Utilities not marketing service offerings effectively to Gen Y customers

As tech-savvy Gen Y comes of age, representing the newest heads of household, utilities are missing an important opportunity to market their programs and services to this generational group that prefers to be hands-on with their energy usage, according to the J.D. Power 2015 Consumer Engagement Study released today.

The study, now in its third year, measures the level of residential customers’ engagement with their electric utility’s programs, products and services and is based on responses from customers of electric utilities throughout the United States and Canada.

The study provides electric utility companies with insights regarding customer awareness, familiarity and usage of their utility’s programs, products and services; ease of enrollment and participation in these offerings; and the impact these offerings have on the overall customer experience.

According to the study, Gen Y is inclined to take control of their energy usage, with more using programs such as online energy calculators and social media tools that allow them to be hands-on, compared with Pre-Boomers and Boomers, who tend to favor rebates and programs that allow them to be more hands-off. Gen Y also takes advantage of environmental programs — such as solar power incentives — more often than Pre-Boomers and Boomers.

With respect to utility communications, Gen Y customers are much more likely to notice messaging received via electronic channels. Nearly twice as many Gen Y customers recall receiving email messages from their utility than do Boomers and Pre-Boomers, and more than nine times as many Gen Y customers recall receiving social media messages than do the two oldest generations.

Historically, utilities have struggled with program and service messaging to all customers. Adding to the ongoing marketing challenge of utilities is the emergence of non-utility third parties — such as Google’s Nest, SolarCity and various home security firms — selling utility-related products and services, including solar panels, smart thermostats and energy-related notification services, that empower consumers to control their own energy usage — an ability that particularly resonates with Gen Y.

“As Millennials [Gen Y] become household heads, utilities need to focus on engaging these customers via digital channels and provide them the informational and hands-on control-oriented offerings that satisfy them most,” said Jeff Conklin, senior director of the energy utility practice at J.D. Power. “Utilities should be mindful that the energy landscape is changing, and because so many other service providers to the home are establishing energy-related relationships with these consumers, utilities need to decide either to compete or partner.”

Strong marketing communication can positively impact overall satisfaction simply by ensuring customers are aware of utility programs. Satisfaction is 76 points higher among customers who are aware of one or more program offerings than among those who are not aware of one or more offerings (690 vs. 614, respectively).

Program participation positively impacts overall satisfaction.

Satisfaction among customers who are aware of program offerings but do not participate is substantially lower than among those who participate in at least one program offering (674 vs. 701, respectively). When customers participate in five or more programs, satisfaction jumps to 851.

Products and services with the highest participation overall include level or equal pay plan (5.9 percent); time-of-day pricing (4.1 percent); and central AC cycling control (3 percent). However, program participation by generation varies. Participation in level or equal pay plans is highest among Pre-Boomer (9 percent), Boomer (8 percent) and Gen X (5 percent) customers and lowest among Gen Y customers (3 percent). Conversely, participation in renewable/green price plans is highest among Gen Y customers (5 percent) and substantially lower among Pre-Boomer (1 percent), Boomer (1 percent) and Gen X (2 percent) customers.

Social media tools for comparing energy usage offer the highest boost in overall customer satisfaction, but only 5 percent of customers are even aware of these tools and less than one percent of customers have actually used them. Other programs and services that significantly boost overall customer satisfaction include allowing customers to earn points for reducing their energy use, online energy management portals, illustrating how energy usage impacts the environment and electric vehicle pricing plans.

The following utility brands have the highest participation rates in their products or services (in alphabetical order): Arizona Public Service, Baltimore Gas & Electric and Salt River Project. The following brands perform particularly well in overall product or service satisfaction (in alphabetical order): Alabama Power, PSE&G and Entergy Mississippi. SMUD, SRP and Vectren (in alphabetical order) have the highest awareness scores, while BGE, Lee County Electric Cooperative and OG&E (in alphabetical order) have the highest “take rates,” or highest percentage of customers who were aware of a program or service and then enrolled in it.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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