The Internet of Things (IoT) is catapulting the energy industry into a new era of products and services, and the demands and expectations of utilities are rapidly changing. According to the IDC, energy utilities are currently the third largest investor in IoT ($66 billion) and this will alter how these companies interact with their customers. As an 80’s kid, I am reminded of a memorable song by Stereo MCs entitled Connected. The song’s chorus goes:
If you make sure you’re connected,
The writing’s on the wall,
But if your mind’s neglected,
Stumble you might fall…
More than ever, our connections with people, places and things drive and define who we are and what we do. These connections are directly impacted by the IoT explosion across our society. Back in 2008, more “things” were already connected to the internet than there were people in the world, and the momentum of this trend has multiplied over the past 10 years.
Local hardware stores, big-box home improvement stores, and home entertainment and department stores carry a multitude of smart home and energy products—from smart thermostats such as the Nest and ecobee4 to smart lightbulbs and smart power outlets, and home automation and monitoring tools such as Neurio and Alexa. The proliferation of these new products and devices is already skyrocketing and expected to increase as more households automate their homes.
In two years, it is estimated that the total number of “smart” households in the US will double* and, depending on the source, somewhere between 20 and 50 billion devices worldwide will be connected to the internet.
* Source: Kagan, a media research group within S&P Global Market Intelligence, reports that the number of US smart homes grew to over 15 million at the end of 2016. While this total equates to just 12.5% of total US households, that percentage is forecasted to grow to 28% by 2021. https://marketintelligence.spglobal.com/blog/smart-homes-in-the-u-s-becoming-more-common-but-still-face-challenges
IoT Opportunities for Energy Utilities
Energy utilities are uniquely qualified to help customers update their homes with the most functional and impactful products and services. However, according to Parks Associates, energy utilities face a significant gap between what they can offer customers and actual consumer adoption of these “things.” Around 100 million US households currently do not have a single smart home device, and of those that do, most have one to two devices, primarily for basic remote-control capabilities.
Additionally, non-utility companies are now fully charging into the energy landscape with cool, smart and efficient energy-related devices and services, presenting a serious challenge and opportunity. Hence this year’s letter to Energy Santa.
Dear Energy Santa,
Thank you for working hard to help us save money through better technology. We appreciate that you are making some effort to offer more useful, cool and smart technologies, but most of the cool, smart products we see are offered by innovative companies such as Amazon, Google, Apple and Tesla.
This year, we want shiny, new toys, devices and even more technology. We already have a relationship with you, so why can’t it be you, too?
There are just two requests for this year’s wish list:
- Develop and deploy more of your own products and services.
- Have energy product marketplaces available where we can easily review and purchase available products and services, as well as access and redeem rebates.
With your help, we’ll get even smarter about managing our energy in the New Year.
P.S. Oh yeah, if we like your “brand story,” we’re going to be more likely to buy things directly from you instead of other companies. But, we’re excited to get our shiny, new toys now, so please hurry!
WISH #1: New Products and Services
Unlocking the full potential of the connections that IoT can offer utilities to engage their customers will come down to more than the devices, but rather to connected data and insights. Success will depend on getting customers in tune with how to use the information so it provides more personal, sticky insights that lead them to take action not just once, but regularly. With more households and businesses installing smart meters, the related explosion of energy use data offers a clear advantage to utilities. It allows them to connect and manage the information and use it in conjunction with new technology and devices that customers are clamoring for. Utilities are well-positioned to capitalize on the customer-facing benefits of their investments in the IoT to connect customers with their energy use.
WISH #2: Creating a Product Marketplace
The potential opportunities that exist for utilities do not end at gathering energy use data and connecting them together with the consumer devices. As I wrote in How Energy Marketplaces Give Utilities More Control, 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 carry more weight than ever, and visual representations including product displays are expected to “come alive” during the purchase process. With that in mind, energy marketplaces can be leveraged to offer a place where utility companies can shift back into the driver’s seat as trusted energy advisors to their customers.
Is the Energy Utility Sector on the Nice List?
With the explosion of smart home and energy devices, energy utilities need to understand how to position themselves in this changing marketplace to meet the needs of tomorrow’s energy consumer. By ensuring that customers’ expectations are not neglected, utilities can mitigate the possibility of facing a “stumble” and “fall.” As utilities’ relationships with their customers evolve, establishing a strong company brand will be particularly important. Utilities that improve overall customer satisfaction and brand advocacy will remain relevant and profitable in the future energy utility business landscape.
2018 New Year’s Resolution
Identifying a trusted customer research and consulting advisor for your company can feel risky. The trick is finding a team of highly skilled researchers who live, eat and breathe the energy industry. Market Strategies’ energy team has the research and industry expertise to help you think through both current and future challenges and deliver deep insights that identify the “shiny new toys” your customers want. What better way to land on your company’s “nice list” than to find a partner who can help you improve engagement and brand trust?
Please reach out to us in the New Year to discuss how we can work together to better connect your company with your customers.
Until then, whoop-de-doo and dickery dock, and don’t forget to hang up your sock. Happy holidays!