Once seemingly distant from consumers, utilities are now fighting for customers' attention and developing business models to improve engagement. Increasingly aware that they need customers on their side to deploy smart meters and other infrastructural upgrades, utilities are expanding their marketing programs, signaling a fundamental shift in the way utilities have traditionally done business.
Despite the buzz among analysts, entrepreneurs and industry executives, recent literature shows little consensus on industry best practices for customer engagement. Cutting through the hype can be a challenge, but utilities can earn more bang for their marketing buck by applying these three pieces of advice when crafting customer strategies:
1. Inform consumers, before someone else does
A recent Smart Grid Consumer Collaborative report [PDF] suggests that consumers care about long-term performance benefits of a smart grid beyond immediate efficiency and cost savings. Similarly, a Harris Poll found that many consumers would actively review the intricacies of their home energy consumption using an energy management system.
Unfortunately, as with green purchasing, there's often a big gap between what consumers say they'll do and what they actually do. Jesse Berst, founding editor of Smart Grid News, was quick to point out that surveys like these are overly optimistic. Converting opinions into results will require utilities to provide customers with more "cruise control" functionality of energy management.
In both polls above, consumer awareness of and openness to the smart grid increased as a result of background information provided by the polls themselves. Given the recent Accenture finding that average Americans only interact with their utility for a total of 7 minutes a year, utilities are missing a big opportunity to engage and educate their customers.
Next page: Lessons good and bad from the banking industry
Utilities that invest in connecting with their customers early on will be rewarded with increased satisfaction with their services. More fundamentally, these utilities can begin to close the customer trust gap [PDF]. The trust gap leads customers to reach out to consumer and environmental associations, rather than utilities, to learn about electricity consumption issues.
2. Prioritize privacy, but sell savings
Are utilities putting their resources in the right place? Surveys like the Consumer Collaborative report mentioned above show that consumers care about more than costs. In fact, privacy concerns are cited as the top reason for lower favorability of the smart grid. If utilities took these findings at face value, they might devote their marketing resources to solving customers' privacy worries. Yet, a lesson from the banking industry may suggest that these statistics may be misleading.
Edelman's research [PDF] on data security and privacy suggests that 80 percent of consumers would likely leave their banks if personal information were compromised. Yet data losses and insider scams didn't scare away Bank of America customers in recent years. On the other hand, a debit card fee led to a 20 percent increase in closed accounts, forcing the bank to repeal its fee before it hemorrhaged more customers, while sending shockwaves through the industry.
While utilities should operate with the highest privacy standards and foster trust through transparency, it's hard to believe customers will bolt from their utilities based on their privacy policies alone. For now, utilities can get a better return on their marketing dollars by actively educating consumers on the efficiency cost savings and other financial benefits of the smart grid.
3. Crack the culture code
As GreenOrder founder Andrew Shapiro wrote, utilities and consumers alike need "a fundamental change in mindset" to facilitate smart grid deployment. The conflicting voices in the consumer engagement debate reflect an inability to measure this abstract concept of cultural readiness.
It's no easy feat measure a population's ethos toward new technology. Still, the growing field of behavioral economics presents an opportunity for utilities to develop tools for consumer research and engagement in the power sector. Companies like OPower have applied such tools to issues like energy consumption awareness and behavior modification, but the quantitative study of culture is still greatly underused.
Understanding consumer culture will enable utilities to apply the most effective levels of segmented customer engagement on individual issues like cost and privacy, while better understanding the subconscious and emotional responses of their customers to energy issues. Utilities that partner with consumer groups and academia to develop and apply such behavioral tools will learn to cut through the hype around smart grid deployment and may finally find ways to create the cultural infrastructure around energy that this country desperately needs.
Smart meter photo CC-licensed by Mark Florence.