The Busy Executives Guide to Engaging Consumers in Saving Energy: The Promise of the Smart Grid Richard Feinberg, PhD Purdue University Service Concepts Annual Meeting June 17, 2010 The Busy Executives Guide to Engaging Consumers in Saving Energy: The Promise of the Smart Grid Richard Feinberg, PhD Purdue University Service Concepts Annual Meeting June 17, 2010

Consumer Engagement is going to be the new metric for utility success 1

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Look for folder called Service Concepts Look for folder called Service Concepts

Let’s review our beliefs…  How informed are our customers of energy policy?  How informed are customers of “the smart grid”?  How proactive are customers in managing electric use today?  Where do customers turn to today for energy management advice?  Where would they like to turn to?  Where do customers “trust” ___, and where do they ____?  What can ___ do to engage customers as partners in demand management and environmental stewardship?  How informed are our customers of energy policy?  How informed are customers of “the smart grid”?  How proactive are customers in managing electric use today?  Where do customers turn to today for energy management advice?  Where would they like to turn to?  Where do customers “trust” ___, and where do they ____?  What can ___ do to engage customers as partners in demand management and environmental stewardship? 4

Key Observations

It is good business to play a larger role in the social issues important to your customers 6

Key Observations  Increased bills poor economy color everything  Overestimate outages  You are not green  Do not understand their role in increasing demand  Believe they are doing the right things  Absolutely positively do not trust you  Increased bills poor economy color everything  Overestimate outages  You are not green  Do not understand their role in increasing demand  Believe they are doing the right things  Absolutely positively do not trust you

Key Observations  The consumer gets it  Day 1 roll out meets needs/wants  Will hear about it  Green is the new black  Smart Grid is the 5 th fuel  Public Policy and Consumer Demand for cost reductions will drive the SG  The consumer gets it  Day 1 roll out meets needs/wants  Will hear about it  Green is the new black  Smart Grid is the 5 th fuel  Public Policy and Consumer Demand for cost reductions will drive the SG

Key Observations  You must speak their language  You cannot overpromise  Website and call center must be ready  Near and long term strategy needed  You must speak their language  You cannot overpromise  Website and call center must be ready  Near and long term strategy needed 9

What do consumers want  Save money  Help the environment  Personal environmental stewardship  Wants to know how to do it  Consumers want control  Programs and devices have to be simple  Save money  Help the environment  Personal environmental stewardship  Wants to know how to do it  Consumers want control  Programs and devices have to be simple 10

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Day One Provides for wants and needs  Want help saving money… more than suggestions, want help… tools… personal solutions  Want to demystify why bills (usage) fluctuate… want help understanding things  Want to eliminate estimated bills  Want to be able to see how much energy using mid-month (also, bill forecasts…)  Want more accurate/timely information pushed to them during outage events  Want programs that offset cost of energy-efficiency—rebates, buy- downs, promotions  Want to be educated on ways to “be more environmentally friendly”  Want pricing plans that guarantee savings in exchange for behavior change  Want to see evidence that their actions result in positive change (usage, bill, envt., standing amongst their peers)  Want help saving money… more than suggestions, want help… tools… personal solutions  Want to demystify why bills (usage) fluctuate… want help understanding things  Want to eliminate estimated bills  Want to be able to see how much energy using mid-month (also, bill forecasts…)  Want more accurate/timely information pushed to them during outage events  Want programs that offset cost of energy-efficiency—rebates, buy- downs, promotions  Want to be educated on ways to “be more environmentally friendly”  Want pricing plans that guarantee savings in exchange for behavior change  Want to see evidence that their actions result in positive change (usage, bill, envt., standing amongst their peers) 12

Early Studies  Smart Meter alone does not make consumer smart  Save 10% on bills  Hard to shift to off-peak  Increases CS and net promotion  Feel good that they are being responsible  Tell 8+ average  Smart Meter alone does not make consumer smart  Save 10% on bills  Hard to shift to off-peak  Increases CS and net promotion  Feel good that they are being responsible  Tell 8+ average

Key, Cross-Cutting Observations  Green = dollars + carbon. Personal environmental stewardship is a key motivator for a cross-section of customer types… but never divorced from cost  Information. Customers want to know What to do to save money/energy, and How to do it (tools, not just suggestions)  New Media. Customers in all demos are open to opting- in to digital communication channels to receive / exchange information  Under-promise/over-deliver. Especially as relates to new pricing plans…  CSRs. Customers will rely heavily on customer service representatives for information… “Smart Advisory Help Desk”  Green = dollars + carbon. Personal environmental stewardship is a key motivator for a cross-section of customer types… but never divorced from cost  Information. Customers want to know What to do to save money/energy, and How to do it (tools, not just suggestions)  New Media. Customers in all demos are open to opting- in to digital communication channels to receive / exchange information  Under-promise/over-deliver. Especially as relates to new pricing plans…  CSRs. Customers will rely heavily on customer service representatives for information… “Smart Advisory Help Desk” 14

Key Messaging Items  We care… thank you for being our customer  We wouldn’t ask you to act unless we ourselves were doing it too… and we are  Energy costs are rising globally… we’re doing something to help you  We are working to contain energy costs  We are being innovative  We are part of a national smart grid movement  You are part of a community effort; “join the crowd, be a champion…”  We are getting proactive  We care… thank you for being our customer  We wouldn’t ask you to act unless we ourselves were doing it too… and we are  Energy costs are rising globally… we’re doing something to help you  We are working to contain energy costs  We are being innovative  We are part of a national smart grid movement  You are part of a community effort; “join the crowd, be a champion…”  We are getting proactive 15

How can you engage consumers 1. Using the principles of social influence that have stood the test of time 2. Designing the attributes of the service/product that compels consumers 3. Popular Books 4. Behavioral S-R Theory 1. Using the principles of social influence that have stood the test of time 2. Designing the attributes of the service/product that compels consumers 3. Popular Books 4. Behavioral S-R Theory 16

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Principles of social influence  Liking  Reciprocity  Social validation- normative influence  Authority  Liking  Reciprocity  Social validation- normative influence  Authority 18

SG design issues  Relative advantage  Compatibility with values  Perceived risk- financial, social, psychological, physical  Trialability  Complexity  Observability  Relative advantage  Compatibility with values  Perceived risk- financial, social, psychological, physical  Trialability  Complexity  Observability 19

Popular Books 20

Behavioral S-R Theory- Stimulus response  Nothing is important but the behavior  Behavior followed by reward is likely to be repeated  Behavior followed by punishment is likely to be diminished  Nothing is important but the behavior  Behavior followed by reward is likely to be repeated  Behavior followed by punishment is likely to be diminished 21

Should you Smart Grid ?  Inevitable  You can let the Big Dogs do it first  It will lead you places that you cannot completely understand  Consumers will engage …  The time to start creating the trust needed is now..not 10 years from now  Inevitable  You can let the Big Dogs do it first  It will lead you places that you cannot completely understand  Consumers will engage …  The time to start creating the trust needed is now..not 10 years from now 22

Richard Feinberg Folder called – Service Concepts Richard Feinberg Folder called – Service Concepts 23