1. 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

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

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4. Look for folder called Service Concepts Look for folder called Service Concepts www.cfs.purdue.edu/richardfeinberg

5. 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

6. Key Observations

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

8. 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

9. 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

10. 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

11. 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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13. 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

14. 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

15. 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

16. 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

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

20. 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

21. Popular Books 20

22. 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

23. 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

24. Richard Feinberg xdj1@purdue.edu 765-494-8301 www.cfs.purdue.edu/richardfeinberg Folder called – Service Concepts Richard Feinberg xdj1@purdue.edu 765-494-8301 www.cfs.purdue.edu/richardfeinberg Folder called – Service Concepts 23