Accenture on utilities and customers

Customers maintain interest in offers, if offered

Phil Carson | Apr 10, 2012

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While we're on the topic of consumers, the consultancy Accenture issued recent findings that bear mentioning in a report titled "Actionable Insights for the New Energy Consumer."

If you didn't realize that there's a "new energy consumer" you'd better tighten your seat belt and read this report. If you do know this new animal, the Accenture findings may provide some ammo for your internal proposals. (Below you'll find further links to past work by Accenture.)

First, nearly 60 percent of electricity customers do not receive a half-dozen obvious products or services from their provider. Of those, from 40 to 60 percent (depending on what products/services they currently receive) are very or somewhat interested in additional offerings. Respondents to Accenture's survey also indicated, at a lesser level, some interest in non-energy offerings from their utility. (That category includes home repairs, telecom, security, insurance, etc.)

My take: your customers are an unexploited market for products and services that might be profitable or advantageous in other ways, such as cementing the relationship or even building trust.

Consumers  that are offered a "premium electricity service" would most expect that to include a greater mix of renewable energy and/or personalized energy tools and reports to help them understand and manage their use. (Hold the Grey Poupon.)

The interest in "premium" services varies with geography. Chinese, Brazilians and South Africans lead the way in willingness to pay more for such offerings (with 70 percent, 61 percent and 58 percent probably or certainly interested), while Americans show 22 percent such interest. That places Americans in the low range of interest. Those willing to pay more want a tangible product rather than improved service, Accenture found.

My take: Americans are tapped out financially and more willing to shop than turn to their electricity provider for additional products/services.

Relative to other countries, respondents in the United States showed somewhat less interest in lower electricity rates in exchange for limited customer service. (That perspective ranked the U.S. 15th among 24 nations on that trade-off.)

Motivating factors that might lead to interest in service bundles include discounted costs and convenience (single point of contact, single bill), much like other industries. (Shocking insight: it's been done before!)

The opportunity is ripe for moving customers to self-service, as the Web is strongly preferred as a channel for interacting with the utility, followed by paper mail—at least where bill presentment and payment are concerned. But that changes with, say, outage information, where telephones beat the Web. Telephones—i.e., human-to-human conversation—also is preferred for bill resolution.

Again, electric utility customers appear to be no different than the customers of any other vertical industry when it comes to Web-based self-service options, as they want transactions that are secure, effective and simple. And they want technical support to be available.

My take: This animal known as the "utility customer" is indeed the mainstream consumer, although, certainly, more likely to be a fully employed head-of-household or bill payer as opposed to other consumer profiles. The utility industry has served "ratepayers" so long that some obvious insights may come as a surprise. That said, the vast majority do not use social media for energy-related interactions and they don't plan to. Conversely, about 13 percent have or will, which is a demographic that's likely to grow. (Presumably about the time I cash in my chips.)

One possible look back at the relatively low expectations created by a century of low-cost, virtually invisible is that 72 percent of U.S. customers are satisfied with their current electricity provider. That placed Americans second among 20 nations. How that jibes with the seven minutes that Americans typically spend each year talking to their utility, I don't know. Is it that the less time you spend, the more satisfied you are? Or is the correlation not causative, as in those who spend the most time on the phone are doing so because they're experiencing a problem?

(Frankly, that last conundrum reminds me of a coal miner I met in Northwest Colorado almost 30 years ago who was old enough to have seen Haley's Comet twice, in 1910 and 1986. He wore a tee-shirt that read: "I Seen It Twice." He averred that he had had a happy marriage, having spent a good deal of it underground, mining coal.)

Perhaps on that note, I'll leave you with some other findings shared by Accenture in the past year or so. The bottom line here is that the elusive quarry known as "the customer" is both familiar and a bit unpredictable, thus the value of research into electricity consumer perceptions.

"Accenture's Sharon Allan: After Smart Meters, What's Next?" described the strategic thinking that should precede smart grid-related roadmaps.

"Part II: Accenture's Sharon Allan: After Smart Meters, What's Next?" is simply the second installment in that conversation.

"Customer Segmentation and Tomorrow's Utility" suggested that bundling price and value for each customer segment would yield results.

