*An IBM/Utility Week round table warned energy suppliers that keeping hold of customers in a smart metered world will be a whole new challenge. Janet Wood reports.*

When customers have smart meters in their homes, and data about their energy use can be easily transfered, energy companies "will be sitting ducks" for new entrants and they will need to do things differently. That was the view of Duncan Sedgwick, ex-chief executive of the Energy Retail Association, speaking at an industry round table on the implications of smart meters for the customer relationship, organised by Utility Week and supported by IBM.

Sedgwick warned that there were potential entrants waiting in the wings whose relationship with customers was very different to energy companies. Those entrants would be able to pick and choose the most attractive customers. He said this was an "opportunity for energy companies to do things very differently. But will they feel it is worthwhile? Will they invest time and money in a changing relationship?"

A quick poll of the industry representatives - and customers - around the table illustrated how far energy utilities had to go. Low price was a key issue, but so was a call for a simplicity, and simply a wish "not to be bothered" by your energy company. One delegate wanted his house to sort out energy automatically, while another wanted a retailer who would guarantee the cheapest tariff and switch him accordingly, without needing his input.

*Who will customers want a relationship with?*

But if customers want to be left alone by their energy supplier, and get the best deal, who will they have the customer relationship with? Some thought that energy brokers, who currently have no impact in the domestic market, could move in. Others saw retail companies such as Tesco or Waitrose, or internet companies such as Google, as more likely players.

Mike Short of O2 highlighted how the telecoms market had changed over the years, pointing out that telecoms had seen some disruptive - and entirely unexpected - new technologies. The number of text messages sent, for example, had grown from an annual 1 billion in 1999 to a monthly 2 billion in 2010. He noted that changes could come from unexpected areas: prepay phone tariffs had begun in Portugal because banks there had a suitable credit transfer mechanism and grew from there.

*Home hub*

Short said O2 was thinking about the home of the future and what would be the functions of a digital "home hub". He named the services people would want to receive as "entertainment, education, security, healthcare and energy". He questioned whether energy companies would be ready to provide that and advised them: "Don't just talk about who is coming in - go out to new partners."

It was clear that utilities need to do some hard thinking about who their customers are, and try to prepare to meet their needs. What will their expectations be? Possibly higher than you expect, one delegate said, noting that the rollout will extend to 2020, so the settled 30 to 40-year-old customer base will be today's media-saturated 20 to 30-year-olds.

*Different strokes...*

Martin Upcraft, customer experience thought leader at IBM, talked about work his company had done to understand different types of customers and how utilities could engage with them. He pointed out that energy companies would have to think again about what it meant to "own" a customer. Energy companies typically had little support from customers, compared with trusted brands such as supermarkets where people might identify themselves as a particular retailer's ­customer.

Upcraft split customers into four groups, each of which would have to be addressed in a different way. "Energy stalwarts" were less interested in cost but would want new applications and products. "Energy epicures" also had little price concern but would want high service offerings.

The groups concerned by price were the "frugal goal-seekers" who could be addressed with low-cost offerings and the "passive ratepayers". These might be hardest to address, but energy companies had to find ways to attract their interest and loyalty.

Utility Week is running a monthly series of articles on smart metering, supported by IBM. Click here to read the first in the series, on data security. Click here to view a live debate on smart meter issues.