Getting To Know Your Customers-Without Meter Data

In today’s competitive energy market, retail providers need a different kind of data-driven advantage.
Published: Fri 30 Oct 2015

Europe’s retail energy sector may have high switch rates, but energy providers have plentiful opportunities to acquire and retain new customers, win back former ones, and cross-sell new products and services.

To seize these opportunities, however, retail energy providers must make serious commitments to customer-centricity. They need to find out what their customers’ needs are and devise strategies to keep those customers engaged over the long-term.

Data is the best resource retail energy providers have to make these determinations and business decisions. But that data doesn’t have to come from meters.

A step ahead of the marketing game: Using data to the max

First, it’s important to understand what data can do. Data analytics enable energy providers to target those consumers most likely to respond to particular offers, segment the targeted population into like-minded groups for tailored messaging, and build trust through personalisation. These three elements--microtargeting, segmentation and personalization—employ data to optimise marketing practices, attracting the most customers for the least cost.

Microtargeting comes first in the shift towards more advanced energy marketing. Widely used in political campaigning to reach individual voters, microtargeting in energy markets allows service providers to identify those individuals with the highest propensities to respond to specific product or service offers. Marketing only to consumers with the highest determined propensities to sign on increases response rates while minimising costs.

Scoring individual consumers on their likelihood to take action relies on careful analysis of data that retail energy providers can gather on their customers, even without meters. Publicly available or customer survey data can reveal whether customers are new or longtime homeowners, when their home was built, how they heat it, whether they work from home, if they’ve switched service providers recently, and the likelihood of them responding to similar offers. This information, combined with predictive analytics, narrows the pool of consumers designated for outreach.

Narrowing the audience already greatly increases the likelihood of acquiring new customers. Propensity scoring alone has a three-fold lift in customer sign-ups (over traditional untargeted marketing efforts). But by also adding segmented messaging, the probability of greater customer interest and engagement increases even more--by five or six percent.

Segmentation only works if it’s done right, though.

“Utilities in the United States often use off-the-shelf, lifestyle segmentation models to divide their customers in broad groups of like-minded individuals. But those models don’t correlate well with energy consumer behavior,” said Mark Gately, data analytics manager at Tendril. “It’s important to have a data analytics platform that can develop energy-centric segmentation models and messaging schemes that are customised to energy providers’ service offerings and geographic regions. Most importantly, the messaging has to resonate with the customer base.”

Bonneville Power Administration in the U.S. Pacific Northwest provides an example of strong segmentation. The energy provider identified seven distinct residential segments to consider when marketing energy efficiency in its territory, including “Green Idealists,” “Affluent Conservers,” and “Comfort is King.”

After segmentation comes personalization. The customers determined to receive product or service offerings after the microtargeting and segmentation are finished should receive only relevant, individualised communications. These customers should be able to see estimates of how much energy and/or money their particular households are likely to save through product bundling, proactive high bill alerts and other context-driven notifications, or other services.

How is this personalisation possible without smart meters and precise knowledge of usage patterns? Home simulation.

No meter data necessary

In the absence of meter data, retail energy providers need physics-based energy simulation models. They’re the

most expressive and useful tools for personalising energy products and services. And in Europe, where meters are often read just once per year, they’re not just the best option; they’re the only option.

Unlike statistical models (the alternative approach that requires historical usage information), physics-based models do not need past consumption data. They can run with only sufficient knowledge of the physical characteristics of the home. Fortunately, the characteristics of the European residential building stock has been studied and documented extensively in a report called the  ”Typology Approach for Building Stock Energy Assessment”. The project, the IEE Project Tabula, was carried out by a number of European partners from 2009 to 2012.

Using this publicly available data, physics-based simulators can plug in details like home size and age, insulation make-up, type of windows and roof materials, and more. The simulators can test different energy management configurations to generate estimates of consumption and monetary effects of different energy efficiency products.

“In a market that’s so highly competitive, European energy retailers can’t afford not to have home simulation models at the ready. The value these models can bring to customers is unprecedented, and the ability to bring that value without an overhaul in meter-reading practices—something that’s unlikely to occur—is something energy providers can’t pass up. Those that do pass it up may find themselves left behind,” said Brad Langley, Tendril’s corporate marketing director.

Tendril’s data analytics-based solutions

Tendril technology applies data and analytics to circumvent the metering issue. The company’s Energy Intelligence software platform, which includes its home simulation model, helps energy providers gain a competitive advantage by building strong customer relationships founded on personalised communications and empowerment. Features of the Tendril cloud offering include the following:

Tendril Energy Messaging, which employs advanced segmentation and microtargeting techniques to determine the best candidates for program, product and service offerings, ensuring that only the right audiences receive the most relevant information. By conveying this information over a range of channels – such as Weekly Challenge Emails and Home Energy Reports--Tendril helps reduce customer churn and deliver new revenue streams with individualised marketing collateral.

The Tendril Customer Engagement Portal, which improves customer satisfaction by putting the power of energy engagement in the hands of consumers. Mobile responsive and packed full of engaging content, like disaggregated appliance information, charts on energy use over time and tailored tips to reduce energy consumption, the portal is a destination site for everything energy-related in the home.

Tendril Home Energy Reports, which give customers the personalised information they need to make smart decisions about their energy usage that reduce consumption and increase savings. And for retail energy providers, the reports do so much more than help achieve energy efficiency goals. As one of the only solutions available that includes free text fields, the reports can be used to promote other programs, products and services. Coupled with Tendril’s microtargeting and segmentation capabilities, the reports ensure that the right offers reach the right people at the most appropriate times.

Alerts and Notifications, which keep customers informed and help avoid bill shock. Once-a-year meter reads means customers struggle to know when to reduce consumption to avoid a high “true-up” at the end of the year. Tendril Alerts & Notifications don’t require smart meter data to proactively inform consumers on a monthly basis if they are using more energy and in enough time to affect change. By avoiding high “true ups” at the end of the year, energy providers can make significant strides in becoming trusted energy advisors and retaining customers over the long term.

Further reading

Episcope- IEE Project TABULA (2009 - 2012), Typology Approach for Building Stock Energy Assessment