Municipal utilities in transition: Why new business models are crucial now
As more and more startups are entering the market and challenging the current business models, municipal utility companies in Germany are forced to undergo change. Many will have to transform their business – away from pure commodity sales and towards a new business model instead.
Historically, municipal utility companies have been seen as basic suppliers for the region, focusing on electricity, gas or water. The commodity business, i.e. the sale of electricity and gas, was and still is the dominant revenue model. However, this business now has several challenges, such as a high dependency on electricity and gas prices, low margins due to competition and price pressure. Last but not least, many struggle with low customer loyalty, as these services are easily interchangeable.
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External market forces and trends: why municipal utility businesses need to react now
More and more energy discounters and large corporations are entering the market, usually with more favorable prices. Customers are more price-sensitive due to the current economic situation in the world. They’re switching suppliers more often, something this year’s BDEW customer focus survey implies.
Added to this is more governmental regulation – companies are obliged to promote renewable energies and be more transparent about the sustainability of their own business. Part of this is also the technological innovation that’s happening, driven forward by e-mobility, smart metering and the use of decentralised energy systems.
Changing requirements from the market are all part of creating more opportunities for municipal utility companies to go beyond the commodity business they’ve traditionally used.
Customers have higher expectations on their service, its flexibility and its digital solutions. We are seeing a trend towards more prosumers, meaning that customers want to produce and store their own energy while selling surplus energy back to the energy company.
From energy supplier to customer-oriented service provider
There is a lot of speculation about what the German energy market will look like in five years’ time.
Is it worth investing in solar energy, wind farms or local battery storage systems, or do you offer consulting and services for prosumer customers? Should the expansion of e-mobility and charging infrastructure be prioritised, or should you instead focus on developing smart control and monitoring systems for households and businesses?
Many questions remain unanswered, but the potential for synergies and positive environmental change is greater than ever before. Perhaps it’s time to stop prioritizing competition and start working with start-ups or technology providers instead, to develop innovative solutions faster.
Having more flexible workflows and method should be your first priority in this new future to stay competitive.
It’s important that you don’t lose sight of how to add value for your customers – the goal should be to be seen as a reliable and innovative partner for all their energy issues and needs.
And to not only understand your customers’ needs but also serve them, you need reliable software that makes it easy to work across all your different departments.
Not sure which issue should be prioritised by your company?
Let your customers help you – simply initiate a customer survey through your CRM system! The collected customer data will help you identify the right target group for new products or services and helps you to send them individualised offers through a targeted approach. This enables your sales team to act more proactively and generate more sales. With the help of intelligent self-service solutions, such as AI-driven chatbots or smart FAQs on your website, you can also save on employee resources while improving the customer experience.
How do you build your future customer journey?
The future of municipal utility companies and local energy suppliers no longer lies solely in the basic supply of energy, but increasingly in their role as a customer-centered service provider and partner for sustainable energy solutions. With innovative new business models and services, they can move away from the pure commodity business and create real added value for their customers.
Investing in digitalisation and customer orientation are vital in order to better understand customer needs and address them in a targeted manner. Using a CRM system helps you with the transformation by enabling a personalised approach and a better customer services.
Want to find out which CRM system is best for you?
We have summarised 6 simple tips for comparing CRM systems in an overview.
*BDEW Customer focus – Households (representative survey) since 2002. (BDEW-Kundenfokus Haushalte seit 2002 | BDEW)
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