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What Do Utility Customers Want Beyond Electricity Delivery?

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Today’s residential energy customers are asking for more from their electricity providers: more options, more personalization and more innovation. This new reality of consumer expectation and desire is leading electricity providers to offer many new products and services beyond basic electricity delivery – including some that are closely linked to energy, like an online marketplace with energy-efficient products, or others that are slightly more distant extensions of the relationships that providers have with customers and their homes, e.g., home maintenance and security.

In the first half of 2018, the Smart Energy Consumer Collaborative (SECC) conducted several focus groups and then an online survey to test consumer opinion on value-added products and services, particularly digitally enabled ones. Some of the offerings tested included a menu of additional products and services that consumers could select and pay for à la carte, a rewards program for taking energy-efficient actions and an online marketplace that included energy-related and non-energy products.

The research, published as the “Consumer Platform of the Future” report, found that these types of offerings are broadly appealing to residential energy customers. In fact, about two-thirds of those surveyed said that they would use at least one of the four offerings, and only a small minority rejects outright the possibility of using one at some point. That is, only five percent state that they would “definitely not” participate in a rewards-type program.

Given this high consumer interest in – and, for some consumers, expectation for – additional products and services beyond basic electricity service, let’s look at three examples of such offerings that are already in the field today.

SMUD: Connecting consumers with energy-saving products, rebates and more

With about 626,000 customer accounts across a service territory that covers 900 square miles, the Sacramento Municipal Utility District, or SMUD, is one of the largest publicly owned electric utilities in the United States. The utility has been recognized in recent years for its strong customer focus and has several business units dedicated to driving a digital-first transformation and improving the value perception of key customer segments.

SMUD takes a segmented and strategic view of its customer base and has found that digitally connected families are one of their fastest-growing and largest segments, representing nearly 30 percent of residential customers. This segment is very tech savvy and relies heavily on their devices. They also expect some level of automation, prefer self-service, are interested in energy efficiency and are willing to pay more for environmentally beneficial products. However, this segment ranks fairly low in SMUD’s core value metrics, which has led the new product group to look for new ways to serve these customers.

SMUD realized that an e-commerce marketplace with energy-efficient products would likely meet many of this segment's needs, but first, they conducted extensive customer research to inform the specific path forward, including online crowdsourcing ideation, digital surveys, customer interviews, focus groups and usability testing. When it came to choosing a marketplace partner, SMUD took a customer-centric approach; they had customers test various platforms and provide live feedback on their experiences.

The SMUD Energy Store officially launched in October 2017 with customers’ most-requested products, including smart thermostats, smart home products, LEDs and more. The initial launch included instant rebates, buyer's guides, reviews, customer support via chat, phone and email and other features. SMUD routinely gets feedback from customers on the products that they want to see in the marketplace, and over the years, SMUD has added home services (home audits, smart home product installation, etc.), rebates for water-related products (in partnership with City of Sacramento Water) and an electric vehicle tool called Plug Star produced in partnership with Plug In America. This tool helps customers shop for EVs, explore incentives, shop for Level 2 home chargers and find local ride-and-drive events.

Over nearly two years, the SMUD Energy Store has proven to be a highly successful engagement channel for SMUD. To date, SMUD has sold 30,000 items (including 11,000 rebated thermostats and 8,400 rebated LED pack) and has had 430,000 site visitors, with a 90-percent average customer satisfaction rate.

Direct Energy: Providing home services to help ease consumers’ minds

Based in Houston, Texas, Direct Energy is one of the largest residential energy retailers in North America, with over four million customers. To better understand who their customers are and what they need in their lives, Direct Energy conducted ethnographic research to get a much broader look at consumers than one typically gets from market research. When Direct Energy conducted this study in Texas, they heard two main themes from their customers: 1) customers want more control over their homes and 2) customers, especially homeowners, want to feel safe and have peace of mind.

