Duke Energy's path to a more engaged, energy efficient and loyal utility customer
By Jesse Berst
Many factors drive the need for utilities to engage customers. One is the need to promote energy-saving initiatives -- initiatives that can reduce peak load, meet energy efficiency mandates and cut carbon emissions. Equally important is the need to foster and maintain customer loyalty and satisfaction.
Fortunately, our industry has sources for scientific insights that can improve customer engagement, as I learned while conducting interviews for our next webinar titled The Science of Customer Engagement -- Applying behavioral science to home energy reports and energy efficiency. It will be on Tuesday, April 24, at 10:30 a.m. Pacific /1:30 p.m. Eastern and you're invited, of course. (Click to sign up for free while space remains.)
The first insight I gained came from Dr. Paul Cole, a psychologist who is VP of Consumer Products for Tendril, where he oversees the ways in which the company’s products and services are developed and evolve based upon research and experience with behavioral science. Tendril's approach to customer engagement, called Active and Social Learning, is based on customized recommendations and on creating an ongoing dialogue. Through that dialogue, goes the theory, customers become progressively more engaged with the decisions that positively impact their energy consumption. It's a journey rather than a destination.
Scaling up for full deployment
During the pilot phase, Duke Energy also learned that it needed expert help for wide deployment. "We piloted some of it internally, but we need an expert partner to roll it out at scale and consistently deliver a customized experience," explains Sonderman.
"As a traditional utility, we had gone down the technology path, trying to get customers to adapt better lighting, HVAC, etc.," says Sonderman. "But as we did research, we discovered that some energy efficiency is structural - about the house - but some is behavioral. And we had nothing in our toolbox for the behavioral side." That's when Duke began scouring the marketplace for behavioral approaches, eventually settling on Tendril Energize Home Energy Reports.
After several years of experience, Duke Energy has learned some subtle tricks of the trade. For instance, consumers tend to move towards normal. If they are below average, they will try to improve. But if they are above average, they may back off their energy efficiency efforts. As a result, the company uses a different chart with above average homes. It compares them only to efficient homes and does not show the values for average homes.
Although Duke ultimately hopes to roll out the program to 1.2 million customers, it had to apply to regulators state-by-state. Duke hopes to move from paper to online, but many regulators favor paper as the first proof point.
"It's ideal to get regulatory approval for both paper and portal," Cole recommends. "But sometimes utilities have to take it one step at a time." His research shows that paper presentation can lead to energy efficiency savings of 2 to 3%, while portals can deliver 5 to 10%.
Challenges along the way
Utilities embarking on customer engagement will first have to grapple with the technical challenges of storing, verifying, managing, retrieving and analyzing a lot of data. There may be compliance issues as well. Duke, for instance, was asked to carve out a sizable control group to ensure the accuracy of their measurement and verification.
Despite the hurdles, the program has been a success. "Our customer surveys show a 70% open rate. Our measurement and verification shows we are saving over 200 Kwh annually per home." In fact, about 2% of all customers have contacted Duke to correct information about their homes so they can get more accurate recommendations -- proof they are fully engaged.
"Many customers don't see the relevance of the paper report unless you customize it," explains Dr. Cole. "But sometimes that customization will be inaccurate. It's important to give them tools to change the assumptions to improve accuracy and to gain their trust and acceptance." Experience shows that the customer engagement experience should be as easy as possible for the consumer, with no barriers to action.
Attend the webinar for more insights
Both Dr. Cole and Delta Sonderman will join me for the April 24 webinar The Science of Customer Engagement. Click the link to register for free >>
Speakers will discuss how behavioral science can improve the effectiveness of home energy reports. They will also discuss the savings that have accrued through programs like those at Duke. Finally, the speakers will show how home energy reports are a key component of an integrated roadmap that can result in progressively more engaged, more interactive and more loyal customers.
Jesse Berst is the founder and chief analyst of Smart Grid News.com. He consults to smart grid companies seeking market entry advice and M&A advisory. A frequent keynoter at industry events in the US and abroad, he also serves on the Advisory Council of Pacific Northwest National Laboratory's Energy & Environment directorate.