Utility Customers Agree the Climate Is Changing—Just Don’t Call It “Climate Change”

Utility Customers Agree the Climate Is Changing—Just Don’t Call It “Climate Change”

“What is the use of a house if you haven’t got a tolerable planet to put it on?”
Henry David Thoreau  

This month we are celebrating Earth Day with our annual designation of Environmental Champions for those utilities whose customers say their utility has exhibited dedication to the environment in our Utility Trusted Brand & Customer Engagement study. What struck me most about this year’s findings is that customers think environmental improvements are a better investment and are not opposed to a utility rate increases related to such endeavors, at least more so than for improvements in reliability or service.

Why Environmental Improvements Have Become More Important Than Reliability and Service

Geography and phrasing play a major role in how customers perceive the need for environmental improvements. As part of our energy industry research on environmental sentiment, we find that utility customers agree the climate is changing. In fact, opinions on climate change among the 16,000 national interviews we recently conducted show consumer sentiment at 70% agreement that climate change is a real issue. But there is a vast difference on sentiment across utility markets, ranging from 50% to 87% agreement. This means that some utilities have customers who somewhat agree with the scientific consensus while others have customers who strongly agree. Utility markets with the strongest sentiment (75% or more agreement) are:

Ameren Missouri
Austin Energy
Con Edison
Duquesne Light Company
El Paso Electric
LADWP
MLGW
National Grid
NIPSCO
NW Natural
Philadelphia Gas Works
Portland General Electric
PSE&G
SDG&E
Seattle City Light
SMUD
SoCalGas
Tucson Electric Power
Washington Gas
Xcel Energy – West

These utilities tend to have the greatest concentration of our “Environmentally Focused” customer segment and should pay particular attention to how their environmental actions and communication are perceived in the market. At the same time, there are definite regional differences and each utility will need to gauge how receptive its customers are to its environmental positioning.

Use the Right Language to Better Position Your Utility

Phrasing, or how utilities talk about their environmental efforts, is particularly important when communicating with your customers. While there is a growing sense that utilities need to be great at environmental stewardship as well as agreement that climate change is happening, only 5% of utility customers say the phrase “climate change” is effective at building support for utility environmental programs. The phrases that are most favorable to building support? “Clean energy” (23%) and “renewable energy” (20%).

How Much Responsibility Do Utilities Own?

The good news: our study data from our brand research say utilities don’t need to own the entirety of the environmental issue, but they do need to do their part. Utilities should focus their efforts and communication on core business improvements that lead to the environmental benefits that matter to their particular customer base. Contact me if you would like to discuss how your utility can improve your environmental reputation.

Find out which utilities have been designated 2018 Environmental Champions.

View the Utility Environmental Champions

Why Energy Utilities Need to Turn Their Attention to Brand Appeal

Why Energy Utilities Need to Turn Their Attention to Brand Appeal

“Signs and symbols rule the world”
Confucius

Brand Appeal measures customers’ positive feelings for a company based upon the claims and visuals the company has created to establish a unique market position. The brand equity that companies evoke in customers’ minds relate to added pricing power and preferred provider status. The first quarter of the 2018 Utility Trusted Brand & Customer Engagement™: Residential (UTBCE) study results are out and a new finding highlights 131 utilities’ Brand Appeal with their respective residential customers.

Brand Appeal Is in the Eyes of the Customer

Establishing high Brand Appeal enables utilities to engineer customer support and loyalty using design and color to shape a unique impression in customers’ minds. By asking respondents to rate their utility’s visuals such as logos and slogans, the UTBCE study has identified the utilities that have created the most appealing customer value propositions. Six utility brands rise to the top with a brand that invokes a high level of customer appeal. As utility customers select who they want to do business with, these six utilities are the likely winners with great brand equity and considered significantly more “ideal” than any other utility.

While many of the six most appealing brands do not have industry-leading operational or service metrics, one in four of their customers value his or her utility’s product endorsement, compared with just one in six for the industry. What’s more, over half of the most appealing utility brands’ customers say they are likely to recommend utility product offerings to other customers.

The implications of Brand Appeal are revolutionary for the industry: the utilities that can generate high brand appeal will position themselves with higher brand trust and offering adoption among customers.

