November 30, 2011

© 2011 SMART GRID CONSUMER COLLABORATIVE. ALL RIGHTS RESERVED.

EXCELLENCE IN

CONSUMER

ENGAGEMENT

Purpose

Identify Smart Grid consumer

engagement best practices

2

Market fragmentation has limited the industry’s ability to learn

from its own activities – what can be gained by assessing

these activities together for the first time?

Overview

• Assess ~20 leading Smart

Grid programs in detail

• Leverage public knowledge

• Conduct extensive primary

research

• Synthesize salient themes

on Smart Grid customer

engagement

3

Target Programs Approac h

Executive Summary

• AMI Lessons Learned (Themes 1-4): The industry

has developed basic elements of effective Smart

Grid customer engagement

• Driving Action (Themes 5-8): Simple messages

with clearly defined benefits and call-to-action can

drive customer action

• Utility Transformation (Themes 9-10): Utilities must

transform their core service model to focus on

customer needs and engagement

4

THEME

Utilities can address most customer complaints 1

AMI LESSONS LEARNED 5

E X P L A N AT I O N I M P L I C AT I O N S

• AMI complaints can be managed by taking

steps before deploying to engage customers

early on and establish policies and

procedures that grant all issues legitimacy

• Utilities should address especially concerned

customers in a personal way, as vocal

minorities are sufficiently small that this will

not overburden the organization

• Engaging communities promotes goodwill

(see Theme 4) and helps address customer

concerns before they have the opportunity to

snowball (see Theme 2)

“ CenterPoint Energy understands your concern

about privacy. We believe energy use data

does belong to the consumer…”

— CenterPoint Energy

• ~All AMI deployments experienced

complaints and dealt with a vocal minority

• Utilities have learned how to address issues

Engaging and educating customers

– SMUD: pre-deployment forums and >100

presentations to address potential concerns

Establishing customer-centric issue resolution

processes before deployment

– SDG&E: responds to issues with empathy and

relies less on evidence-based argument

– AEP Ohio: escalated issues to VP’s if appropriate

RF health issues

Data privacy& security

Overbilling

Rate increases

Meter reader job loss

THEME

Staged messaging helps manage expectations 2

6

E X P L A N AT I O N I M P L I C AT I O N S

• With respect to Smart Grid programs,

consumers are most interested in these

programs’ near-term impact to them

• Staged messaging strategies, which provide

customers with information only when it is

immediately relevant, ensure that customers

receive the right information at the right time

• Promising too early or overpromising can

lead to missed expectations and perception

of failure, which can diminish future interest

Installation (Day of install)

Local Outreach (60-90 days before install)

Notification (7-21 days before install)

• Educational forums

and community events

• Outreach to politicians,

media, etc.

• Installation notification

mailer

• Automated call

reminder

• Pre-Install: Door knock

• Post-Install: Leave

door hanger with FAQ

space text

EXAMPLE AMI STAGED MESSAGING SCHEDULE

• Missed expectations can lead to customer

pushback

• Staged messaging programs set only those

expectations that can be met promptly

Communicate immediate deployment logistics

– SDG&E: followed 30-60-90 day program to

engage local leaders and educate customers

about the deployment; left a door hanger after

completing installation

Promote Smart Grid benefits that can be

delivered on in the near- to intermediate-term

– CenterPoint: messaged near-term SG capabilities

after customers requested future AMI-enabled

technologies (e.g., smart appliances)

AMI LESSONS LEARNED

THEME

Internal messaging and education improve engagement 3

7

E X P L A N AT I O N I M P L I C AT I O N S

• Broad internal messaging and education

helps ensure that all employees provide a

consistent and positive external message

across all customer touch points

• Utilities can leverage their employees’

relationships and status in their communities

by using internal education programs to

encourage them to act as program

representatives and engage in personal,

informal interactions with customers

• Utilities that conducted internal messaging

and education programs credit them with

providing a critical foundation for success

Consistent messaging across all touch points,

including informal interactions (e.g., PTA

meetings)

