What Makes a Utilities Customer Tick?

What makes a utilities customer tick? That is the question firmly on the minds of power companies, who remain hard at work on developing the right value proposition and strategy for engaging customers on smart energy initiatives.

Over the past week, discussion within the industry has centered on a JD Power & Associates report that attempts to clarify the matter.

Notable to the utilities customer dynamic is the fact that the most rudimentary moral and business motivations often cannot paint the entire picture of what drives customer behavior. Social-consciousness is one thing, but in order to truly get behind progressive energy endeavors, customers must be compelled to actually make changes, which could require making "significant out-of-pocket investments."

Given this constraint, utilities companies face immense challenges in crafting engagement strategies for smart grid and smart meters. Mobilizing the various marketing segments (driving behavior rather than perception) can require vastly-different stimuli, so few value propositions will prove universally effective.

As JD Power illustrates, some customers, for instance, will respond to smart systems that better monitor the amount of energy they use, which enables them to properly manage their level of use and conservation. Others, however, will be more enticed by rewards systems that provide incentives for reducing their energy use. Though both would seem like just branding campaigns for smarter alternatives, the difference in customer motivations, though slight, would complicate how the utilities companies actually go about presenting their new services. The presentation, as noted, often must drive behavior—it can’t simply be "good enough" to "kind of" jibe with how customer feel.

JD Power’s six customer segments range from "innovators" (totally sold on making significant investments that yield long-term financial and environmental benefits) to "automators" (those who will, for example, authorize remote management of their thermostat in exchange for savings) and "indifferents" (those who have no inclination to make any effort towards energy management).

Companies looking to make significant headway on their smart initiatives require engagement strategies that compel all segments to take action. If the technology and message works, getting "innovators" on board should be easy, but "automators" and "indifferents" are going to require far more justification for their rubber stamps. For these people, the inherent consciousness and "obvious" environmental, economic, technological and efficiency advantages of progressive energy offerings are not taken for granted the way they are by "innovators."

Significant effort, therefore, must go into moving the needle. It is not enough to offer "smart"—the service has to underscore why it is the smart choice and why the audience should care. As of right now, utilities may know the pros and cons of progressive energy movements, but few are properly framing these in terms of the diverse behavioral segments.

How Does This Impact Electric Vehicles?

Though JD Power’s "Smart Energy Consumer Behavioral Segmentation Study" focuses on smart grid and meter implementations, it is interesting to apply the first wave of JD Power’s investigation against the electric vehicle movement.

Earlier this week, PA Consulting Group issued a press bulletin advising utilities companies to enter the electric vehicles mix.

"By developing the EV infrastructure and customer processes, and offering innovative charging models, utilities can encourage the adoption of electric vehicles," said the group’s industry expert Arun Mani.

The bulletin highlights three best practices for utilities seeking entry into electric vehicles: build a versatile infrastructure, monetize and incentivize charging and shape a strategy around consumer behavior.

Valuable about PA Consulting’s bulletin is the fact that it recognizes the importance of customer segmentation. The multitude of customer segments each possess their own valuation of alternative energy, and successful electric vehicle rollouts have to take that into account. If vehicles—and their fueling and charging mechanisms—are not designed with drastically-different consumer behavior in mind, they are going to gravely fail to launch.

What the bulletin seems to lack, however, is a formula for driving the various customer segments to action. Retroactively providing electric vehicle customers with options seems essential, especially since the market has yet to truly define how it will use its electric cars. Jumping straight to that step, however, ignores the fact that the electric value proposition is falling on deaf ears for a lot of customers. If one applies JD Power’s "automators" and "indifferents" to the electric vehicle market, he will see that no matter how advantageous these cars seem to be over straight-gasoline vehicles in 2011 and how they supposedly represent the future of automotives, their value remains unproven for a significant part of the audience.

The Chevy Volt epitomizes this phenomenon. General Motors will publicly say it is happy with the sales. In support of that notion and the PA Consulting bulletin, the campaign aggressively promoting its hybrid fueling option seems to have driven the car’s best-ever sales month in October.

But demand compared other vehicles is still light; if the majority of the public saw electric cars as the true way of the future, why would they even consider going with a gasoline-powered car for their new purchase? Getting this segment invested in alternative is going to require more than mere options after the fact: it will require a powerful driver to create the initial demand.

And, for all the talk about inevitability, there is still concern among electric loyalists about whether the technology in a car like the Volt has reached an ideal point. So while this audience, in theory, should be easily persuaded, in execution, they too might need further motivation.

This article focuses on the customer management strategies employed by utilities companies. If your job centers in this space, you will not find a better benchmarking, networking and learning environment than the CRM for Utilities Conference! Check out the speakers or agenda--or register at a great rate--right now!