Consumer Pulse and Market Segmentation Study Wave 5

Transcription

1 Consumer Pulse and Market Segmentation Study Wave 5 Consumer Pulse and Market Segmentation Study Wave 5

2 Table of Contents Executive Summary... 4 Residential Consumer Segments... 6 Consumer Knowledge of, and Favorability Toward, Smart Grid and Smart Meter...13 Consumers Relationship with the Environment...19 Consumers Relationship with Their Electric Utility...23 Consumer Participation and Interest in Electric Utility Energy Programs...31 Participation and Interest in Electric Utility Energy Products & Services...35 Implications...37 Appendices...39 Smart Grid Consumer Collaborative (SGCC) The SGCC is a consumer-focused nonprofit organization aiming to promote the understanding and benefits of modernized electric al systems among all stakeholders in the United States. Membership is open to all consumer and environmental advocates, technology vendors, research scientists and electric utilities for sharing in research, best practices and collaborative efforts of the group. Learn more at smartgridcc.org. Market Strategies International This research was conducted by Market Strategies, a market research consultancy with deep expertise in the energy, technology, communications, financial services, and healthcare industries. Learn more at marketstrategies.com. Consumer Pulse and Market Segmentation Study Wave 5

3 Background and Objectives SGCC has undertaken this Consumer Pulse research and analysis to help its members and other stakeholders understand consumer awareness, favorability, expectations, and preferences as they relate to Smart Grid and Smart Grid-enabled programs and technologies. The analysis in this report is primarily based on the most recent wave of Consumer Pulse research, using data collected in October It also illustrates trends, where possible, by making comparisons to the initial wave of the Consumer Pulse research (2011). Consumer Pulse The Consumer Pulse study is a national telephone survey sponsored by Smart Grid Consumer Collaborative. Five waves have been completed, most recently during October Each wave, 1,000 adult (18+) heads of household are interviewed via phone. Data are weighted by age, ethnicity, gender and region to align with national population parameters. The margin of error for the total sample size of 1,000 is +/-3.1 percentage points at a confidence level of 95%. Statistically significant differences are noted in the report. Statistical significance is a mathematical tool that is used to determine whether the outcome seen is the result of a relationship between specific factors or merely the result of chance. For this study, the confidence level is set at 5 percent and when the results are determined to be statistically significant, it means that we are 95 percent confident that the result did not happen by chance. Updating the SGCC Segmentation Framework SGCC first developed a Smart Grid-focused consumer segmentation framework based on the initial, 2011 wave of Consumer Pulse research. In this report the segmentation framework is renewed and updated based on the latest data to reflect today s marketplace for smart energy technology. Consumer Pulse and Market Segmentation Study Wave 5

4 Executive Summary The Consumer Pulse Research Program The Consumer Pulse research program helps SGCC members and other stakeholders understand consumer awareness, favorability, expectations, and preferences as they relate to Smart Grid and Smart Grid-enabled programs and technologies. Five waves of Consumer Pulse research have been completed by SGCC, beginning in 2011 and most recently during October Each wave, 1,000 adult (18+) heads of household are interviewed via telephone. Data are weighted by age, ethnicity, gender and region to align with national population parameters. The margin of error for the total sample size of 1,000 is +/-3.1 percentage points at a confidence level of 95%. Executive Summary of Key Research Implications The most recent wave of Consumer Pulse research was completed in October Analysis of the results, presented in this report, lead to several important strategic implications: Specific programs and benefits are what appeal to consumers, much more than the technologies behind them, and should increasingly be the focus stakeholder strategies and of future Consumer Pulse studies. The benefits of Smart Grid have broad consumer appeal and should be leveraged to build trust. There is an opportunity for more effective communication of the fact that new grid and meter technologies are being implemented in order to serve the interests of customers. Interest in innovative pricing programs is quite high, although it varies depending on program design and consumer segment. However, to some extent, this interest is influenced by consumers assumptions that may overestimate the potential for savings. There is a need to educate consumers and set appropriate expectations. The updated SGCC Consumer Segmentation has great potential to guide the design and marketing of Smart Grid programs and services for consumers. Provisions have been made to give SGCC member companies access to this valuable tool at low cost. Major Findings: Consumer Pulse Wave 5 Measures of Smart Grid/Smart Meter knowledge and favorability mostly remain stable throughout the period. However, there is evidence of a small but statistically significant increase in unfavorability toward both Smart Grid and Smart Meters. The research provides clear evidence that consumers are embracing, and interested in further embracing, technologies that are enabled by the Smart Grid. The vast majority of consumers say that they care about the environment and about saving energy, and that they want to manage energy better. Consumers give their electric utilities mixed reviews. Four out of five (8), say they are satisfied with their utility (ratings of 6 10 on a 0 10 overall satisfaction scale). On key measures relating to Smart Grid technology, the majority see no change, although more consumers say that their utility is performing better than it did five years ago than that it is performing worse. On measures relating to trust, they are less supportive of their electric utility. For example, only 58% agree that their utility acts in consumers best interest. Consumer Pulse and Market Segmentation Study Wave 5 pa g e 4