– CenterPoint: has educated its staff so customers

don’t “take different avenues and get different

answers”; created an “employee ambassador”

program to train employees to act as Smart Grid

resources and advocates in their community

Improved customer service

– Austin Energy: educated departments on roles in

complaint resolution process to help address

customer issues more quickly

AMI LESSONS LEARNED

THEME

Fostering goodwill establishes a foundation for success 4

8

E X P L A N AT I O N I M P L I C AT I O N S

• Customers that trust their utility’s intentions

are more receptive to their utility’s Smart Grid

programs

• Organizations with a well-established

community presence are positioned to

maintain goodwill directly through continued

activities and events

• Organizations looking to build goodwill

should partner with trusted community

groups and figures that can promote

messages and programs to large networks

“ Through community outreach, sponsorships

and energy assistance programs, our goal is

to improve the quality of life where we live

and work.”

— Reliant Energy

• Utilities agree that customer goodwill

provides a foundation for successful

programs

– AEP Ohio: credits goodwill established before

deployment with proactively tempering issues

• Utilities have established goodwill both

directly and indirectly

Directly: maintaining visible community presence

– Austin, OG&E, SCE, others: attend community

events such as fairs and parades

Indirectly: partnering with local org’s and figures

– APS: energy efficiency campaign featured

Phoenix Suns‘ basketball player Steve Nash

AMI LESSONS LEARNED

THEME

Messages about saving money are applicable to all customers 5

DRIVING ACTION 9

E X P L A N AT I O N I M P L I C AT I O N S

• Cost savings is a safe and broadly applicable

message that should be promoted clearly

and prominently

• Messages about non-economic benefits like

environmental stewardship or consumer

control have been serviceable as secondary

messages and do resonate with certain

segments, but have not proven as effective

as economic messages in untargeted

campaigns

• Effective message targeting (see Theme 9)

should enable primary non-economic

messages for specific segments

0.27%

2%

Control and Environment(ComEd)

Saving Money(Ameren IL)

PRICING PILOT DIRECT MAIL RESPONSE RATE

• Saving money has been the most effective

message at driving program enrollment in the

absence of targeted messaging using

segmentation

– APS: finds that “cost saving always resonates with

customers”

– OG&E: found saving money to have been a more

effective message than environmental

stewardship, note “It’s not that people don’t want

to be green, but they want to save money”

• Other messages (e.g., user control)

appeal to certain customer segments but

are not as broadly applicable

THEME

Increasing incentives offer diminishing returns to enrollment 6

DRIVING ACTION 10

E X P L A N AT I O N I M P L I C AT I O N S

• While the relationship between incentive

amount and customer enrollment is unclear,

customers are more responsive to messages

that promote incentives

• Higher incentives may provide limited

returns, and redirecting budget from these

incentives to other marketing and acquisition

tactics may be a more cost-effective way to

engage customers and promote Smart Grid

programs

• Small incentives can be sufficient to pique

customers’ interest and drive adoption

– Connexus: high DLC participation (28%) despite

offering average incentives ($10/mo)

– SCE: low DLC participation (8%) despite offering

high incentives (up to $40/mo)

– APS: study found diminishing returns on

incentives

• Having incentives to market helps drive

customer interest and enrollment

– OG&E: found that just having an incentive to offer

was helpful when promoting TOU pilot

2.4%

4.9%

No Incentive $25 Incentive

PG&E CPP DIRECT MAIL RESPONSE RATE

THEME

Simplicity facilitates program enrollment 7

DRIVING ACTION 11

E X P L A N AT I O N I M P L I C AT I O N S

• Keep it simple – energy is not top of mind for

the vast majority of consumers and simple

programs with simple calls-to-action are

more accessible

• Simple messages and enrollment processes

limit barriers to adoption and maximize

utilities’ limited opportunities to drive

customer action

“ Save Money and Energy with MyMeter”

