State of the consumer
April 17, 2018
The Smart Energy Consumer Collaborative (SECC) released their annual State of the Consumer report in February this year.
The report highlights how consumer expectations in the US have expanded or changed since the previous report was published.
In 2017, the State of the Consumer report identified six key themes that were indicative of the state of the smart grid consumer at the time of release. These were:
- Consumer interest transcends technology availability in that consumer values drive interest, and policy and incentives boost adoption. This was particularly interesting as it appears that the sophistication of a State’s energy policy does not determine awareness and interest in the offerings.
- Marketing effectiveness continues to be key for driving adoption of smart grid programmes and technologies. The findings supported the theory that the framing of the offer is key to its adoption. As many consumers want control and choice, these are important elements in any marketing campaign.
- Programme design matters, and several offerings show promise. Programme design should be viewed from the perspective of amount of consumer control and incentives, time and effort required to participate, and level of information to be shared.
- Cost can be a barrier, but innovative acquisition models are emerging. Cost is a big deal for consumers. Policy too is an influencer of adoption with the research indicating that adoption is likely to be higher if the State you live in provides incentives for solar and EVs, for instance.
- Don’t forget about post-purchase engagement. Customers are becoming increasing expectant of good customer service. Utilities could take a leaf out of the customer service books of banks to see how they can further improve already improving customer service.
- The research suggests a structure for potential changes to the utility business model. Consumers wish to have requirements and benefits clearly communicated to them. They increasingly look to their utility as a trusted source of information and this is an opportunity the utility can take advantage of.
The State of the Consumer report 2018 shows that consumers’ expectations are changing and this echoes some of the findings from 2017. Among the key themes from the new report are:
1. Utilities have the opportunity to proactively start engagement with their customers
The changing needs of the consumer, plus the new ways in which consumers engage with retailers, have resulted in consumers having different expectations of their engagements with service providers.
Utilities have an unparalleled opportunity to actively change the way they are perceived by their customers, thereby enabling them to change the trust relationship between utility and consumer.
Millennials, who make up the largest generation in US history, are now a significant market force according to the SECC’s Spotlight on Millennials report. Their influence will continue to grow, with their sway being seen in an increased interest in technology, money saving opportunities, solar technologies and electric vehicles. They also believe that online retailers provide better customer service than traditional bricks and mortar retailers. This focus on online provides an additional opportunity for utilities to engage with their customers.
Customers traditionally only engage with their utility when they have a specific need or query. Thus by engaging with their customers, utilities now have the chance to position themselves as trusted advisors who can support and help their customers make better energy saving decisions, changing their positioning in their consumers’ lives.
Utilities too should remain mindful that addressing the financial constraints which impact on customers being able to implement cost or energy saving changes to their homes, will subsequently impact their position of trust within the lives of their consumers.
Options such as rebates, time of use tariffs and energy efficiency programmes could therefore address some of these concerns.
Pacific Gas and Electric (PG&E), through their Best Rate campaign, engaged with small and medium businesses. By undertaking a rate analysis of customer’s energy usage, PG&E were able to identify customers who could lower their bills by switching to another rate plan. They identified 12,000 customers who could benefit from a change in rate and each customer was mailed with a personal message, encouraging them to change programmes.
Over 5% of consumers they reached out to responded to the proposal and this resulted in over $1 million in annual savings.
The campaign was considered such a success that PG&E ran a second campaign in 2017.
In addition to saving the consumers money, PG&E raised awareness with their clients and awareness of the various programmes on offer. While it may be challenging to engaging in this kind of one to one communications with residential customers, personalisation is available for text, email and social media on a scale that will bring some individualisation to any outreach.
2. Multiple outreach channel strategies offer the best options to educate and reach customers
Utilities mustn’t just focus on social media to engage with consumers. Whilst many consumers are happy to use social media, it is Millennials who are more likely to use social media to manage their energy use and pick up energy efficiency tips and energy related info.
In particular, consumers who are not comfortable with social media need alternative communication channels. These options include in person, telephone, website, web and phone applications.
While Millennials are most comfortable utilising digital media, they are also happy to use telephone and other media, and are more likely to utilise three or more communication channels, depending on which is considered most convenient at the time.
The SECC therefore recommends:
• That they take a combination approach to customer engagement and utilise more than just their website. Recommendations include using webinars, workshops and community-oriented outreach options.
These can be used to share information and communicate about energy efficiency, new rate plans and programmes.