"What Does Today's Electricity Consumer Want?" is last year's installment on the study of the "new energy consumer," also by Accenture.

And, finally, "Customer Behavior and Electricity Usage" presented 2010's findings in the same vein.

Bon appétit!

Phil Carson
Editor-in-chief
Intelligent Utility Daily
pcarson@energycentral.com
303-228-4757

 

 

 

 

 

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Comments

Customer

I am surprised. Smart metering or smart grid is not a matter of Customer solicitation or appeasement in any way. It is pure and simple modernization of an otherwise obsolete system nothing more or nothing less.Such discussion by people who are not from Utility industry will damage the case for implementation of new technologies.Do we ask such queries in any other field?No .Then why create unnecessary controversies on such issues. If we do not want tpo work for utility industry then it is a different matter. What is this conversation about services from the Utility?Do they kow what is the basis purpose of Utility. Generate and Supply quality energy.

Rip Van Winkle

You may have noticed that the majority of homes and small businesses in the U.S. have or will receive an interval meter and, further, many consumers have heard of "smart grid," though its meaning is as murky to the public as to the industry.

Regulators and legislators over time will ensure that the consumer is engaged by the utility -- thus the concern about what to say and do for that consumer.

Recent research (and one of our columns) is devoted to the fact that price is not the only motivator when it comes to consuming electricity.

Many of these threads will play out when (and if) utilities go to dynamic pricing, for cost-effective deferral of capital projects at first and for distributed generation next. The old paradigm has actually already disappeared in the rear view mirror. But don't spend much time looking in that mirror or you'll miss the turns in the road ahead.

Regards, Phil Carson

A “True Commodity” Market

Most of the problem with existing marketing studies or attempts at them is a failure to realize that electricity is a “True Commodity”. What that impact means is that it is typically consumed immediately after it is produced and available everywhere to everyone with well entrenched expectations. Most of the marketing strategies are not geared to deal with a true commodity. You will not succeed trying to differentiate your product in a “True Commodity” market. “Got Milk”, is another good example of a “True Commodity” market. Both have limited supply and must be consumed shortly after production. You can freeze milk or store electricity for limited periods of time, but the reconstituted products are not received or preserved by the consumer to be the same as the original. That is the other problem when dealing with a “True Commodity”, the entrenched expectations of the consumer. Electricity like milk is available everywhere. If I ask you what brand of milk you buy or who makes it, most give you the deer in the headlight look. Yet, ask them which they prefer, 2% or whole milk, and you get a litany of different reasons. To successfully sell into a “True Commodity” market you must compete on price and your product had better look, feel, and act just like all the others in that market space. The other marketing strategy of “single point of contact, single bill” concept is a strategy that is waiting to get blown out of the water. Don’t know about you, but I hate my telco/cell phone or the cable/entertainment bills I get and their complexity. You keep charging me for things that make no sense, for things I don’t understand, or even worst for things I did not authorize. I will trust you when you giving me control with simplicity that I can easily understand. My life is already busy enough, adding complexity does not help me. People will tell you many different things on a survey but will they actually pay you to provide it is the real question that needs to be answered. Richard G. Pate Pate & Associates, Principle

Commodity Market

True but you can not get to the extent when you get milk from a New Breed of cow which gives more milk a subject matter of troubling the world and milkman and creating a confusion in the market place when one is not even remotely connected to milk production.This particular co intends to do just that!

We are not competing on price but value

Electricity production and delivery is a commodity, but the value proposition does not end there.  There are opportunities to bundle additional products and services with electricity to increase it's overall value.  For example, helping people help design buildings, offering green electricity options, rating solar installers, providing information on energy efficient manufacturing equipment, etc. 

Utilities can and must add value to the commodity if they want to be more than poles and wires.  For those utilities hoping to do more, they must find these bundling opportunties and create incremental value for their customers.  These opportunities will lead to additional revenue is some instances and will be free in other instances but the objective is to help keep people connected to the grid and choosing electricity options that align with the utilities long term goals.

Next time you are filling up on that commodity gasoline, you might also buy a cup of coffee, get a car wash, rent a video from redbox, and air up your tires. 

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