Resources: The Pull-Through
Energy Program Participant Recruitment and Retention
To the Meter…and Beyond!
We’ve entered an era in which utilities must adapt to an increasingly connected and informed consumer marketplace. Moving beyond the meter to interact with customers can represent unknown territory for some utilities. “Ratepayers” will become “customers,” and customers have increasing access to information and expectations of customer service and technology performance. The same service levels expected from companies such as Amazon and Apple will be expected from electric service providers.
Utilities will need to follow the retail model and adopt a consumer-friendly approach to becoming a trusted advisor – think of Flo from the Progressive Insurance commercials. Intuitively, customers will look to their providers first for information about energy efficiency options, so utilities should be prepared to respond by training their employees – all employees, not just customer service representatives and installers. Each employee should be viewed as an ambassador for the company and should have a general knowledge of new programs or at least know where to direct people who inquire about them.
“The job of utilities for 100 years has been to keep the lights on. End of story. Now they’re being asked to make the grid more efficient and reliable, integrate renewable sources, and introduce consumers to new technologies. That’s a culture shock they’re struggling to adjust to.”
“Why the Smart Grid is Stuck in First Gear,” Martin LaMonica, CNET News, September 2011
Educate & Communicate.
Consumers’ lack of understanding is the biggest challenge to successfully implementing an energy conservation program. Utilities need to educate their customers by positioning themselves as a source of information. Remember that consumers are smart – don’t go overboard with too much marketing fluff, but at the same time avoid technical jargon. Share your motivation for the program and what direct benefits consumers can expect through participation.
Expectation of communication is evolving at lightning speed. Generations Y and Z already consider email passé. Millennials will represent the largest generation since the baby boomers and will have a huge impact on consumer expectations. Utilities need to think beyond the call center and incorporate a multipoint approach to communication that includes everything from direct mail to social networking.
Some utilities have created a new role in their organizations, the chief customer officer, who will focus on the customer experience. This will be a pivotal role in the successful implementation of new programs. This individual will focus on the composition of your customer base and how to tailor messaging that will resonate with customers. They will gauge their experience with everything from program application through installation and ease of use. You know your program is the best thing since sliced bread, but without consumer acceptance and adoption, you’re toast.
The Future is Two-Way.
The past is asynchronous – utilities had all the control and dictated the what, why and when of information flow. The future is synchronous – with consumers having more power through access to information, technology and options.
The future will require utilities to not just acknowledge their customers and react to comments and concerns but also to understand them and proactively engage with them.
It’s not all about glossy brochures and slick advertising campaigns. The introduction of behavioral and social science brings a left-brained approach to the issue of customer acquisition and retention.
This approach recognizes that not all customers are created equally and examines the social, economic, demographic and emotional drivers that influence people’s decision making.
“The term ‘behavioral’ refers to overt actions; to underlying psychological processes such as cognition, emotion, temperament, and motivation. The term “social” encompasses sociocultural, socioeconomic, and sociodemographic status and to the various levels of social context from small groups to complex cultural systems and societal influences.”
So, Who is Your Customer?
Organizations such as the Smart Grid Consumer Collaborative1 are collecting data on various consumer segments and motivating factors. The findings from other groups vary slightly and depend partly upon the sample size and geographic location. Regardless of the report utilized, the key is remembering that not all consumers are the same.
An international study conducted by Accenture2 on the new smart energy consumer identified 6 unique profile segments:
U.S. citizens are largely skeptical of energy programs offered by their utility companies, and ranked 14th of 17 countries studied in terms of being proactive.
In terms of overall trust of their utility provider, the U.S. is average, with 29% of consumers looking to their utility company as a trusted advisor.
We’re also seeing the evolution of the new energy consumer. This is a growing population of high-tech users who typically have a college degree or higher, are 27-35 years old, own their home and have an average household income between 70,000 – $100,000. This technology-immersed group is keenly aware of the fact that energy is a scarce resource just like food or water and they are inclined to leverage technology and mobile devices to manage their energy consumption.
Applying what we know from science, we can develop a marketing approach to lead people into the new era of energy management. We call this approach the pull-through.
To be successful, utilities will need to embrace the Pull-Through – not just for acquiring customers but also for building goodwill with them to break down barriers to effective communication.
“Fifty-six percent of consumers don’t understand enough to make an informed decision about their energy management.”
Pike Research, Smart Grid Consumer Survey 4Q 2010
“Those utilities that understand and leverage the perceptions, behaviors and values of their consumers will ultimately generate the most value in the new energy era. By presenting a compelling and convenient value proposition, energy providers and consumers alike will be rewarded by lasting energy efficiency.”
