total energy and sustainability management WHITE PAPER Utility Commercial Customer Engagement: The Five Analytics-Enabled Strategies that Matter Most
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1 total energy and sustainability management WHITE PAPER Utility Commercial Customer Engagement: The Five Analytics-Enabled Strategies that Matter Most
2 TABLE OF CONTENTS INTRODUCTION 3 Strategy #1: Target Customers, by both Need and Want 4 Strategy #2: Align Channel Outreach with R.O.E. 4 Strategy #3: Personalize the Message to the Audience 4 Strategy #4: Pave the Path to Conversion 5 Strategy #5: If At First You Do Succeed Try, Try Again 5 SUMMARY 6 PAGE 2 ECOVA 2016
3 INTRODUCTION Historically, the utility-commercial customer relationship has been relatively simple the utility supplies reliable power at a reasonable rate, usage is determined monthly and a bill is sent, and the customer pays that bill. Today, however, customers have more choice in how they procure and generate energy, utilities face an increase in efficiency savings targets, and there are opportunities for utilities to establish new revenue streams. Utilities, therefore, must establish deeper relationships with their commercial customers to successfully navigate this changing landscape. A dynamic customer relationship provides utilities with the opportunity for value-added conversations and interactions outside of the narrow bill payment transaction, opening the door for utilities to more easily combat competitive threats, deliver energy savings programs, and expand their offerings. Traditional marketing efforts and customer interaction models, which tend to rely on impersonal messages delivered to the mass market, are not sufficient if utilities are going to significantly improve their position in the eyes of the customer. These approaches simply do not capture the attention of business customers, who may spend little time thinking about their energy consumption, and even less time thinking about the entity that provides that energy. Fortunately, utilities are in a prime position to take marketing and engagement to the next level perhaps more so than any other type of company. While enterprise peers in industries such as retail, healthcare and financial services have fully embraced data-driven marketing, they are often subject to customer blind spots significant gaps in the data available to them that makes it difficult to see how customers are actually behaving. Utilities, through the interval meter data they are already collecting, have high-frequency, near-continuous visibility into how their customers are using the product they are selling to them. To harness this information, a new class of energy analytics solutions has emerged to translate that raw data into actionable, building-specific insights, prior to engaging that customer. An analytics-based approach can enable utilities to transform their customer relationships, resulting in meeting and exceeding energy efficiency savings and customer satisfaction targets. But achieving impactful results requires great execution. And you cannot get to the right endpoint if you do not know where to begin. This paper outlines five best practices that utilities should implement to fully maximize their analytics efforts with respect to engaging commercial customers around energy efficiency. PAGE 3 ECOVA 2016
4 #1 TARGET CUSTOMERS, BY BOTH NEED AND WANT Commercial customers have complex and diverse energy efficiency needs. As a result, it takes time and money to educate customers and scope potential energy efficiency projects in their buildings. That has traditionally made the process of driving adoption across an entire utility portfolio very slow and expensive. Upfront targeting and segmentation, therefore, is critical. Effective targeting begins by answering two questions: how much energy can each customer cost-effectively save, and what is their likelihood to participate in a utility-sponsored efficiency program. Sizing the savings potential determines the level of energy efficiency products/services a given customer needs, while propensity-to-act scoring tells us how much energy efficiency a given customer may want (or, can be persuaded to want). Advanced analytics can provide an accurate sizing of the opportunity for each and every customer. For example, if a customer consumes 1,000,000 kwh of energy annually, has a 20% energy savings opportunity, and you believe you have a 15% chance of converting that customer into an efficiency program, the expected savings from that customer is 30,000 kwh. Segmenting customers helps make sense of tens or hundreds of thousands of individual customers by putting them into a more manageable number of groups. Analytics-based segmentation takes this a step further by assigning a true value for each customer and this serves as the foundation for all efforts thereafter. #2 ALIGN CHANNEL OUTREACH WITH R.O.E. While analytics-based targeting determines an accurate value for each customer, that s only one side of the equation. The other side is the cost to acquire that value, which is largely driven by the marketing strategies employed to capture a customer. The cost to capture a customer varies based on the channel leveraged (web, print, , phone, in-person, etc.) and the frequency of the engagement (e.g., just how many mailers do you send to a customer?). A strong analytics-based program will stratify customer outreach tactics based on expected return on engagement. The highest potential customers may receive the high-touch phone calls, and potentially in-person meetings, to ensure that customer receives and understands the opportunity. More moderate potential customers should receive communications via lower cost channels, such as print or . Still yet, lower potential customers can be handled on an inbound basis. (Or, for a great customer satisfaction booster, you can also proactively let these customers know how well they are doing in their energy management efforts.) Back to the example of a customer with an expected value of 30,000 kwh. Utilities must know how much they are willing to spend to acquire that 30,000 kwh. Typically, this is a function of each program s target cost per kwh saved. From there, calculations can be done using assumptions of conversion rates by channel and their associated costs. In the end, you can align engagement costs with expected return on engagement, or R.O.E., as we prefer to call it. #3 PERSONALIZE THE MESSAGE TO YOUR AUDIENCE One of the major benefits of analytics is that it allows utilities to truly personalize an engagement message to customers. This personalization not only ensures that the information being provided is as relevant as possible, but it also establishes credibility and trust. In