Does the average person shop for energy products through their utility? We know that customer preferences for shopping, particularly for Millennials and Gen Xers, is shifting toward online or mobile phone and away from traditional “brick and mortar” stores—51% of Americans think shopping online is the best way to shop (source: Big Commerce). But, how does that translate for utilities? Consumers embrace new products, adapt to new services more quickly and spend significant time researching and comparing online shopping options prior to making purchases. Product reviews and word-of-mouth opinions carry more weight than ever, and visual representations including product displays are expected to “come alive” during the purchase process. Such changing consumer behavior requires that traditional marketing tactics evolve to meet these shifting consumer demands, and utilities are not the exception.
A New Solution for Old Problems
A defined marketplace and process by which consumers can purchase energy-related solutions from companies have historically been inadequate and confusing. Consumers interested in cost and energy savings often face considerable challenges in understanding which products they should use and/or which products or services best address those specific needs.
Such a challenge has triggered many US utility companies to add “energy marketplaces” to their websites. These marketplaces allow customers to research various consumer electronics such as home appliances, HVAC systems and lighting to better understand product details, energy-efficiency use, relative price points, peer-to-peer reviews and product ratings. These marketplaces offer consumers visual comparisons of various brand and manufacturing products. Mounting competition from non-energy entities such as Apple, Google and Tesla have led some to speculate an eventual “death spiral” for utilities as we know them. The addition of an energy-related marketplace allows the utility industry to go on the offensive against these non-utility entities.
We know from our Utility Trusted Brand & Customer Engagement™: Residential study (UTBCE) that two key needs have been identified by consumers.
- An ideal utility marketplace
- Energy markets and/or commodity market companies dealing specifically with the trade and supply of energy products and services to “help consumers save money” and “offer a great value”
Energy marketplaces put utility companies back in the driver seat when it comes to these traits, giving utilities the opportunity to position themselves as trusted advisors to their customers while offering a means to help increase adoption of available program and service offerings.
This research identifies a potential opportunity for energy and utility companies and brands to leverage growth within the energy marketplace and ultimately lead to new and successful revenue streams for companies in favorable regulatory situations. Energy marketplaces are expected to continue evolving over time, and according to Anne Pramaggiore, president and CEO of ComEd, marketplaces will serve “as a cornerstone where customers can transact with us and other parties for a wide range of energy-related products and services.” (Source: ComEd, On Cyber Monday ComEd Customers Can Shop to Drop their Energy Bills on the Newly Launched Online Marketplace: November 2016.)
Why Is Utility Brand Management Important?
Changing consumer behaviors and expectations and the implementation of energy marketplaces point to the importance of utilities needing a strong brand in order to be successful. In fact, our UTCBE study finds that product adoption and use does not happen until a customer has high brand trust with a utility. As The New Energy Consumer: Unleashing Value in a Digital World suggests, after specialist providers, utilities are consumers’ preferred choice for connected products and services. (Source: Accenture)
This chart shows that a boost in product and service adoption occurs when an energy utility has a higher level of trust with its customers.
Energy Marketplace Examples
A particularly interesting and comprehensive example of an energy marketplace is the one currently offered by SDG&E. This website allows customers to easily locate and compare available options across an array of consumer electronics, home appliances, HVAC systems, smart home devices and lighting, which then points customers to places where these products can be purchased. Of note, SDG&E is considered one of the Product Experience market leaders among combination utilities in the US based on the company’s index scoring in the 2016–2017 Residential UTBCE research.
Energy marketplaces offer access to more products and services and related information in addition to two other key and grossly underused consumer benefits—immediate access to utility incentives and rebates and an efficient process for redeeming them. Despite being offered what amounts to free money to upgrade and become more energy-efficient, consumers in the US rarely take advantage of these kinds of incentives and rebates. According to a study conducted by Nielsen several years ago, only a small percentage of consumers (10%) took advantage of an appliance incentive or rebate in the prior year. Participation for other energy-efficient equipment was even lower, at just 7%.
Consumers today are accustomed to single-click buying and next-day shipping. Therefore, they are less likely to go through the hassle of engaging with a utility to collect incentives or rebates after making a purchase. In many cases, energy marketplaces can offer better and immediate access to available incentives and rebates, making the process of redeeming offers more efficient and timely online. Offering a one-stop shop for consumers on energy-related products and services is just another avenue for utilities to improve their brand profile and combat competition from non-utility companies entering the landscape.
What Is the Utility of the Future?
As we continue to gain more intelligence from our UTBCE research along with our custom research and engagements with our clients, we know that the “utility of the future” provides consumers with more utility engagement opportunities across all digital platforms while providing better access to more product and service offerings, conservation tips, green pricing programs, etc. If executed correctly, we expect utilities that implement energy marketplaces to ultimately realize positive movement in Engaged Customer Relationship scores due to increased Product Experience and Brand Trust scoring.
If your energy utility leadership team is looking to learn more about opportunities to best position the company in the evolving energy landscape, please email me at: email@example.com.
Or, download more information on the Utility Trusted Brand & Customer Engagement™: Residential study