Greg Guthridge, Managing Director, Accenture
It all begins with the education of the customer.
Seventy-seven percent of Americans think they know enough to take actions that will optimize their electricity consumption.
However, most don’t actually know anything about their energy use but still want to save money – as long as it is kept simple.
In 2011 the Consumer Electronics Association reported that 64% of consumers are unaware of electricity management programs, and 66% of consumers aren’t familiar with the smart grid.
A survey by Zpryme in May 2011 asked consumers to rank energy usage by appliance and found that consumers don’t generally know the amount of electricity consumed by their appliances and how they compare to other appliances in the home.
Electric utility providers don’t typically help their customers understand their consumption. A report from the American Council for an Energy-Efficient Economy (ACEE)3 showed that 25% of utility bills do not even show the rate being charged.
The proliferation of conflicting information from both sides of the smart energy argument makes it difficult for the consumer to choose the right path. A few progressive companies go beyond just providing a “tip” or hotline and engage customers to help them understand and manage their energy
“Twenty-five percent of electric utility bills do not show the rate being charged. Advanced energy management programs go beyond simply providing an energy ‘tip’ or hotline and engage customers to help them learn about their energy use and management.”
“The State of the Utility Bill” ACEEE Report, November, 2011
Don’t You Trust Me?
Even though consumers intuitively look to their provider for information, only 29% of consumers trust that their utility will provide them with good information about the actions they can take to optimize electricity consumption. Forty-six percent are unsure, and 25% do not trust their utility4. In this Accenture survey, the most trusted source of information is Environmental Associations (53%), followed by academia and consumer associations.
Don’t Need No Education?
The failure of Google’s PowerMeter was driven primarily by lack of education. Consumers did not understand it, and utilities viewed it as a threat to the relationships they have with their customers. Opponents cried “Big Brother” and caused irrational fear. Ironically, many of these people probably utilize location services on their smartphones and allow companies such as Amazon to make purchase recommendations. It just comes down to the consumer’s level of trust and perceived value.
Consumer’s primary fears of utilizing a conservation program include4:
- Increasing electric bill (46%)
- Saved electricity will be sold by utility for a profit (41%)
- Access to personal data (32%)
A general lack of interest creates a challenge for implementing a conservation program. This can be caused when there is no perception of an upside for the consumer. And altruism regarding the environment and being a good citizen are not typically sufficient motivators. Lastly, actual savings may not be significant enough to motivate some groups to take a potential risk in loss of comfort or control.
Right Message + Right Method = Success
We live in a world that bombards us with information – it’s important to tailor the message to the audience.
When consumers make decisions regarding electricity management programs, they place different levels of importance on the components. Generally, across all segments, “impact on their utility bill” carries the most weight. “Utility control” carries nearly the same weight, and concern for the environment as a motivating factor is a distant third.
There are different hot buttons for each consumer segment5:
- The largest segment in the U.S. is Skepticals (31%), who typically distrust utilities and are less sensitive to electricity bills and social pressure. They tend to have higher incomes and utilize natural gas within their homes. They most often look to consumer associations for advice about electricity management.
- Twenty-five percent of the U.S. market survey is Pragmatic, which are more often men who tend to reject utility control but are sensitive to savings on their electric bills. This group is generally slow to adopt new technologies.
- Cost-Conscious consumers represent 13% of the U.S. market survey, have the highest sensitivity to electricity bill savings and are more sensitive to social pressures to take action. Complication of their bills is a discouraging factor, but they also tend to trust their utility providers more. This group consists mostly of women.
- Proactives, representing 12% of the U.S. market, have the highest willingness to take action to reduce their electricity consumption but care the least about the environment. They prefer to get their information in-person and tend to use electricity more often for heating than do other groups.
- Indifferents compose 12% of the U.S. market and are most often men younger than 24, who have lower incomes but higher acceptance of new technology. They are generally the least willing to take action to reduce their electricity consumption, but more open to giving control to the utility. They don’t generally believe that electricity has a negative impact on the environment but acknowledge that they don’t understand enough to make a decision.
- Eco-Rationals are the smallest group in the U.S., at 7%, and are more often women who seek advice before making a decision. They have the highest interest in reducing their impact on the environment, and are most sensitive to social pressure and perception of people who take action. They are more willing than are most to sacrifice personal comfort to save energy and welcome new technology as a solution.