fact, putting the right wrapper around the analytics can be as important as the insights themselves. A utility commercial customer base is incredibly diverse in terms of its level of sophistication, resources and motivators. Large commercial customers are increasingly sophisticated about their energy usage, with a strong understanding of their systems and why they are being operated the way that they are. Mid-market customers may vary by segment even though their overall consumption is similar. For example, a school district may have a centralized energy manager overseeing several buildings, whereas a local grocery store chain may not have anyone thinking about energy efficiency, even on a part-time basis. And the smallest of customers are often the least knowledgeable, even though saving on their energy bills may have a big impact on their bottom line. What this means is all marketing content or messages must be filtered for the intended audience. For example, large commercial customers can typically handle (and will appreciate) a more technical message than a small customer, whose business realities may dictate easier-to-understand, bite-sized pieces of information. This carries through not just for printed information, but also for verbal communication to a customer. Account managers and extended delivery team members who may interface with customers (e.g., program administrators and contractors) must be trained to deliver the right message to different types of customers. PAGE 4 ECOVA 2016
5 #4 PAVE THE PATH TO CONVERSION While analytics developed remotely can make many potential, building-specific energy saving recommendations, it is important that utilities provide the right post-engagement tools and direction to customers to ensure savings are achieved. There can be several solutions to the same energy optimization problem, which provides flexibility in terms of which path a customer is guided down. Take the problem of suboptimal building schedules the right solution may be tweaking a current energy management system or installing a new system entirely. Analytics-based insights should be supported with a process to convert these issues into projects. Much like how the message wrapper can vary by customer segment, so too can the post-engagement conversion process. Factors such as the level of sophistication, the measure(s) to be investigated and the relationship the utility has with the local value chain may influence what the best next step might be in a given situation. Utilities should have a plan in place for each situation, such as what are the right questions to ask or information to gather and how to escalate buy-in on specific projects from customers. Once that is accomplished, the utility value chain (e.g., contractors, trade allies and product companies) must have the right context and data for these opportunities so they are aligned to execute on the measures the customer is committed to. Analytics can help this process by offering all parties a consistent view of the relevant energy efficiency opportunities. #5 IF AT FIRST YOU DO SUCCEED TRY, TRY AGAIN While analytics can often help utilities achieve results very quickly, a successful engagement strategy that incorporates a long-term plan and approach will maximize desired outcomes, such as driving energy savings or improving customer satisfaction. As with marketing most products and services, many business customers take action right away, but others will require multiple touchpoints or impressions before showing interest. Sustained engagement also allows utilities to vary their messages and offers to customers based on overall commercial program strategies and goals at that time. The timing of when a commercial customer invests in energy efficiency is often driven by factors beyond just the energy savings opportunity or payback period. There are key decision points or events such as budget cycles, equipment end-oflife replacement, building renovations, or changes in building management that may be the tipping point for participation. Relevant engagement touchpoints will keep energy efficiency and the utility top-of-mind for customers when these events happen, whenever they may be. And reaching customers when they are ready to move forward can be the difference between converting them versus not. Finally, longer-term engagement opens the possibility for providing customers new types of insights over time. How is their energy usage changing? How much did they save from an energy efficiency action? A utility that can provide answers to these questions is well-positioned to be a trusted advisor for energy solutions for commercial customers. PAGE 5 ECOVA 2016
6 SUMMARY Utilities, now more than ever, must aggressively work to transform their commercial customer relationships. Fortunately, they are in a prime position to do so. With advanced energy analytics that can rapidly mine interval meter data, utilities can provide insights to customers at scale like no other actor in the market. But to achieve desired outcomes, best-in-class technology must be supported by the right strategy. This paper outlined five tactics that Ecova s experience has shown are important for a successful analytics-enabled engagement strategy. They are: #1 Target Customers, by both Need and Want Utilities should look to target customers based on their energy improvement opportunities (their need) and their likelihood to participate in a program or offer (what they want). #2 Align Channel Outreach with R.O.E. (Return on Engagement) High potential customers warrant high touch engagement, whereas lower potential customers can receive lower cost marketing. #3 Personalize the Message to your Audience Analytics-enabled insights must be delivered with the appropriate message in order to resonate with each individual customer. #4 Pave the Path to Conversion Utilities, along with their program delivery partners, should have a plan and the right tools in place to help customers move from initial recommendations to fully implemented energy efficiency measures. #5 If At First You Do Succeed Try, Try Again Utilities will see good initial returns with the right commercial analytics solution, but those that deliver a continuous strategy will see even deeper success by reaching more customers, driving new products and services, and refining their approaches over time. Questions, comments, or wondering whether analytics-based engagement can help your commercial customer initiatives? Reach out to us to start (or continue) the conversation by ing info@ecova.com CONTACT US Find out how we can put these solutions to work for you facebook.com/ecovainc ecova.com/insider linkd.in/ecovainc youtube.com/ecovainc ecova.com
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