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Learning to Listen: Market Research = Market Intelligence

Understanding the wants and needs of customers is critical in today’s increasingly volatile energy industry, where non-utility providers are encroaching on markets that were previously the sole purview of the local utility. Examples include home alarm system companies (like ADT) that provide home energy management services, and thermostat companies (like NEST) that offer automatic and remote control of HVAC systems based on how homeowners actually use them throughout the day.  In an increasingly competitive market with several entities selling energy-related products and services, several utilities are recognizing the imperative to be highly attuned to what their customers want so they can devise services that deliver value beyond keeping the lights on.

Utilities need to “amp-up” their relationship with consumers to understand what they value most and what they expect related to their energy services experience.  The main method for utilities to do this is through primary research—regularly querying consumers with periodic surveys aimed at finding out their wants, needs and preferences around their use of electricity and the services it powers.

Designing and conducting a listening campaign—i.e., market research—is central to an effective customer engagement strategy.  Smart utilities reach out to their customers through a variety of market research means including traditional methods such as:

  • Annual customer surveys, for understanding satisfaction with current services and the utility overall
  • Utility Program Evaluation Surveys and site visits, for evaluating impacts of specific programs and services

And less traditional methods, such as:

  • Consumer Pulse or Panel Surveys, for understanding trends, new wants and needs
  • Web-based and Instant Push-Notification surveys, for engaging tech-savvy market segments

Typically, utilities perform some customer satisfaction surveys and then evaluations of programs to claim savings.

  • The customer satisfaction surveys look at overall satisfaction with the utility and perhaps probe some customer touch points such as phone interactions with a representative, navigability of utility website for bill payment, etc.
  • The program evaluations have a more narrow focus, where the aim is to understand participation in a specific program and understand behaviors that might impact savings for the program under consideration.

The industry on the whole has not historically invested in research to get broad market intelligence.  Until today, this has been sufficient…but not anymore. Many factors now affect the marketplace, such as:

  1. Open choice states – utilities have to fight to acquire/keep consumers even for core product/service delivery (energy). Utilities are no longer a monopoly.
  2. Competition from outside for ancillary services – Encroachment from all quarters such as Home Security, Tech manufacturers, Communications firms, Home DIY retailers etc.
  3. Reduced utility revenues from increased efficiency – Utilities are experiencing flat if not declining sales due in part of more efficient appliances and buildings due to standards and technology improvements, and the impacts of society becoming more efficient in their energy use overall.

Diversification of revenue streams is something utilities are looking at keenly and knowing which retail services—beyond energy—to offer is a key piece of the puzzle.  This would include new ancillary products and services like home energy management systems.

While there exist several national and smaller regional surveys on consumer behavior and purchase trends in the packaged goods, finance, electronics and other industries,  there aren’t analogous research vehicles in the  energy industry.

Consider the parallel with the financial industry and credit scores as provided by firms such as  FICO/Experian/Equifax. Financial health and behavior is studied extensively and informs outreach and cross-selling new products and services to existing customers.  Developing analogous indicators that encapsulate information on energy consumption trends, technology adoption, home ownership status, and energy expenditure health (a subset of overall financial health) would be useful to utilities, other wires-to-the-home providers (cable, security), and all other industries jockeying to bundle energy services with other offerings.

DNV GL has started down this path in a few ways:

  • Combining utility and external data sources –Through some targeted partnerships with third party data providers, DNV GL has begun appending utility customer data with enhanced socio-demographic demographic, purchase behavior and other purchased data sets to provide even more granularity around consumer behaviors related to energy and how added value can be created through energy service offerings.
  • Custom Research: DNV GL’s approach leverages “broad data” in addition to big data. Broad data helps paint a textured portrait of the energy consumer by looking beyond just billing data, such as impressively granular 15 second interval load .  Broad data includes utility customer data such as receipt of e-bills and bill payment method.  These pieces of information function as proxies for technology adoption.  Energy customers who walk their payment to a center or mail a check in differ from those who receive their bill via email and have set up auto-pay options for their bill. Delinquencies are proxy indicators of financial health and past program participation is an indicator of a motivated and engaged customer. DNV GL marries utility customer data with focused and well-designed primary research and other relevant data such as Census data to provide its clients with the market intelligence they need.

Figure 1

  • Proprietary Research: DNV GL recently conducted web-based national consumer surveys in the US and Europe on emerging technologies such as Home Automation Systems and a Competitive Positioning survey that assess perception of the utility relative to other service providers and consumer willingness to purchase ancillary products and services from their energy providers.
  • A 360 Degree Perspective: DNV GL advocates a comprehensive approach to intelligence gathering by studying the market through interviews with the full range of industry stakeholders, regulators and policymakers, plus our clients’ commercial, industrial, government, non-profit, and institutional customers with B2B research services for a full spectrum perspective on the market.

We  DNV GL helps our clients listen to their customers.  We leverage all these market research tools to develop more acute hearing so that we can provide our clients with the best market intelligence available for competing in today’s energy marketplace.  Learn more here.

This blog was co-authored by DNV GL’s Luisa Freeman and Gomathi Sadhasivan.

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