5 Interest in electric utility energy programs varies by consumer segment and by program design. Few customers currently participate in the four pricing strategies that were tested, and interest in participating varies greatly from Critical Peak Rebates (60% say they would participate) down to Critical Peak Pricing. Time of Use and Demand Response pricing plans are in the middle in terms of consumer interest. Customers expectations about how much they should be able to save by participating in such pricing programs are high: along the lines of 25% 30%, on average. Consumer participation in electric utility energy products and services is currently low, but interest levels suggest growth opportunities. By far, the highest participation rate is for Online Bill Pay at. Interest, among those not participating, is highest for Incentives & Rebates (80%), although at least 4 of all consumers express interest in all programs and services tested. Consumer Pulse 2015 Residential Consumer Segments The Consumer Pulse Wave 5 data have been analyzed to identify five consumer segments that exhibit distinctive patterns of awareness, favorability, expectations and preferences relating to Smart Grid and Smart Grid-enabled programs and technologies. The five segments vary in size from 15% to 30% of the U.S. adult consumers. They are: SEGMENT Green Champions PERCENT OF CONSUMERS 30% POINT OF VIEW ON SMART ENERGY Smart energy technologies fit our environmentally aware, high-tech lifestyles. Savings Seekers How can smart energy programs help us save money? Status Quo We re okay; you can leave us alone. Technology Cautious 1 We want to use energy wisely, but we don t see how technologies can help. Movers and Shakers 15% Impress us with smart energy technology and maybe we will start to like the utility more. Paths to Practical Application of the SGCC Segmentation Because this segmentation framework is designed to be adopted at low cost by any SGCC member organization, it offers an effective tool to improve smart energy communications, program planning, and consumer acceptance nation-wide. In 2014, SGCC s Segmentation Successes study showed that leading SGCC member utilities are increasingly sophisticated in their ability to apply consumer segmentation to their customers. By leveraging these updated SGCC segments, additional Smart Grid stakeholders can develop more effective programs, services, products and messaging that appeal to the specific characteristics of these groups. Consumer Pulse and Market Segmentation Study Wave 5 pa g e 5

6 Consumer Pulse 2015: Residential Consumer Segments Advanced statistical analysis of the Consumer Pulse Wave 5 data identifies five consumer segments that exhibit distinctive patterns of awareness, favorability, expectations, and preferences relating to Smart Grid and Smart Grid-enabled programs/technologies. Because the segments have been defined through in-depth, holistic research, they are also distinct in terms of demographic patterns, lifestyles, shopping behavior, general technology adoption, media preferences, and so on. These segment differences have actionable implications that are important in program planning, marketing and public relations, regulatory relations, etc. The five Smart Grid segments are shown in the pie chart below, with brief summaries describing their key characteristics and explaining what makes each segment distinctive and important. Throughout the report, findings are analyzed by segment to provide a detailed understanding of each group s perceptions and preferences. Segment Breakdown Consumer Pulse Wave 5 Technology Cautious 1 Movers and Shakers 15% Green Champions 30% Status Quo Savings Seekers Consumer Pulse and Market Segmentation Study Wave 5 pa g e 6

