by Patty Durand, Smart Grid Consumer Collaborative (SGCC)
Electricity customers sit at the intersection of big data, online portals, grid modernization investments, innovative smart energy appliances and programs. With all the advancements in the electrical power sector, smart grid stakeholders have a front-line opportunity to engage customers, shape relationships and produce tools that meet customer desires for electricity management.
At the core of Smart Grid Consumer Collaborative’s (SGCC’s) research, we found that an engaged consumer is a more satisfied and empowered consumer. Many utilities, however, fail or struggle to engage consumers. The secret to engagement lies in tapping consumer motivations and sentiment. Understanding consumer desires when it comes to smart energy programs and technologies is the key.
In SGCC’s “Consumer Pulse Wave 5 and Market Segmentation” study, smart grid stakeholders are provided in-depth insight into U.S. consumers’ awareness, favorability, expectations and preferences as they relate to the smart grid. First conducted in 2011, the report is the fifth wave of a national telephone survey of residential consumers. Each wave of the study interviewed 1,000 adult heads of household. The data was weighted by age, ethnicity, gender and region to align with national population parameters. The margin of error for the total sample size of 1,000 is ±3.1 percentage points at a confidence level of 95 percent.
The survey results reveal that consumers embrace the benefits of the new smart energy technologies, and many are interested in new pricing plans and service options that are becoming available. The survey tested three major benefits of smart energy technology: improved reliability, reduced greenhouse gas emissions and helping consumers save money by enabling better energy management. In each case, at least 86 percent of consumers said these smart grid benefits are important.
The findings also illustrate a high consumer interest in electric utility energy programs. For example, 3 in 5 respondents stated they would be likely to participate in a critical-peak rebate program. In addition, one-fourth to nearly half of consumers interviewed said they would be likely to participate in three other pricing program-time-of-use, demand response and critical-peak pricing plans-that were tested in the survey.
The study shows that consumers favor smart energy programs that offer simplicity and convenience and put customers, rather than utilities, in charge of household energy management. These types of energy programs have broad appeal and offer an opportunity for utilities to increase customer engagement and improve customer satisfaction.
Unlocking Smart Grid Value for Consumers: Segmentation Works
One might ask, “Why is consumer segmentation important within the energy landscape?” After all, most smart grid stakeholders assume most consumers are alike when it comes to energy usage: only caring when the power is out and how much an energy bill costs. Our research shows consumers have different energy management desires and needs. Segmentation reveals the opportunities for the best ways to engage consumers and provides insight to what electricity consumers desire most in smart energy programs and technologies.
The study provides a new segmentation framework designed to understand U.S. consumers better according to their values and attitudes about energy (see Figure 2). The report’s data identifies five consumer segments:
1. Green champions (30 percent). These consumers demonstrate the strongest interest in new utility services and smart energy programs. They are early technology adopters, the youngest segment and the most environmentally conscious.
2. Savings seekers (20 percent). These consumers have low satisfaction with their current utilities, and many want information on how to save money. Awareness and favorability toward smart grid and smart meters are low; however, the segment views smart grid benefits as important.
3. Status quo (18 percent). These consumers have the lowest interest in smart energy programs of all segments. The segment is relatively old, and comfort and ease are more important than conservation.
4. Technology cautious (17 percent). These consumers are more knowledgeable about smart grid programs but have little interest in participation.
5. Movers and shakers (15 percent). These consumers have the highest incomes. Smart grid awareness and favorability are high, but utility satisfaction is low.
SGCC’s segmentation framework reflects an accurate view of the U.S. consumer landscape and presents differences in consumers that have actionable implications and opportunities that are important in energy program planning, marketing and public relations and regulatory relations. In addition, segmentation allows utilities and smart grid stakeholders to use data and understand what kind of information is relevant to a particular consumer segment to deliver the right message that is impactful and meaningful. The better utilities and stakeholders understand consumers and their energy behavior and desires, they can then better satisfy, serve and empower consumers from a holistic standpoint.
To communicate the value of smart grid investments to customers, stakeholders must have more than a transactional relationship with consumers. Segmentation offers the first step to illustrating the value of a smarter grid and what those direct investments provide to consumers.
Connecting Consumers With the Promise of Smart Grid
The future of smart energy is now. Across the nation, consumers are talking more frequently about the smart grid, from improved energy efficiency, purchasing of smart energy products, faster utility response to outages, increased reliability and money saved on monthly energy bills. Also, smart grid stakeholders are communicating the benefits of grid modernization investments to customers in various ways and sometimes are using nonfriendly consumer language. As a result, consumers get different and mixed messaging on what grid modernization is, if they hear anything at all.
SGCC knows from basic marketing and understanding of how brand awareness evolves that it is better for consumers to hear a common message or set of messages so they can begin to build awareness and understanding around the smart grid. SGCC has developed the Consumer Value Proposition (CVP) for the smart grid to help deliver a clear, concise message stakeholders can use with one consistent voice to consumers. The more frequently people are introduced to the message, the more consumers will understand the benefits a smarter grid yields. Our CVP efforts help the electrical power sector have a master narrative on the smart grid.
The CVP is a promise of value that will be delivered to consumers from investing in or purchasing specific items or from participating in specific utility programs that deliver smart grid benefits. To develop the quantified CVP smart grid message, in 2013 SGCC commissioned the “Smart Grid Economic and Environmental Benefits” report. The study presents quantifiable direct and indirect economic and environmental benefits of grid modernization based on real case studies. In addition, the report synthesizes findings in a per-customer context to help smart grid stakeholders better understand the benefits associated with smart grid investments: economic, environmental, reliability and customer choice. From the study, nine capabilities or benefits were identified as a result of smart grid technology investments. These nine capabilities were grouped into three buckets of benefits the smart grid yields to consumers: environmental, economic and reliability. Behind each smart grid benefit claim for the CVP are a set of quantified metrics and proof points from research and real-world success stories from smart grid investments to consumers. Equipped with this documentation of smart grid benefits based on quantitative research, SGCC began developing the CVP message with three basic questions we thought consumers would have:
1. What is smart grid, and why should I learn about it?
2. What’s in it for me?
3. What’s in it for “us?”
Each question provided the foundation for how the CVP would be designed to connect the smart grid message with mainstream consumer audiences nationwide. SGCC worked with industry stakeholders, thought leaders and SGCC members to garner as much input as possible. In 2016, SGCC will launch an integrated marketing communications campaign that will raise awareness and spark regional and national dialogue around the importance of grid modernization and the underlying key messages of environmental, economic and reliability consumer benefits.
The objective is to establish a consistent narrative and language that answers consumers’ need for a smarter grid. Industry stakeholders can use the CVP message in daily communication initiatives to build positive smart grid awareness, favorability and sentiment among U.S. consumers and drive an active dialogue that positively resonates by leading with the CVP. The CVP work does not replace the need for any individual utility to better understand its consumers through segmentation. We hope utilities will get to know the individuals who make up their territories and create programs and messages specifically for how they have grouped those individuals into segments, but we know that level of work might be far in the future for many utilities. Our CVP work is meant to raise national awareness about the benefits of grid modernization and assist industry stakeholders now by helping them position the need for and understanding of a modern grid to the public.
Patty Durand is the executive director of SGCC. To learn more and access SGCC’s Consumer Pulse study fndings and the Consumer Value Proposition for the smart grid, visit www. smartgridcc.org.