increased churn, and rising energy costs, said Opower in a statement.

In order to address these challenges, innovative utilities are taking advantage of new customer engagement technologies and are looking for additional ways to turn their customers into assets.

Commenting on the report’s findings, John Webster, VP Marketing and Strategy, Opower EMEA, said:“Many utilities are failing to keep up with customers’ expectations about quality of service.

And while adopting a more customer-centric approach will be a challenge, our report clearly quantifies the value of the engaged energy consumer.”

In collaboration with more than 95 of its utility partners, including leading European utilities, Opower examined five key value sources for European utilities. These include:

  • Improvements in customer satisfaction to reduce churn and increase acquisition
  • Better digital engagement to drive a lower cost to serve
  • Improved marketing effectiveness through customer segmentation and communication of programmes (such as boiler repair insurance)
  • Use of Behavioural Demand Response to improve load management and integrate intermittent renewables
  • And a future value source of cost-effective, scaleable energy efficiency, which is mandated by the EU across all member states by 2020.

Monetary value of engagement

Opower concluded that incremental value could be achieved in all five areas that it examined with its partners, as follows:

Programme goals Annual benefit per household to utility
Reduced churn & increased acquisition €3 – €8
Lower cost to serve €7- €11
Increased cross-sales €1- €10
Demand optimization €0.5 – €3 Energy efficiency €3 – €8
Total expected benefits €15- €40

‘The Value of the Engaged Energy Consumer’ provides insights that will enable utilities to transform the way they relate to their customers, including best practices around the key value sources from companies from around Europe, New Zealand and North America.

The report includes case studies from several partners in highly competitive markets, such as E.ON UK and Mercury New Zealand, that have positively differentiated their brands by advertising their customer-centric tools and services.