— Wright-Hennepin CEA

• Smart Grid programs that are messaged,

presented, and structured simply are more

effective at enrolling customers

Simple, concise messages make the best of

utilities’ limited windows to engage customers

Simple program structures make programs

easier to understand

– SRP: 86% of TOU program enrollees have

chosen simplified TOU rate option after it was

launched

Simple enrollment process reduce barriers to

adoption

– OG&E: credits simple enrollment processes for

improving campaigns; examples include:

» Click-through enrollment link for email

campaign promoting online portal

» Self-addressed stamped enrollment card for

direct mail campaign promoting TOU program

THEME

Urgency and purpose spur customers to act 8

DRIVING ACTION 12

E X P L A N AT I O N I M P L I C AT I O N S

• Customers care about saving money, energy,

and the environment, but are largely

disengaged today and must be motivated to

make changes

• Utilities should communicate impetuses that

spur customers to take action

• In addition to those tactics discussed above,

utilities should leverage existing customer

touch points (see Theme 10) to engage with

customers at those few moments when they

are already thinking and making decisions

about energy

• Customers are more likely to enroll in

programs and change their behavior when

given an immediate reason to do so

• Successful tactics used by utilities include:

High-frequency messaging

– AEP Ohio: placed pre-calls before direct mail

campaign to inform customers about mail piece

Acquisition and time-sensitive offers

– Connexus: promotes DLC program with $10 gift

card limited-time offers, has 28% participation

Energy saving competitions

– Wright-Hennepin: competition participants

reduced usage by up to 58%

Comparative household energy reports

– Typical saving around 2-3%

Goal-setting programs

– SCE: “Budget Assistant” online portal allows

customers to set a monthly budget and alerts

them as they approach it

THEME

Attitudinal segmentation may improve program messaging 9

13

E X P L A N AT I O N I M P L I C AT I O N S

• There is a rising belief among utilities that

attitudinal segmentation, which has been

employed to great effect in other industries,

can help improve program performance, and

select utilities have begun to integrate these

schemes into their Smart Grid activities

• With effective segmentation, organizations

can improve outreach by delivering targeted

messages, enabling a wider range of primary

messages beyond “saving money” (see

Theme 5)

• Utilities may see value to extending customer

experience differentiation beyond messaging

to include offer and channel strategies as

well

UTILITY TRANSFORMATION

• Few utilities have used segmentation when

messaging their Smart Grid programs

• Prior SGCC research has found that

attitudinal segmentation will better enable

differentiated and optimized messaging

strategies than demographic segmentation

given the extent to which energy preferences

occur across demographic dimensions

• Many utilities are starting to use attitudinal

segmentation as they begin to market Smart

Grid programs

– AEP Ohio: believes their attitudinal segmentation

framework is showing promise in pilot, plan to use

it for targeting purposes in the future

– SRP: has used attitudinal segmentation to create

targeted messages for TOU program

THEME

Utility channels can transition from service to sales 10

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E X P L A N AT I O N I M P L I C AT I O N S

• Utilities should integrate their Smart Grid

programs into day-to-day business

operations, promoting them and making them

accessible across customer touch points

• Existing customer touch points provide

strong opportunities to engage customers on

energy, as it is already front of mind and the

time/effort cost of engagement is low

• As utilities move beyond pilot-stage and

begin managing full programs, traditional

economic success metrics (cost of

acquisition, churn, etc.) will become more

important

UTILITY TRANSFORMATION

“ …SRP offers different price plans so you can

choose the plan that fits your lifestyle.”

— Salt River Project

• Utilities launching Smart Grid programs are

for the first time acting as sales organizations

looking to drive opt-in participation

• Utilities have had success engaging

customers during existing touch points

Customer sign-up

– APS: offers TOU rates as part of BAU enrollment

and helps customer pick the plan that best suits

them; have the nation’s largest pricing program

Internal referrals

– Austin Energy: call center refers customers to

DLC program, helping achieve 22% participation

Third-party referrals

– SCE: donates $5 to schools for each parent that

takes SCE’s Home Energy Efficiency Survey

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Q&A