Revolutions cut out the middle man – Energy suppliers are middlemen and eventually, we will see them go. Renewable energy & microgrids will change how consumers buy energy. It’s a controversial view but one I believe is inevitable. Another is that brokers are dead, consultants have a chance. Will brokers & consultants be needed when artificial intelligence can do a better job? Is everything all about price or do people care about service? When consumers generate their own energy, will they buy from brokers? Will energy costs ever reach zero?
Middle Men Being Cut Out
In order to get a glimpse into the future of the energy industry, we can just look at the present and past of other similar industries. One that is very similar from a broker and consultant standpoint is the Insurance industry. The insurance industry already has artificial intelligence scanning pictures of customers to determine their gender, age, sleep deprivation, if they smoke, how quickly they are aging, their ethnicity and which common diseases those ethnicity’s often carried. All within minutes, these AI machine can work out a life expectancy of a person. A job that would take a human a few hours. Who’s to say an AI machine couldn’t scan a customers bill in a few seconds and find them a better deal in the time it takes the energy broker to send an email?
The financial sector has been massively changed by AI and Machine Learning. These computers are able to use algorithms to decide on when the best time to buy a stock is and when’s the best time to sell. Remember the days when if you wanted to buy stocks you had to call a broker and pay them a high fee? Well not anymore. Thanks to more and more companies you can even buy shares for free, zero commission, without ever picking up a phone and speaking to anyone.
Here’s how it works in our industry currently; Suppliers buy energy in the wholesale market and sell it on to customers. Suppliers work in a competitive market and customers can choose any supplier to provide them with gas and electricity. The customer pays the supplier for their service. Do you think that things will stay the same in the coming years?
Stock prices in all of UK’s floated energy suppliers has fallen year on year. Their profit margins are minimal and investors are steering clear of the once staple utility stocks in their portfolio. The investors know it, the management teams know it and the brokers seem to be enjoying the high commissions ignoring what’s going on.
Consultants Have A Chance
Many believe AI won’t completely replace us, unless AI can completely convince us that they are not computers and are actually real people. As per Maslow’s hierarchy of human needs, people still need to have respect for others and feel respected by others. As an energy consultant, if you can provide value to consumers in terms of their energy needs while showing them respect and behaving in a respectful manner, then you have a chance.
The business model of many Energy Brokers, I say many although the number is probably close to 97% of Brokerages, is to rip off the customer slightly less than the competition and maximize profits. With this model, Brokers seek to do as many high uplift/commission deals as possible and then move on. As such, they communicate with the consumer very little and do nothing to help them with their energy needs. This will have to change.
In tomorrows world, where computers can find the prices much faster than the human, analyze the data much quicker & better and ask for much lower commission – brokers will be gone. The business owners who purely care about price will end up in the sales funnel of a comparison website. You may have a few hundred naive consumers but that won’t be enough to feed the thousands of hungry salespeople. What remains are the consumers who want to be valued and looked after.
Unfortunately for brokers, providing value and removing pain from customers requires time, which will drastically affect sales numbers and commissions. If you can switch to being a Consultant, caring for the client and providing value, not just selling, you may have a chance in tomorrows world.
The general public’s sense of community and the rise of social media makes us more than ever – connected. Brokers have a bad rep of being ruthless and rude. This is simply due to them having high commission targets that needed to be hit. With social media and online reviews, you’re going to have a hard time getting customers when everyone you call/email googles you first and see’s all those scathing reviews. Of course, you could buy fake reviews, but then Google is getting better at spotting those and penalizing companies.
Will Brokers & Consultants Be Needed When Artificial Intelligence Can Do A Better Job?
It’s true that computing and artificial intelligence can do better than humans at many tasks but will people ever want to give up that personal touch? Well, I would suggest yes. We all prefer going to an ATM and a self-checkout than a real person at a till. Why? Usually, it’s quicker for us to do it that way and we avoid awkward chit-chat. The moment business owners realize AI can do it quicker than a real person and interrupt their business less – then we’ll see the switch from people to AI very quickly.
The only place I see real people having a leg over AI is when business owners are having issues and problems. Generally, when we have a problem, we want someone who can understand and sympathize with us. That’s where real human Energy Brokers & Consultants come into play.
Is Everything All About Price Still Or Do People Care About Service?
Consumers and Business Owners will always say the price is the only thing that matters to them. However, Amazon begs to differ. eBay and the £ store are cheaper yet Amazon has walked all over them. Price matters but not that much. If an AI system can get prices in 2 minutes while a human takes 25 minutes, even if the human is 5% cheaper – the majority of people will go with the AI.
When Consumers Generate Their Own Energy, Will They Buy From Brokers?
Well no not really. We are already seeing customers who generate 70% of their energy from renewables cannot be bothered about what tariff they are paying on the remainder of the 30% of the energy they take from the grid. As Brokers generally just supply a price, and as price becomes less important, you will see fewer businesses using brokers. Consultants will have to offer a lot more than just price to stay relevant.
Will Energy Costs Ever Get To Zero?
Yes. Due to Economies of Scale and the fact the sun and wind don’t bill us for anything, we can see as the years go by, the cost of producing energy get’s significantly lower very fast. Will it ever get to zero? Yes. When? Far enough in the future that Energy Brokers and Consultants have enough time to prepare for it.
Do I know when AI will massively disrupt our energy industry? No, I don’t but that doesn’t mean that we shouldn’t prepare for it. The future may be scary but only if you’re one of those doing things wrong. Do the right thing and you’ll be rewarded over time.