By K Kaufmann
The most effective way to change people’s behavior -- about energy use or anything else -- is simply not to give them too much of a choice in the matter. You also need to nudge them in the right direction by giving them information that is personalized -- that is, immediately relevant to them -- via their preferred communication platform or channel, which today, and especially for millennials, is mostly digital and mobile.
There, in an extremely compressed and simplified nutshell, are the key messages I took away from the Behavior, Energy and Climate Change Conference I attended in Baltimore Oct. 20-21. Now in its 10th year, the conference is a mix of highly academic presentations and more pragmatic case studies focused on one of the most pressing questions of the energy system transition now underway in the U.S. and around the world.
How can utilities and other industry stakeholders engage customers in new ways of thinking about and using energy, and then keep them engaged until the new behaviors -- and the thoughts and motivations that drive them -- become the norm?
Cass Sunstein speaking at the Behavior, Energy and Climate Change Conference, Oct. 20 in Baltimore. (Photo by K Kaufmann).
The first step, according to author and Harvard Law School professor Cass Sunstein, is to make energy efficiency and other green energy programs the default choice for consumers -- something they are automatically enrolled in and have to opt out of if they don’t want to participate. Sunstein is the co-author of “Nudge,” a best-selling book on decision making and behavior change.
In his opening keynote at the conference, he cited a study in Germany in which tens of thousands of households were asked if they wanted to opt in to a green energy program; only about 6.7 percent did, he said. But when a similar number of households were told they had been automatically enrolled in a green energy program, 70 percent stayed in.
“What’s going on here? The power of inertia cannot be overestimated,” Sunstein said. “The default setting establishes what happens if people do nothing; and frequently, doing nothing is what people are most inclined to do. There’s also a power of suggestion in default. If people have an automatically green (option), there’s some sort of informational signal given that that is what is normally done.”
Read other K Kaufmann blogs on customer engagement here and here.
Two case studies presented on the second day of the conference underlined and amplified Sunstein’s point.
In 2013, National Grid started customer outreach and education for a smart grid pilot program in Worcester, Massachusetts, combining Internet-connected smart thermostats with an aggressive demand response program and time-of-use rates. One key feature of the program was that enrollment was on an opt-out basis; when the program went live in 2015, about 15,000 National Grid customers in the city were automatically enrolled in the program, but could opt out if they wanted.
In 2014, Duke Energy launched a similar pilot program pairing smart thermostats and demand response in its Ohio service territory. Its program was set up as an opt-in choice for its customers, and the utility conducted extensive outreach to get about 4,000 households enrolled.
Presenting the National Grid case study, Dana Max of Navigant Consulting reported that the pilot program is still going strong -- racking up significant energy savings and high customer satisfaction ratings. On the other hand, Carol Burwick, a marketing manager at Duke Energy, said the Ohio pilot has just been closed down, following ongoing technical issues and disappointing results.
Demand response personalized
While automatic enrollment is a major difference between the two programs, it is, of course, not the only factor in their different outcomes -- which is where the other conference takeaways about personalized, mobile customer engagement come into the picture.
The National Grid pilot -- which went live the beginning of 2015 -- pushed the limits on the demand response parameters it set for the program participants, Max said in her presentation. Most residential demand response programs involve turning customers’ air conditioning off or just down a few degrees a few times during the summer, generally for a few hours on very hot days when electricity supplies may become strained. The National Grid pilot called about 20 demand response or conservation “events” per year -- during which air conditioning was turned down -- with each one lasting up to eight hours, and often occurring on consecutive days.
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Customers were also given a choice of two pricing plans, both with price signals encouraging conservation, and four options for receiving additional technology to help them save energy. For example, they could get a digital picture frame that provided them with information on their energy use and real-time price information, or at the highest level, a smart thermostat and smart plugs to provide even more detailed energy use information and control. Customers with smart thermostats also had a program smartphone app.
Max said that National Grid’s intensive customer engagement efforts, tailored to individuals’ personal preferences, were another critical aspect of the program. Notices of demand response events were sent out 24 hours in advance via customers’ preferred mode of communication -- email, automated phone message, the digital picture frame, text or the program app. Other communication included conservation tips, and the utility set up a Sustainability Hub, a physical storefront location in Worcester, where customers could stop in to learn about different technologies, ask questions or attend community meetings about the program.
The hub has become a de facto community center, offering energy education programs for youth groups and hosting other community meetings, Max said.
Critical customer connections
According to Carol Burwick, Duke Energy also set up its pilot smart grid program with customer engagement efforts built in, including a mobile app and conservation tips. But the level of engagement was not enough in the face of the technical disruptions the program faced, she said.
Duke had offered its program participants free or low-cost smart thermostats, with free installation, paired with a demand response program of 10 conservation events of about three hours each, Burwick said. The problems started when the program’s Internet service provider went down, taking all participants offline, followed by a firmware issue with the thermostats themselves that kept many customers offline for up to six months.
Even after the technical problems had been resolved, a major portion of the program participants did not reconnect their thermostats to the program and did not respond to the utility’s efforts to contact them to gather information on their reasons for withdrawal.
“That’s why it’s so important to keep that connection to customers,” Burwick said. “What else is going to drive them back to being connected, if you’re not maintaining that (personal) connection all along. We thought the program tips were enough to keep them active and motivated and connected, and it turns out they weren’t.”
Duke isn’t giving up on smart grid programs or customer engagement efforts, Burwick said. But she and others at the utility are figuring out more effective approaches and program designs.
Real-time communication is the new norm
For Burwick and other conference attendees, two presentations pinpointed one of utilities’ key challenges for customer engagement -- changing consumer demographics and what they mean for communication strategies.
Utilities have to go beyond their traditional approach to market segmentation, said Cavan Chasan, a principal at KSV, a New York-based advertising company that works exclusively on energy and sustainability campaigns.
Personalization is the new segmentation, he said, based on “activated, data-driven customer communication.”
“Real-time communication is the expected customer experience,” he said, but “not every customer is same. With the explosion of data technology, personalization allows us to focus on the individual. Customers want personalized, visual information.”
SEPA's "What the Community Solar Customer Wants" offers smart marketing tips to boost community solar subscription rates here.
Ashley Nicholls, also from KSV, drilled in even deeper on how to personalize for the increasingly important millennial market -- the 18-34 year-olds -- where mobile communication is critical, she said.
Utilities should be focusing on millennials, Nicholls said, because they are the next generation for energy efficiency. They want their personal economics -- what they spend money on -- to be aligned with their values and also expect if a company has data about them, it should be used to make their lives easier.
Her key takeaway on outreach to millennials was -- yet again -- go mobile. But her follow-up line can probably be applied to utilities’ communication strategies for all customers.
“We have to meet them where they are,” she said. “If they don’t go where we want them to be, we have to go out and meet them where they are.”
K Kaufmann is communications manager at the Smart Electric Power Alliance (SEPA). She can be reached at email@example.com.