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Industryhost:Shell
Title:ReducingcustomeracquisitioncostandchurnforRetailElectricityProviders(REPs)
Challenge:
RetailElectricityProviders(REPs)operatinginde-regulatedpowermarketsfaceatremendousamount
ofcustomerchurnandhighcustomeracquisitionscosts.Newenergyanddigitaltechnologieshavethe
potentialtoimprovecustomerretention,loweracquisitioncosts,andincreaselifetimecustomervalue
byenablingbetterconsumerexperience,andnewproductsandservices.
Background:
RetailElectricityProviders(REPs)sellpowertoresidentialandcommercialcustomersinmarketswhere
utilitynetworkoperationshavebeendecoupledfromthecommercialdeliveryofpower.Theintentof
de-regulationistospurcompetition,innovationandconsequentiallydrivebetteroutcomesfor
consumers.
Duetoahighdegreeofcompetitionandlackofapparentdifferentiation,REPsoperatinginde-regulated
powermarketsfaceatremendousamountofcustomerchurnandhighrelativecustomeracquisitions
costs.ThisisaproblemforREPsinadvancedde-regulatedpowermarketsglobally.TheresultforREPsis
relativelylowlifetimecustomervalueandlowrelativecompanyvaluations.
Keytoimprovingperformanceisatoolsettoacquireandengagecustomersmoreeffectively,anda
portfolioofhighervalueproductswithlongertenure.Advancesincostandperformanceofnewenergy
anddigitaltechnologiesholdthepromiseofenablingtheseefforts.
Dataanalyticscansupportmoreeffectivecustomertargetingtoimproveconversionrates,sellhigher
valueitemsandbuildtrust.Betterappscanimprovecustomerengagementbyproviding(realtime)
insightintopowerusageandcouldbeachanneltodeliveringnewproducts.Acquiringandmaintaining
accurateandrealtimecustomerusagedatamayenablethedeliveryoftailoredadviceandproducts
basedoncustomerprofileandusage.Exampleenablingtechnologiesarebigdataanalytics,load
disaggregation,IoTplatforms,energystorageandsolar.Withlimitedresources,whatshouldanREP
focuson?
BoundariesandConsiderations:
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TheREPmarketincludesresidential(singleandmulti-family)andcommercial.
ThemostcompetitiveretailmarketintheUSinERCOT(Texas)yetretailersacrosstheboard
facethesamechallenges.
REPsarecurrentlynotparticipatingheavilyinpossiblyinterestingprogramssuchasNYREV
demos.
REPswillnothavemuchcapitaltodevelopnewproductsandplatforms,butawholesale
providerholdingaportfolioREPscouldpossiblydeveloptoolsandservicesthatcouldbe
providedtoitsREPsfordeploymentintoend-usermarkets(theREPisachannel).