Energy companies produce oil and gas or generate electricity — they don’t need to worry about what their customers are doing, right? Well, to compete and to thrive in the energy transition, they definitely do. For many energy companies, getting to know their customers better can be the key difference between commercial success in the energy transition and falling behind.

I’m Alex Roinesdal and I’m a partner in Oliver Wyman’s Energy and Natural Resources Practice. I’m based in Houston, but I grew up in Norway and I’ve also lived for a while in Brazil. My passion for the energy industry grew at the very beginning of my career when I worked with the Norwegian Brazilian Chamber of Commerce in Rio de Janeiro. It was a boom time in the Brazilian offshore industry, with massive pre-salt discoveries. My role at the time was to help Norwegian companies with offshore expertise break into the Brazilian market.

Three aspects of the energy industry really hooked me in back then and have kept me hooked ever since: One, the global connectedness of the sector; two, the rapid pace of change; and three, the importance of the industry to the broader economy and to social development. Fast forward a couple of decades, and the energy transition is driving the industry to change faster than ever, with even higher stakes to get it right. 

To respond to changing demand patterns, regulations, and their own net-zero commitments, clients I work with in the energy sector are launching new products, new services, and building new commercial business models. They’re also facing new competitors, including agile start-ups.

At the same time, demand for many of their traditional products, like gasoline and diesel, is shrinking in many markets, making competition for the remaining volume even tougher.

My clients often ask me how can they stay ahead when the market is changing so quickly?

One key lever, in my opinion, is for energy companies to develop a stronger understanding of their customers and, importantly, to use these insights consistently in strategic decision-making.

For example, when selling renewable diesel or sustainable aviation fuel, it’s not just about producing the products and getting them to the market; you need to understand which customer segments need it, what regulatory incentives they will benefit from, and what level of premiums they might be willing to pay.

You need to understand which customer groups might benefit from bundled product and services solutions, for example, by including things like detailed carbon accounting.

And, for traditional fossil products, it becomes increasingly important to “own the short”, or, in other words, ensuring you have a reliable and profitable outlet for your products, especially in markets that are shrinking.

In summary, energy companies need to build a deeper understanding of their customer segments, including what they need, how they want to buy it, and what they are willing to pay for it.

Interestingly, energy companies often have access to rich information about their customer segments that goes untapped or underutilized. I’ve seen first-hand that their own sales data and customer engagements can yield powerful insights into demand patterns, customer needs and preferences, and willingness to pay. But it requires the right tools and analysis to make those insights efficiently accessible and to put them front-and-center to be utilized consistently throughout the organization.

Embedding these types of customer insights into both broader strategic decision-making and into every day-to-day decision, like the pricing of individual deals, can collectively yield significant value and position energy companies to win in a rapidly changing market.

I’m Alex Roinesdal, and this is my take on customer focus in the energy transition.

This transcript has been edited for clarity.