7 Green Champions Smart energy technologies fit our environmentally aware, high-tech lifestyles. Green Champions demonstrate strong interest in new utility services and smart energy programs and are early technology adopters and the most environmentally-conscious consumers. However, satisfaction with their utility is only average, and they may not consider their utility the best provider of innovative products and services to meet their needs. The youngest segment, with half under the age of 35, they are the second highest income group. Key Demographics Youngest, and higher than average income, despite youth More likely than most to live in an apartment, but their bill is still relatively high College educated, working, and living in suburban areas Distinctive Attitudes and Behaviors Early adopters of technology Average level of utility satisfaction, and want a choice of providers Attach high importance to Smart Grid benefits, especially greenhouse gas reduction Highest interest in pricing options Highest interest in new utility services Consumer Pulse and Market Segmentation Study Wave 5 pa g e 7

8 Savings Seekers How can smart energy programs help us save money? This segment s utility satisfaction is low, and they are open to pricing programs that can save them money. As the lowest-income segment, many are looking for information on how to save. Awareness and favorability toward Smart Grid and Smart Meters are low, but they do see the benefits of the Smart Grid as important and, despite having income constraints, are willing to pay for Smart Grid benefits. Key Demographics Many younger than 35; few older than 65 Lowest income; highest percentage of low-income households (4) Three quarters live in single family homes Average electric bill Distinctive Attitudes and Behaviors Low satisfaction with current provider, and want a choice Low awareness of, and favorability toward, Smart Grid/Meters High interest in pricing options Average level of interest in new utility services Consumer Pulse and Market Segmentation Study Wave 5 pa g e 8

9 Status Quo We re okay; you can leave us alone. This segment has lower interest in smart energy programs than any of the other segments. These consumers are relatively older and are characterized by low energy consumption and high satisfaction with their utility. Comfort and ease are more important to this segment than conservation. Key Demographics Relatively older age, many retirees Smaller households Middle income Lower than average electric bill Most concentrated in the Middle Atlantic and West North Central regions Distinctive Attitudes and Behaviors Low Smart Grid/Meter awareness and favorability Know little about energy efficiency, and don t think it s important Very satisfied with and favorable toward current provider Don t feel they need a choice of providers and, if forced to choose, would prefer to purchase from current provider Do not attach high importance to Smart Grid benefits, particularly with regard to electric utility products and services or 3rd party products and services Consumer Pulse and Market Segmentation Study Wave 5 pa g e 9

10 Technology Cautious We want to use energy wisely, but we don t see how technologies can help. Similar to Status Quo demographically, this group is more knowledgeable about Smart Grid programs, but has little interest in participating in them. They claim knowledge of how to save energy and indicate concern about the environment, but are more focused on comfort and ease of use. Key Demographics Relatively older age, retired, few people in household Second lowest segment in average income Lower than average electric bill Distinctive Attitudes and Behaviors Relatively high Smart Grid/Meter awareness and favorability Knowledgeable about energy efficiency Very satisfied with and favorable toward current utility and more likely to agree their electric utility has improved versus five years ago If forced to choose, would prefer to purchase from current provider Do not attach high importance to Smart Grid benefits, particularly with regard to electric utility products and services or 3rd party products and services Consumer Pulse and Market Segmentation Study Wave 5 pa g e 10

11 Movers and Shakers Impress us with smart energy technology and maybe we will start to like the utility more. Smart Grid awareness and favorability are high among Movers and Shakers, but utility satisfaction is low. The segment includes early technology adopters and has high interest in new energy technologies but, so far, only moderate interest in smart energy programs and new utility services. The highest income segment with the highest average electric bills, they attach about average importance to energy efficiency, yet claim a high level of knowledge about how to achieve an energy efficient home. Key Characteristics Working, college educated Highest average bill Highest income Higher concentration on Pacific Coast, more likely suburban than most Distinctive Attitudes and Behaviors Attach above average importance to home energy efficiency High level of energy efficiency knowledge Low satisfaction and want a choice of providers Least likely to believe their utility does what they say or works in the best interest of the consumer Prefer comfort, time, and ease over savings Average level of interest in pricing options High interest in new energy technologies Consumer Pulse and Market Segmentation Study Wave 5 pa g e 11

