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Why mobile will turn power retailing on its head

  • Opinion
  • March 23, 2015
  • Ari Sargent
Why mobile will turn  power retailing on its head
Powershop CEO Ari Sargent

The energy retail sector is about to enter its most disruptive period of change in more than a century.  It’s long overdue.  It’s an analog industry in a digital world. 

We’re one of the last industries still operating according to the centralised,  command and control, one-size-fits-all principles of the industrial era.  The first phase of the internet revolution more or less bypassed the energy industry. The mobile revolution will not.    

The rise of mobile technology will transform every aspect of the industry, from the way we buy and sell energy to the way we behave, talk and relate to our customers.  

Think about how mobile has already turned banking on its head by allowing every bank customer to create their own personalised banking service, available 24/7 in their pockets. It’s about to do the same for the energy industry.     

In an analog business model, the supplier sets the rules.  Remember analog banks and their gentleman’s pace of business? They were open 10 till 3 and took a week to clear a cheque. Today’s analog energy companies are the modern day equivalent. They don’t bother telling you how much energy you’re using or how much it’s costing until after you’ve used it. They don’t offer any way to help you use less energy.  Perish the thought!  As far as the average energy consumer is concerned, energy companies exist simply to get them to use more energy, and then refer them to the credit department if they show any reluctance in paying.   

But change is on the way.  At Powershop, we’ve become the world’s first full service mobile ‘pocket power company’.  Our customers use their smartphones for everything - to shop for power, check daily usage and balances, grab special discounts, refer friends and get support.

The more our customers use their mobiles to manage their power, the more money they save, the less power they use and the happier they become, referring more of their friends and family members and staying with Powershop for longer.   

Across the board, mobile is changing our business model for the better.  It’s the reason more than 1,500 households are switching to us every month.  It’s the reason our customer satisfaction ratings remain well above 90 percent.  

Why customers are going mobile

Customers use mobile to get more value for less effort.  Powershop’s mobile customers are purchasing 20 percent more of their power actively than our non-mobile customers.  In the last six months these customers have have saved over $600,000 off Powershop’s everyday prices for purchasing through the mobile APP.

The secret sauce in all of this is engagement. 

 Unlike traditional arms-length billing, a beautifully designed mobile experience encourages people to engage deeply with their power purchasing and use, and from this comes a deeper understanding of how they can buy more tactically and take steps to use less power.  

And they get this value without jumping through hoops.  Mobile gives our customers something useful to do with their downtime, whether they’re waiting for a train or standing in line at the supermarket.  It has helped us achieve what no other power company anywhere has managed to do - turning a grudge purchase into something people actually find enjoyable.  

Why it’s good for retailers

Here’s where the mobile story gets even more interesting.  Alongside the benefits accruing to our customers, we benefit from mobile by retaining customers for longer, reducing our cost to serve and acquisition costs, and almost doubling customer lifetime value.

The mobile customer experience combined with the savings available through specials and improved knowledge means mobile customers have a switch (churn) rate 32 percent lower than non-mobile customers.  

The trade-off we make is earning a lower annual net margin per customer over a longer period of time, but a higher margin over the customers whole lifetime with us.  It's a longer-term play which ultimately benefits Powershop as well as our customers.  

Mobile customers are also more likely to be self-servicing than non-mobile customers.  This means overheads reduce as more customers go mobile.   

And as well as being more satisfied, mobile customers are more likely to become advocates and refer friends or family.  Word of mouth referrals have always been important for us, but referrals from customers who use the mobile app are off the charts compared with traditional referrals, up to 18 percent higher.

Mobile more than an app

Building a smartphone app alone isn’t enough to be relevant to the new energy consumer. You can’t build an energy company that people love while you have legacy IT systems, keep your customers at arm’s length, or people who don’t believe they’re making a difference.  

You need to disrupt all parts of your business to stay relevant to the new energy consumer.  And going mobile is a great place to start.

​ ​

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