To meet these needs, Direct Energy developed a few new services. Direct Energy launched an Energy Insights dashboard that uses smart meter data to break down customers’ bill not by kilowatt hour but by the dollar amount used by each major appliance. The dashboard helps customers understand exactly where their money is going each month and also helps identify where any major issues may be going on in their homes, if, for example, their HVAC system, pool pump or another major appliance has much higher than normal usage. The Energy Insights dashboard can be accessed through the website and also now through Alexa and has been well-received by Direct Energy’s customers.

Over the years, Direct Energy has also developed a robust line of home protection and warranty services for its customers, including whole-home warranties, single-system protection, appliance rental and residential solar warranties. To provide these types of services to residential customers, Direct Energy has developed a network of approximately a thousand service technicians who are thoroughly vetted to ensure that they are representing Direct Energy well. These types of programs also help address the pain points revealed in the ethnographic research, namely around control of the home and peace of mind, and have proven popular with Direct Energy’s customers.

Allconnect: Bundling utility services to make customers’ lives more convenient

Allconnect is a technology company that works with electricity providers across the United States to develop product and service bundles that not only offer convenience to residential customers but often save them money too. By partnering with Allconnect, electricity providers can offer personalized product bundles for their customers when they’re moving into a new residence and create a very positive customer touchpoint during an otherwise stressful time in consumers’ lives.

When working with a provider’s customers, Allconnect uses data on homeownership, the services available at their address, stated interests and needs, demographics, current enrollment status (including specific products), keyword searches and more to offer bundles that meet their specific needs. For example, one homeowner may be offered a demand response bundle that includes a free smart thermostat and also includes internet and security at a reduced price. This offer has been highly successful for electricity providers, with a 60-percent take rate. For a customer that’s renting their new residence, Allconnect may put together a bundle that includes appliance warranties, surge protection and other products that help protect against one-time expenses.

Customers highly value convenience and personalization, and Allconnect helps electricity providers harness available data to ensure that every customer gets what they need for their situation – and often at a reduced price compared to buying the products separately.

Conclusion: Services – not commodity – are the future

Consumers today seem to increasingly expect their electricity providers to deliver programs and services that go beyond basic electricity delivery and help address related concerns and desires that they have. While this space is sure to continue to develop in the years ahead, these three examples demonstrate how providers can use customer feedback, data, research and more to develop services that improve the customer experience and boost satisfaction.

Patty Durand's picture

Thank Patty for the Post!

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Discussions

Matt Chester's picture
Matt Chester on Aug 20, 2019 2:34 pm GMT

Really interesting piece, Patty-- thanks for sharing. It seems like the utility customer of today is really for the first time the one dictating what they want, rather than being told what they want from the utility. It sounds like the energy providers who willingly embrace that idea will be the most successful in the long run. Do you find that there's still an inherent internal resistance to that change in framing?

Patty Durand's picture
Patty Durand on Aug 20, 2019 6:44 pm GMT

I'm seeing much less or even non-existent internal resistance to this new paradigm. It's great to see!

Mounir GOUJA's picture
Mounir GOUJA on Aug 26, 2019 9:28 pm GMT

Thanks Patty. Very interesting what you posted!

Here is what I wrote in 1996 when DSM programs generalized in most utilities' LCP:
"If we go back to the history of the power industry, we can see that when Thomas Edison's first electric company set up its first power station in Manhattan in 1882, it immediately realized that it should also develop a system that convert this raw energy produced into other forms of energy services more than lighting. As a power plant manufacturer and electric bulb manufacturer, Edison soon realized that technical progress should generate new uses for electricity.

The first electrical industry was in its beginning an integrated technical system from upstream to downstream, ie from the construction of generation equipments to the manufacture and sale of electricity-using devices. However, thanks to the importance of economy of scale and technological innovations (incremental, but also major) achieved at the level of the generation-transmission-distribution of electricity subsystem, the latter has developed in a more rapid pace than that of the end-use subsystem, whose development and optimization are entrusted to market mechanisms.

We then came across a technical system fragmented into two subsystems in "unbalanced growth", one of them is in the process of maturation and saturation while the other is stunted (at least concerning the diffusion of innovations). Faced with the exacerbation of environmental, regulatory and generation cost constraints on the development of the first component of the system, electrical companies found themselves forced to act on the side of the second component (final use subsystem) where many things remain to be done".

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