By Bennett Fisher, Retroficiency
Utility-commercial customer relationships historically have been relatively simple-the utility supplies reliable power at a reasonable rate, usage is determined monthly, a bill is sent and customers pay those bills. Today, however, customers have more choice in how they procure and generate energy. A recent Shelton Group survey revealed that more than half of the commercial customers polled would buy energy or energy management services from someone other than their utility if they could.
The same survey revealed, however, that utilities have opportunities to establish new revenue streams and drive energy efficiency savings. In the survey, 70 percent of commercial respondents expressed interest in energy services agreements.
To capitalize on new potential revenue streams, utilities must establish deeper relationships with their commercial customers.
A dynamic customer relationship provides utilities with the opportunity for value-added conversations and interactions outside of the narrow bill payment transaction. This interaction opens the door for utilities to more easily combat competitive threats, deliver energy savings programs and expand their offerings.
Traditional marketing efforts and customer interaction models, which tend to rely on impersonal messages delivered to the mass market, are not sufficient if utilities are going to significantly improve their position with customers. These approaches simply do not capture the attention of business customers, who may spend little time thinking about their energy consumption, and even less time thinking about the entity that provides that energy.
Utilities are in a prime position-perhaps more so than any other type of company-to take marketing and engagement to the next level. While enterprise peers in industries such as retail, healthcare and financial services have fully embraced data-driven marketing, they are often subject to customer blind spots-significant gaps in the data available to them that make it difficult to determine customers’ behavior.
Utilities, through the interval meter data they already collect, have high-frequency, near-continuous visibility into how their customers use electricity. A new class of energy analytics solutions has emerged to translate that raw data into actionable, building-specific insights and then use the information to engage customers.
An analytics-based approach can enable utilities to transform their customer relationships, resulting in meeting and exceeding energy efficiency savings and customer satisfaction targets. Achieving impactful results, however, requires great execution.
Based on experience, Ecova has identified these strategies that utilities should use to maximize their analytics efforts:
Target Customers by Need and Want
Upfront targeting and segmentation is a critical first step to dissecting a commercial portfolio, which consists of customers with complex and diverse needs. Effective targeting begins by answering two questions: How much energy can each customer cost-effectively save? and, What is their likelihood to participate in a utility-sponsored efficiency program? Sizing the savings potential determines how much energy efficiency products and services a given customer needs, while propensity-to-act scoring identifies how much energy efficiency a given customer might want (or, can be persuaded to want).
Segmenting customers helps make sense of tens or hundreds of thousands of individual customers by putting them into a more manageable number of groups. Analytics-based segmentation takes this a step further by assigning a value for each customer, which serves as the foundation for all efforts thereafter.
Align Effort with Expected Return on Engagement
While analytics-based targeting determines an accurate value for each customer, that’s only one side of the equation. The other side is the cost to acquire that value, which is driven largely by the marketing strategies used to capture a customer.
The cost to capture a customer varies based on the channel leveraged (web, print, email, phone, in-person, etc.) and the frequency of the engagement. A strong analytics-based program will stratify customer outreach tactics based on expected return and value. The highest potential customers might receive the high-touch phone calls, and potentially in-person meetings, to ensure that customer receives and understands the opportunity. More moderate potential customers should receive communications via lower cost channels, such as print or email. Still yet, lower potential customers can be handled on an inbound basis. In addition, for a great customer satisfaction booster, a utility can proactively let these customers know how well they’re doing in their energy management efforts.
Personalize the Message to Your Audience
One of the major benefits of analytics is that it allows utilities to personalize an engagement message to customers. This personalization not only ensures that the information being provided is as relevant as possible, but it also establishes credibility and trust.
In fact, putting the right wrapper around the analytics can be as important as the insights themselves. A utility’s commercial customer base can be incredibly diverse in terms of its level of sophistication, resources and motivators. Large commercial customers are increasingly sophisticated about their energy usage, with a strong understanding of their systems and why they are being operated the way that they are. Mid-market customers may vary by segment even though their overall consumption is similar. For example, a school district may have a centralized energy manager overseeing several buildings, whereas a local grocery store chain may not have anyone thinking about energy efficiency, even on a part-time basis. The smallest of customers are often the least knowledgeable, even though saving on their energy bills might have a big impact on their bottom line.
Pave the Path to Conversion
Analytics-based insights should be supported by a process that converts issues into projects. Much like the message wrapper can vary by customer segment, so too can the post-engagement conversion process. Factors such as the level of sophistication, the measure(s) to be investigated and the utility’s relationship with the local value chain may influence what the best next step might be in a given situation. Utilities should have a plan in place for each situation, such as the right questions to ask or information to gather, as well as how to escalate buy-in on specific projects from customers. Once that is accomplished, the utility value chain (e.g., contractors, trade allies and product companies) must have the right context and data for these opportunities so they are aligned to execute on the measures to which the customer is committed. Analytics can be beneficial by offering all parties a consistent view of the relevant energy efficiency opportunities.
Take a Long-Term View
While analytics often can help utilities achieve results quickly, a successful engagement strategy that incorporates a long-term plan and approach will maximize desired outcomes, such as driving energy savings or improving customer satisfaction.
As is the experience with marketing most products and services, many business customers take action right away, but others require multiple touchpoints or impressions before showing interest. Sustained engagement allows utilities to vary their messages and offers based on overall commercial program strategies and goals.
The timing of when a commercial customer invests in energy efficiency is often driven by factors beyond just energy savings or payback period. There are key decision points or events, such as budget cycles, equipment end-of-life replacement, building renovations or changes in building management, that might be the tipping point for participation. Relevant engagement touchpoints will keep energy efficiency and the utility tops in the minds of customers when these events happen, whenever they may be. In addition, reaching customers when they are ready to move forward can be the difference between converting them vs. not.
Finally, longer-term engagement opens the possibility for providing customers new insights over time. How is their energy use changing? How much did they save from an energy efficiency action? A utility that can provide answers to these questions is well-positioned to be a trusted energy solutions advisor for commercial customers.
Utilities, now more than ever, must aggressively work to transform their commercial customer relationships. Fortunately, they are in a prime position to do so. With advanced energy analytics that can rapidly mine meter data, utilities can provide insights to customers at scale like no other actor in the market. Following these five strategies will turn those insights into transformative business results.
Bennett Fisher has spent more than a decade building and leading companies around data analytics. He is the CEO and co-founder of Retroficiency, which offers commercial building energy analytics for utilities and energy service providers.