Identifying opportunities for smart rollout acceleration

Kevin Scott 05 Jul 2024
Transformation MHHS Energy
Man riding upwards on a steep hill on a mountain bike.

Remember that huge challenge of getting the smart rollout done, originally by 2020? Well, it still remains, albeit the deadline has since moved three times, landing on completion (with tolerances) by the end of 2025.

Whilst performance has increased over time, in our analysis based on performance to date, we recently highlighted the need for further improvements by suppliers, with most being at risk of missing the government’s target for 2025.

Analysis of Smart Rollout in the Energy industry

Opportunities to hit the target are still there

In data from the Department for Energy Security and Net Zero, the best performing suppliers are shown to successfully install meters for over 75% of customer appointments, whereas lowest performers hit less than 55%. The opportunities to improve the end to end installation processes and customer journeys still exist, which in themselves can then drive improved broader customer sentiment.

Not only that, Smart is a key enabler for Ofgem’s Market-wide Half Hourly Settlement (MHHS) reform in removing estimation and making the settlement process more accurate and timely. It enables much greater opportunities in new product creation and demand reduction. Suppliers are likely to face significant challenges if they are unable to operate MHHS effectively.

Better targeting and ‘right first time’ are critical focus areas; maximising your approach through better utilisation of data, and the application of Operational Excellence. We’ve looked closer at where the opportunities are below.

Tailored comms can shift customer attitudes (which themselves are still changing) as Ofgem pressure continues

Ofgem have already hit suppliers with over £10m of penalties at the end of 2023, with the signposting for more severe penalties for 2025’s target. In a challenging environment, it paints a bleak picture for suppliers going into the final 18 months.

However, from their regular engagement tracker surveys, Smart Energy GB still feel there are large volumes of customers who claimed they didn’t already have a smart meter, but said they’d seek or accept a smart meter in the next six months.

Ofgem and Smart Energy GB have also stated that consumers shift between ‘attitude groups’ in terms of their positivity towards having a smart meter, and have factored this into their installation numbers. Their push is that more targeted comms should be used, such as tailored messaging for renters, as well as traditional pre-pay customers where they could benefit from direct payment of the Energy Bill Support Scheme payment.

There’s also the opportunity to push more incentives to uptake, tapping into consumers who may have recently changed ‘attitude group’, and could now be more receptive to taking up smart. This may be particularly effective if it’s clear that smart will open the door to a money saving tariff, which previously wasn’t available or understood. It can be even more impactful if combined with segmented data analysis for targeting.

Using data effectively is key

All of this does require a level of sophistication with data, as well as applying the right lenses and overlays to drive useful outputs. Timing and channel then become further considerations to achieve the greatest engagement. When there are no dedicated teams to drive this, it can often become a side of desk activity or something that’s lost amongst other marketing activity.

It’s important to ask:

  • Are you using segmentation consistently and strategically, capitalising on opportunities to influence attitudes in today’s market?
  • How often do you make use of alternative or multi-channel contact? Are you diversifying and experimenting enough, as the 2025 deadline gets closer?
  • Are the benefits of access to new tariffs and usage/bill reduction being shown, specific to the customer?

Leveraging Operational Excellence techniques can improve successful installation rates

End to end processes are another critical focus area for acceleration, ensuring these are rock solid and not driving installation losses due to process failures. Visibility of the right data is also critical here too, as well as ensuring it’s being used to highlight the relevant areas to tackle as part of targeted MI and reporting. On top of this, well managed Operational Excellence improvement approaches such as Kaizen can call out waste, failure points and areas for root cause analysis.

Appointment quality elements, system interactions, and data transfer/stability are just a few of the areas worth digging into via Continuous Improvement techniques, which can then be prioritised for solution generation and implementation. Any failure reasons as part of appointment generation, booking completion, capacity management of appointments, and further downstream elements can all provide data to drive further root cause analysis, enabling solutions, process changes and new approaches.

Given the stakes, a ‘once and done’ approach is not going to work here, and so regular iterations and learnings are imperative to continuously adapt to ever changing customer need.

Challenges still lay ahead in the smart rollout

There’s a strong argument to back the view amongst suppliers that almost all the low hanging fruit, in what was considered as ‘easier installs’ across engaged customers, has now gone.

Remaining challenges include:

  • Problematic install locations (i.e. blocks of flats where the IHD is distanced from meter)
  • Cost and skill shortages of installation engineers
  • Remote area WAN coverage issues
  • Existing smart installs that are not working as ‘smart’
  • Installs not being completed end to end
  • Lack of awareness of consumer benefits, as more suppliers offering dynamic pricing
  • Unengaged customers who do not actively want a smart meter

It’s clear these challenges are not going away, but a focus on improved/dynamic targeting of customers, as well as using operational excellence techniques to maximise the success rates from installation appointments, are two clear ways of continuing to shift the dial positively.

At BFY, our Operational Excellence experts have a wealth of experience, delivering fundamental improvement results to process outputs; removing pain points, driving out root causes, and generating tactical improvement initiatives/actions to turn the dial on performance.

Leveraging our broader energy industry experience, we’re supporting suppliers with their smart install targeting and campaign strategies across this challenging period.

We also have been helping our clients increase customer contact and engagement across SME and residential customers, often in the challenging area of debt and collections. Improvements can be realised through data segmentation and the application of different lenses, enabling the creation of targeted contact campaigns – an approach that’s delivered £m’s in benefits for our clients.

If you’d like to know more on how we can help, contact Kevin Scott.

Kevin Scott

Director

Kevin leads client engagements with a laser focus on empowering clients to navigate large-scale events and market challenges.

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