12 Identifying Smart Grid Stakeholder Opportunities The SGCC segmentation framework is ready to be adopted at low cost by any member organization, it offers a valuable tool to improve Smart Grid/Meter communications, program planning, and consumer acceptance nation-wide. There are two ways that SGCC members can leverage the segmentation at low cost: Append commercially available third-party data (10 12 variables) to a customer database in order to categorize all customers by segment (more than 55% accurate see Appendix 2) Embed 10 questions (along with region code) from this segmentation into other research instruments in order to categorize respondents by segment (more than 7 accurate see Appendix 2) Using the SGCC segments, stakeholders can identify and capture opportunities to design programs, services and communication strategies targeting the specific needs and preferences of each segment, thereby increasing cost-effectiveness of the likelihood of success. Some examples of segment-specific opportunities are: SEGMENT Green Champions Movers and Shakers Savings Seekers Status Quo Technology Cautious OPPORTUNITIES Tendency toward environmentalism as well as early technology adoption, coupled with relatively high income, makes them attractive prospects for smart energy technology and programs. Third party innovations and progressive utility offerings will appeal to this group. This segment is the most affluent, likes technology, and has some interest in efficiency. Nevertheless, comfort, convenience and ease of use come first. Offerings that use technology to minimize effort, avoid inconvenience, and maximize comfort will make inroads with this group and may also lead to improvements in overall satisfaction. This segment has serious budget concerns and high interest in saving money. New pricing programs that can help reduce their bills are appealing, along with such programs as energy audits, and energy assistance. Low electric bills, high utility satisfaction and low interest in new technologies, products, and services make it difficult to engage this segment. To encourage change, products and services should emphasize ease of use and minimize disruption of long-term habits. Nevertheless, this segment is unlikely to be enthusiastic about adopting smart energy lifestyles. With comfort more important than conservation and resistance to technology, this segment presents challenges. As with the Status Quo segment, products and services should emphasize ease of use and minimize the need for lifestyle changes. Consistent messaging emphasizing comfort and convenience may make inroads with this segment over time and, as this is the second-lowest income segment, some will be motivated by savings. Consumer Pulse Consumer and Market Pulse and Segmentation Market Segmentation Study Wave Study 5 Wave 5 pa g e 12

13 Note: Throughout this report, Consumer Pulse Wave 5 results are compared to Wave 1, where possible, to show trends. The Wave 5 survey was completed in October 2014; Wave 1 was completed in September Consumer Knowledge of, and Favorability toward, Smart Grid and Smart Meter Consumer knowledge of the terms Smart Grid and Smart Meter remains unchanged since Although penetration of households with Smart Meters has continued to grow since the first wave of Consumer Pulse research in 2011, there has been no change in consumer knowledge over that time. Yet throughout the report we see consumers are embracing, and interested in further embracing, technologies that are provided by Smart Grid technology. After three years and five waves of tracking, the key question may no longer be how much has knowledge and favorability of the terms Smart Grid and Smart Meter improved. Instead, the objective should be to measure the adoption of, and interest in, products and services that are delivered through Smart Grid technology. I have a fairly complete understanding of what it is, how it would work, and how it would affect homes and businesses Current Level of Knowledge of Smart Grid Smart Meter n= Wave 5 1,004 Wave 1 1,234 I have a basic understanding of what it is and how it would work I ve heard the term, but don t know much about what it means % 2 2 I have not heard that term %!! indicate a significant increase or decrease between current and previous waves A1. Which of the following statements comes closest to describing your current level of knowledge about smart grid? A2. Which of the following statements comes closest to describing your current level of knowledge about smart meter? Consumer Pulse and Market Segmentation Study Wave 5 pa g e 13

14 Just one in four consumers stated a basic knowledge or more of the term Smart Grid, statistically unchanged from Movers & Shakers reported the highest knowledge with 4 indicating some basic understanding whereas 7 of Status Quo indicated having never heard the term. Level of knowledge Smart Grid Technology Savings Movers and Green Total Status Quo (A) Cautious (B) Seekers (C) Shakers (D) Champions (E) n= Fairly complete understanding AC 15% ACE A Basic understanding 25% AC 14% A 2 AC 2 A Heard the term, but don t know much 2 14% % A Have not heard the term 5 7 BCDE 3 64% BDE 3 4 Base: Among those who have heard of smart grid A1. Which of the following statements comes closest to describing your current level of knowledge about smart grid? Similar results are seen for Smart Meter knowledge, albeit with slightly higher awareness. Again, it is Movers & Shakers (54% basic knowledge or higher) who lead and Status Quo (9 never heard the term) who trail on this metric. Level of knowledge Smart Meter Technology Savings Movers and Green Total Status Quo (A) Cautious (B) Seekers (C) Shakers (D) Champions (E) n= Fairly complete understanding 0% ACE ACE 1 AC Basic understanding 3 AC 1 A 34% ACE 2 AC Heard the term, but don t know much 2 30% AC 1 A 24% AC 3 AC Have not heard the term 4 9 BCDE 7 BDE 2 B 34% BD Base: Among those who have heard of smart grid A2. Which of the following statements comes closest to describing your current level of knowledge about smart meter? Consumer Pulse and Market Segmentation Study Wave 5 pa g e 14