Top 6 Most Appealing Utility Brands

The Relationship between Brand Appeal and Customer Trust

If you have ever needed to increase rates, you know what a difficult public relations challenge this can be. The six most appealing utility brands score above industry average on future rate support. In fact, these utility brands have a 13% higher level of customer “trust [in utility] to set fair and reasonable rates.” In other words, appealing brands get the benefit of the doubt with customers. So, a recognizable and appealing brand is essential to building customer trust. This is important, as the phrase “customer trust” is now part of the mission statement for almost every utility. The brand research results below shows the impact that creating an appealing utility brand has on building customer trust (scores are based on a 1,000-point scale).

As there is a significant 234-point difference between the most and least appealing brands, many utilities have a lot of work to do to increase brand appeal.

How to Build Brand Appeal

As utilities work toward establishing a stronger foothold among their customers in order to compete with disruptive forces such as Tesla, Apple and Google, building Brand Appeal can be a major differentiator.

Five Ways to Build Brand Appeal

  1. Consistently represent logos and slogans on all customer-facing media
  2. Select color schemes and visuals that appeal to your customers
  3. Develop a market value proposition (different from your corporate stakeholder commitment) that your customers can relate to
  4. Develop a slogan that reflects your market value proposition
  5. Ensure that the signs, symbols and claims your company develops reflect your market value proposition

Building Brand Appeal is one part of the larger strategy to positively position utilities for the future. Enlisting the right team with the right tools and expertise will make a difference in creating a stronger brand to survive. Contact me if you would like to explore how you can improve your Brand Appeal.

Review the details on the Utility Trusted Brand & Customer Engagement: Residential Study

Uncertain Optimism: Investors React to a “Too Good to Be True” Q4

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Investors React to a “Too Good to be True” Quarter

Measuring Investor Sentiment During a Period of Unprecedented Growth

My father-in-law had a saying, “If something is too good to be true, it is.” Yet the last quarter of 2017, which in many ways seemed unbelievable, really did occur. During this time, all-time stock market highs became commonplace and the US economy continued to pick up momentum. 637,000 jobs were added and the term “full employment” was quoted in the media with virtual champagne corks popping in the background. Consumer confidence reached a high not observed since the start of this century, and the CBOE Volatility Index, or VIX, hit an all-time low since its inception in 1993.

Throughout the fourth quarter of 2017, uncertainty levels dropped and investors became increasingly hopeful and optimistic. Confidence was highest in November while, despite political and social events, anxiety and fear remained largely at bay. As the new year approached, hope and optimism became the leading emotions expressed by investors toward the market. Continue reading

The Secrets of How, When and What in Institutional Marketing

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Many asset managers struggle with their client communication strategy in the institutional market. The sophisticated nature of this audience in terms of their investment knowledge and experience makes for a particularly tricky course for asset managers to navigate. Sending content that’s viewed as too simplistic or too frequent could be annoying and cause clients to ignore future outreach. Providing content that’s too rich or too infrequent runs the risk of the content becoming irrelevant. All the while, the needs and interests of pension investors are often quite different than those of endowments and foundations, requiring that content be tailored appropriately to each audience. Compounding the challenge further is the choice of medium—email or in-person? Digital or print? Our latest US Institutional Investor Brandscape report provides insights to help institutional marketers answer these questions.

How?

To pinpoint the optimal form(s) of contact, we asked institutional investors to identify the most effective means asset managers can use to communicate with them. Overall, email is the overwhelming favorite, selected by more than half of institutional investors. In-person visits are the preferred method of one-fifth of institutional investors. Continue reading

Loyalty Has Benefits On and Off the Field

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With Super Bowl LII behind us, the professional football season of 2017–2018 is over but a tremendous amount of loyalty remains among New England Patriots and Philadelphia Eagles fans. One doesn’t have to spend too long watching an NFL game to witness what loyal fans will do to cheer on their team in the pouring rain, sub-zero temperatures, or near-whiteout snowfall. The feeling of support and allegiance from fans for their teams is palpable.

What drives fan loyalty? The team, an individual player, the coach, the owner or various combinations of all of the above. Influence on loyalty from a combination of factors also holds true for investors working with advisors and other investment professionals and their respective firms. In fact, the industry average loyalty to an investment firm among advised investors is substantially higher than among the overall affluent investor population, indicating that the inclusion of a financial advisor or other type of investment professional offering advice is key to client loyalty, referrals and retention. Continue reading

Is ESG Investing Relevant in the Institutional Market?

