As utilities look towards a future service-oriented business model, likely with some sort of app or product storefront, some thought will need to be given to how to interest customers in these services and encourage their uptake.
Marketing obviously will be key, but what will be the ‘killer’ message that strikes the chord in the customers’ minds and swings the deal?
For some clues, a recent study by California-based platform as a service provider Enervee published in the journal ‘Energy Efficiency’ provides findings in that one specific context, energy efficiency.
Enervee’s platform, offered both under its own name and in a branded form for a number of utilities including Pacific Gas & Electric and Con Edison in the US and E.ON in Europe (collectively with 47m households), is in essence an energy efficiency shopfront for appliances and devices.
Consumers looking to buy a new appliance can compare the energy efficiencies and prices of models from different manufacturers on which they can then make their purchasing decision.
Energy efficiency information
Enervee’s approach has been to provide for each item listed on its platform an ‘energy score’ indicative of its relative energy efficiency potential and ‘energy savings’ estimating the personalised bill savings in monetary terms.
Based on consumer behaviours both on the utility branded marketplaces and in randomised controlled experimental trials, the study found that in both of these datasets, the energy score has a significant effect on consumer product choices, encouraging them to select more energy efficient products.
On the other hand, the effect of the energy bill savings information varied across the studies, proving salient in some cases but not in others. The strongest effect was found in the response of people with lower socioeconomic status, for whom financial considerations are top of mind.
According to Enervee, these results make a strong case for leveraging heuristics-based nudges ,i.e. based on peripheral, impulsive or ‘hot’ choice styles, to drive energy efficient purchasing behaviour at scale.
“The simple-to-process energy score appears to elicit a hot/impulsive decision style, whilst the cognitively more complex energy bill savings information prompts a reflective/cool decision style.”
For example, consumers faced with the need to quickly replace a broken appliance (i.e. a distressed purchase) were found to select significantly less efficient washer models than those in the planned purchase condition, who had plenty of time to research their choices.
Harnessing big data
These findings are not entirely surprising in the light of earlier customer behavioural work around engaging consumers with their energy consumption and in the use of devices such as smart thermostats.
In apps and on bills and in-home devices, a range of information is provided in addition to any monetary figures.
Another key in all of these engagement mediums is the use of visualisation with graphical elements in the presentation of data. While this was not considered in the study, in Enervee’s design the energy efficiency rating is presented in a simple but prominent circular element.
What the findings also highlight is the value of big data and analytics for creating customer engagement products.
As the article states: “Harnessing big data to integrate a relative energy efficiency score throughout the modern consumer product shopping journey has great potential to eliminate market inefficiencies and thereby transform markets with minimal intervention, no reduction in choice and a sustained energy gain.”
It adds that it is an approach that aligns well with ambitious energy efficiency goals and strategies, as well as the emerging role of utilities as facilitators of transactions between customers and distributed energy resource providers.
The authors recognise a number of limitations of the study and other factors that may influence purchasing decisions such as a disruption on a retailer site, but these don’t impact the essential conclusion: “The findings suggest new opportunities to empower households, including low- and moderate-income households, to shop resource smart.”
Enervee’s platform features home appliances and devices but a similar concept, appropriately tailored, could be applied equally to other products such as solar panels, storage batteries or electric vehicles – any category of products that a utility might want to promote or regulation permitting, associate itself with.