Monetary incentives for participation in programs have been proven effective, although there is a point of diminishing return. Generally a $25 incentive produces the greatest response for the least cost.
Semantics is critical in development of messaging to customers about energy-saving programs.
Terminology that is widely utilized and accepted within the utility arena must be tempered to suit the sensitivities of a new audience. Avoid industry jargon such as “control,” “ratepayer” and even “smart grid.”
Just as important as the message is the method in which it is delivered. Again, one size does not fit all.
Consumers by and large prefer to communicate with their utilities via the Internet, except when it comes to support issues, in which case the phone is preferred. Inperson, at-home communication is the second most desired. On the horizon and growing quickly are other methods for communicating, including social media.
Consumers have indicated that their preferred method of learning about smart grid options is through mailed materials from the utility, followed closely by visual presentations.
Absolutely, positively do not forget social media. Nearly 12% indicated Facebook as a preferred method. Consider these powerful statistics6:
- More than 48 hours of video are uploaded to YouTube every minute.
- YouTube generates three billion views per day.
The power of social media to influence customers cannot be overlooked – google “socialnomics”.
As a whole, 60% of all segments in the group of 17 countries surveyed by Accenture indicated that they feel social pressure to make a change regarding conservation.
The Consumer Experience.
I guess it shouldn’t be surprising that Microsoft doesn’t utilize the “K.I.S.S.” (Keep it Simple, Stupid) method. The failure of its Hohm product could be attributed to the 189-question profile survey that users had to complete to set up the program.
Leave it to a former Apple employee to take a common device and revolutionize it. Nests’ Learning Thermostat doesn’t require any programming, but instead learns from the user’s behavior and senses when he or she is home. The user portal is simple and intuitive and provides relevant, actionable information.
So, where does a utility begin? It may be aware that it needs to do something differently but may not have the knowledge or the staff to develop and implement a plan. This is where a strategic partner can step in to help define the product, identify the market and primary motivators, and develop and deliver the right message with the right method to achieve success while still supporting (or enhancing) the existing brand. Spending the time and effort up front will make implementation much easier down the road.
Key Points to Remember…
- Consumers have more access to more information. Often the loudest voice wins, so it’s imperative that utilities develop a proactive messaging strategy to deliver accurate information to their customers before opponents spread fear and misinformation.
- Consumers want to trust their utility providers. This trust is earned through a concerted effort over time by engaging in nontransactional communication and providing useful and timely information.
- Utilities have to recognize that not all their customers are the same, and must tailor their messaging to suit the audience. Consumers are bombarded with information daily, so utilities need to provide relevant information to get through the noise and clutter.
- Information is everywhere – utilities need to explore numerous avenues for sharing information for education and enhanced customer experience. Studies show that once 10% of the population accepts a product or idea, it reaches a tipping point where it is widely accepted.
- If needed, find a strategic partner to help bridge the gap between you and your customers.
2 Understanding Consumer Preferences in Energy Efficiency: Accenture end-consumer observatory on electricity management, 2010. Accenture.com
3 The State of the Utility Bill, ACEEE Report, November, 2011.
4 Understanding Consumer Preferences in Energy Efficiency: Accenture end-consumer observatory on electricity management, 2010. Accenture.com
5 Understanding Consumer Preferences in Energy Efficiency: Accenture end-consumer observatory on electricity management, 2010. Accenture.com
6 Why Video Is Essential To Your Marketing Mix (and 7 Steps to Powerful Results). Awareness, Inc. www.info.awarenessnetworks.com
2012 State of The Consumer Report. Smart Grid Consumer Collaborative. www.smartgridcc.org
Excellence in Consumer Engagement. Smart Grid Consumer Collaborative, October 2011. www.smartgridcc.org
Understanding Consumer Preferences in Energy Efficiency. Accenture end-consumer observatory on electricity management 2010. www.accenture.com
The New Energy Consumer: Strategic Perspectives on the Evolving Energy Marketplace. Accenture, 2011. www.accenture.com
Revealing the Values of the New Energy Consumer – Accenture end-consumer observatory on electricity management 2011. Accenture. www.accenture.com
The New Energy Consumer. Zpryme Smart Grid Insights (sponsored by Itron), May 2011. www.zpryme.com
The State of the Utility Bill. Ben Foster and Elena Alschuler, ACEEE. Report Number B111. November 2011. www.aceee.org
“How to talk to a customer, if you have to” Intelligent Utility, www.intelligentutility.com February 2012
VIDEO: Social Media Revolution (Socialnomics). http://youtu.be/ed4Fzk8TzBc