• One-on-one communication. Customer service reps should be trained to answer all questions, and studies have reinforced the importance of one-on-one communication. Therefore, a combination approach should be considered as part of a comprehensive strategy.
PG&E utilised a combined approach in their Best Rate campaign. After the direct email approach, PG&E followed up with one-to-one communications and site visits.
This has resulted in an increased uptake and participation in the programme.
In addition, PG&E has further supplemented engagement with their solar customers through specially trained customer service reps, who are knowledgeable about the interconnection process and are able to answer any questions consumers may have.
3. Outreach opportunities should begin by helping customers understand their bills and payment options.
The US Department of Energy (DoE) stresses that customers need further education with regard to rooftop solar. The SECC believes that this approach starts with educating consumers about their bills.
According to the DoE, consumers may have difficulty understanding why their bills differ from their neighbours, or why the bills are higher or lower on some months than others.
The DoE goes as far as classifying consumers’ bills “as a ‘black box’ with a dollar amount due attached.”
One of the ways consumer education can be promoted is through the advancement of online billing and payment as a gateway to further customer engagement. By promoting the use of online billing and payments, customers are motivated to utilise the utility website, thereby opening up opportunities for further engagement, enabling the utility to introduce consumers to other programmes and opportunities.
4. Customers want to be in control of managing their own energy use
The research further shows that consumers want to understand and control their energy usage. The increased use of smart meters is providing energy consumers with easy access to their energy use data, helping them make informed decisions to enable them to manage their usage. It emerged that two-thirds of consumers are interested in real-time energy usage data and outage reporting; and third-party research suggests that with increased access to energy data, consumers can reduce household energy use by 12% or more.
Another tool which has proven to help consumers manager energy is to implement a prepaid programme. Surveys indicate consumer interest in these types of programmes is high, especially among Millennials.
5. Time of use and rebate programmes offer a win-win for consumers and providers
Shifting energy usage through programmes such as peak-time rebates or peak-shifting appeals to a broad range of consumers.
Nearly 59% of consumers overall and 75% of green champions indicated a level of interest in participating in a programme that rewarded them if they reduced their electricity use during peak periods. Substantial consumer interest has also been shown in smart internet-connected devices.
More than half of consumers (and over 80% of Millennials) are interested in this type of energy-related technology. Utilities therefore have an opportunity to promote the purchase and use of smart appliances as part of a comprehensive programme to encourage energy efficiency and shifting of peak demand.
With the shift in the energy sector and the changing needs of consumers, utilities have an excellent opportunity to proactively engage with customers, help them save energy and create a foundation for future success and longevity.
As the research has shown, proactive outreach to consumers using a variety of communication channels is key. Yet, as with all relationships, each engagement is a progression that evolves depending on the customer’s needs. By beginning this journey now, utilities will assure themselves of a trusted position with their consumers. MI
Metering & Smart Energy International spoke with Kirill Rechter, the CEO of Lognet Billing, to find out if the company has had similar experiences in the European market.
Are you finding that these findings are the same in the markets you operate in and if not, why do you think this may be?
These findings are certainly valid for all market spaces across the utilities industry, especially those we are active in. What differs from country to country is the progress the utilities suppliers along with regulatory bodies have made to educate their customers. Most of our European markets have started this process already and this is the basis on which healthy competitiveness is built and assures the delivery of value, energy efficiency and savings to the end customer. For us as a provider of billing solutions, we can have a significant impact on educated and competitive markets that will benefit both our utility supplier customers and their customers.
How do you think utilities can actively start engagement with their customers?
Engagement has to start when the customer is about to become a first time customer or is still with another supplier. Engagement should begin through the provisioning of value in the form of knowledge provided through education and content sharing. Value propositions such as billing transparency and simplified access to service information can lead to high levels of customer engagement and more importantly to long-term customer loyalty.
How do utilities effectively educate their customers to understand their bills?
The first step is for a utility to educate its own customers on understanding their consumption and how it is presented on their invoices. A second step is making the customers aware of measures that can be taken to improve the efficiency of their consumption. And following this, a third step showing the benefits and value of both prior steps by showing how it reflects on their invoices.
In competitive markets, where consumers have alternative utilities suppliers to choose from, educating customers to understand their consumption patterns and invoices is essential. Straightforward and easy-to-understand pricing and billing will always contribute to satisfied, loyal and engaged customers.
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