‘2024: The year of less is more for transforming retailers’

The start of 2024 is the opportunity for energy retailers to regroup, simplify and move forward with agility, writes Neel Gulhar, Chief Product Officer at Kaluza.

Oh to be a fly on the wall as European retail leaders regroup after the holidays…

“Ok team, 2024 – what have we got?!” exclaims the CEO, with new year energy on the C-Suite zoom.

“Well, we have a number of new propositions in the pipeline which we are pushing to launch in September – there’s one for electric vehicle owners and another based on heat pumps. That will bring our product count up to an impressive 476,” coolly remarks the Chief Product Officer.

“What about AI? We’re using that, right?”

“Of course,” flatly replies the CTO, rolling her eyes off camera.

Many of us are familiar with this kind of conversation within our organisations, especially as digitisation and market competition has ramped up in recent years. But the reality is that although the industry has more data, more advanced technologies, more customer expectations and more smart devices connecting to the system every minute, what retailers should in fact be asking themselves is ‘what can we be doing less of?’

Having worked with a number of major national energy companies in Europe and around the world, I’ve seen first hand how retailers with hundreds of products and solutions feel pressured to churn out even more, and fast – or else risk feeling like they are falling behind.

While the changing demands of a competitive market are relentless and the clock is ticking away on our net zero promises, the start of a new year brings an opportunity to reflect, consolidate and simplify. According to EY, 94% of energy service providers say their ability to move quickly is a challenge.

If agility is the goal, then the mission needs to be streamlining the ship, not adding more cargo.

Of course there is no silver bullet, and these processes require resources, time and a fair number of difficult decisions – however, the main stages to stepping back and simplifying can be straight forward:

Phase 1: Take stock

One of the biggest challenges comes first – fully mapping your internal systems and identifying how different components of your architecture connect.

After years of plugging in and patching up, a typical retailers’ digital infrastructure becomes a jungle of components. You end up with a system for meter data, another for billing calculations and more for market messaging, all connected with custom integrations to support legacy products that serve a tiny subset of customers for a high cost – both in financial terms and complexity for your business.

To accompany this architectural view, you also need to understand what your expectations are of each component – how do you measure the value that it’s giving you? Whilst the process can be a gruelling one, to produce a comprehensive, single view of your systems and their value is a useful way of highlighting where it makes sense to strip back, or at least, to start.

Phase 2: Think customer lifetime value (CLTV)

Before you begin consolidating or reshaping though, it is imperative that everyone is clear on what you’re optimising for. An increase in gross margin per sale can have a bigger impact on the total enterprise value of your business than merely reducing the cost to serve your existing customer book. Employing a CLTV lens can help identify the high-value opportunities beyond the tempting, low-hanging fruit of cost-to-serve reduction.

Taking an example from a completely different industry, Uniqlo’s product mix is designed to promote cross-selling and you often have to purchase two pieces of a matching set separately, perhaps getting a discount when you do.

Getting clear on your wider business strategy is critical to then developing your teams and technology around it.

Phase 3: Simplify

While much of the technology simplification is about removing redundant components or underperforming services, it’s about identifying the opportunities for automation and yes, you guessed it, perhaps AI.

With areas such as billing and customer care, so many operations consist of data-driven, repeatable processes which are ripe for AI. For example, Large Language Models (LLMs) are becoming highly proficient in describing intent from inbound customer enquiries from chatbots and emails, helping to automate triaging for agents.

Taking this further, you can train these models with other retailer-specific datasets such as disaggregated usage data and solutions to common exceptions to reduce costs by millions.

Implementing this AI effectively, however, requires simplifying your data architecture and ensuring data accessibility for the models to use, otherwise attempts could take years. There’s no escaping it - simplification and innovation go hand in hand.

Of course these three phases make big, complex transformation projects sound easy but we all know they’re not. However, as we embark on 2024, with invigorated aspirations to delight customers and empower them to decarbonise, let’s not jump straight back into more of the same, but take this opportunity to regroup, simplify and move forward with agility.

Discover how Kaluza helped OVO, one of the leading UK energy retailers, achieve operational and technological transformation in this case study.

About the author:

Neel Gulhar is Kaluza’s Chief Product Officer and is responsible for leading the productization of the business’ pioneering SaaS solutions. Neel has over twenty years’ experience in product development, B2B marketing and utility platforms. Previous to Kaluza, Neel was Vice President of Product at Oracle and Senior Director of Product Marketing at Opower where he helped lead the high-growth SaaS company to IPO and acquisition. Neel has extensive knowledge of the utility sector having spent over a decade working for US majors Exelon and Baltimore Gas & Electric.

About the company:  

Kaluza is an energy software company powering the future of energy. From revolutionising billing to smart electric vehicle charging, Kaluza’s technology is empowering some of the biggest energy suppliers to better serve millions of customers. Kaluza is a B Corp-certified business with over 450 employees across seven global hubs. www.kaluza.com