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Environmental, social and governance (ESG) investing is continuing to impact the wealth management space. As individual investors become increasingly concerned with the ethics and environmental impact of the companies they are supporting, they are passing that concern on to the institutions that manage their investments. In fact, ProxyPulse*, a report by Broadridge and PwC, found a growing momentum of ESG proposals in proxy meetings in 2017. Following the US withdrawal from the Paris Climate Accord, the report also suggests an expected increase in questions from shareholders on environmental impact and climate change in 2018.

To keep a pulse on the growth in the ESG category, Cogent tracks interest in and usage of ESG investing among all the audiences we survey: financial advisors, DC plan sponsors, affluent investors and institutional investors. Specifically in the institutional market, we added a new question to this year’s US Institutional Investor Brandscape report, fielded late in 2017 and publishing this month. We asked institutional investors in the US how likely they were to adopt ESG investing in the next 12 months. We found that, while few institutions have already incorporated ESG in their portfolios, usage is considerably higher in the non-profit sector, where the approach to investing tends to be more mission-based than is typical among pensions. Continue reading

The Internet of Things: A story of the Haves and Have Nots

The Internet of Things: A story of the Haves and Have Nots A Market Strategies study identifies diverging points of view between two emerging groups of consumers and workers in the IoT market

There’s little doubt that the Internet of Things (IoT) is one of the most exciting and profitable sectors in technology today. IDC is predicting that global spend in IoT will reach a stunning $1.2 trillion by 2020—a figure that represents a compound annual growth rate of 15.6%. A recent Forbes Insights study even found that senior executives now see the IoT as the most important set of emerging technologies.

But the IoT market is also a competitive one. Companies in virtually all industries are now eager to join the IoT gold rush. Thriving in this emerging but lucrative market will require a deeper understanding of what consumers truly need, want and might adopt, whether for use in a personal or work context. Continue reading

Fighting Feature Creep and Creating the Right Credit Card Offer

Fighting Feature Creep and Creating the Right Credit Card Offer

Editor’s Note: As seen in Forbes Magazine, this study reveals which features consumers really want in their credit card.

A colleague of mine was strutting around the office the other day, excited about getting Hamilton tickets. A pretty good get, I have to admit. And then he told me that he had used the concierge service that comes with our corporate card to get access to a sold out show. Both of us were surprised to learn that our corporate card even had a concierge service—and that it seemed to work well. That got us thinking. Do most card holders even know the benefits of their credit card? And, if they do, does it matter?  So, of course, we decided to do some research.

It turns out we are not alone. More than half of credit card holders know about few if any of the features and benefits offered by their card. Which means the laundry list of features and benefits that accompany many cards is not having much impact on acquisition. Credit card issuers seem to be constantly adding new features in an attempt to lure more people to open their card. The question is, do any of these features matter, and if yes, which ones tip the balance?
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How to Avoid a Robotic Approach to Product Innovation

For many of us, robots seem to be more of a concept than a reality. We may receive a shipment from Amazon that was picked from the shelf by a robot, and we may drive a car with electronics and mechanical parts built by robots. Yet, with just a few exceptions, these robots labor behind the scenes where we are largely unaware of their impact and the role they play in our lives.

Enter Walmart, who has begun to test “shelf-scanning robots” in 50 of its stores. Designed to move up and down aisles and determine the stocking status and needs of each shelf, these robots have the potential to reduce labor costs and increase revenues through improved shelf maintenance. Not surprisingly, Walmart feels these robots could add millions of dollars of profit to its bottom line.

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Despite an Uncertain Fate, DOL Fiduciary Rule Leaves Its Mark

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A Shift Toward Level Compensation for Commission Products Is Likely to Shape the Future Product Landscape

While the regulators in Washington, DC, continue to kick the can down the road, there’s no doubt that the DOL fiduciary rule is prompting changes in advisors’ practices. As previously reported, advisors are moving further toward fee-based compensation, and predominantly fee-based advisors and RIAs are the only advisor segments that are growing.

Recent research with variable annuity (VA) producers further supports the trend of changing compensation models. Nearly half (44%) of VA producers agree that their firm is encouraging a level compensation structure that does not vary with the particular investment recommended. This proportion climbs to more than half in the National and Bank channels (56% and 57%, respectively). As a result, advisors expect to allocate fewer new dollars to VAs going forward, with one-third of advisors looking instead to the best interest contract exemption for commission products.

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