15 Favorability toward Smart Grid and Smart Meter, among those with some knowledge, mostly remains unchanged, with about half of consumers indicating they are favorable for both. Those not favorable (0-4 on the 0-10 point scale) did increase statistically from 1 to for Smart Grid and 15% to 24% for Smart Meter between 2011 and These increased unfavorable perceptions are cause for concern. As smart technologies have rolled out in more and more locations, negative viewpoints appear to be gaining traction to some extent. Overall Favorability Smart Grid Smart Meter Total Favorability (%6 10) % 54% Very Favorable (%9 10) Somewhat Favorable (%6 8) % 3 Neutral (%5) Unfavorable (%0 4) 25% 25% 2 2! n= 24%! Wave Wave % n= Wave Wave 1 628!! indicate a significant increase or decrease between current and previous waves A4. Considering what you know about the smart grid, would you describe your general feelings about the smart grid as favorable or unfavorable? Base: Among those who have heard of smart grid A5. Considering what you know about smart meters, would you describe your general feelings about smart meters as favorable or unfavorable? Base: Among those who have heard of smart meter/smart grid Green Champions are the segment most likely to have favorable feelings about Smart Grid, while Status Quo and Savings Seekers are the most likely to express unfavorable views. Overall Favorability Smart Grid Technology Savings Movers and Green Total Status Quo (A) Cautious (B) Seekers (C) Shakers (D) Champions (E) n= Total Favorability (%6 10) 4 34% 44% A Very Favorable (%9 10) Somewhat Favorable (%6 8) 3 24% 28% % Neutral (%5) 25% 2 30% 2 3 E Unfavorable (%0 4) 25% Base: Among those who have heard of smart grid A4. Considering what you know about the smart grid, would you describe your general feelings about the smart grid as favorable or unfavorable? Consumer Pulse and Market Segmentation Study Wave 5 pa g e 15

16 Green Champions and Movers and Shakers are the segments most likely to have favorable feelings about Smart Meters. Technology Cautious consumers are the most likely to express unfavorable views, although at least one in five consumers in every segment expresses negative feelings. Overall Favorability Smart Meter Technology Savings Movers and Green Total Status Quo (A) Cautious (B) Seekers (C) Shakers (D) Champions (E) n=519 16* Total Favorability (%6 10) 50% 3 45% Very Favorable (%9 10) 1 8% 14% 1 Somewhat Favorable (%6 8) 34% % Neutral (%5) % Unfavorable (%0 4) 24% 28% 24% 2 2 Base: Among those who have heard of smart meter, *view with caution, small base size A5. Considering what you know about the smart meter, would you describe your general feelings about the smart grid as favorable or unfavorable? Consumers agree that the benefits of Smart Grid technology are of high importance. Most consumers rated preventing and reducing the length of outages (8), ability to connect to renewable energy sources (8), and near real time energy information (8) as being important benefits of Smart Grid. Green Champions and Savings Seekers find these benefits very important, and are most likely to pay, and pay now, for these benefits. As often seen in this report, the Status Quo segment is significantly less likely than other segments to find these measures of reliability, environment, and economics important. However, it s worth noting that even this segment finds these benefits of the Smart Grid important. RELIABILITY A smart grid senses problems and reroutes power automatically. This prevents some outages and reduces the length of those that do occur. ECONOMIC Smart grid help consumers save money by providing near real time energy usage information and the ability to manage electricity use. ENVIRONMENTAL Smart grid reduces greenhouse gas emissions by making it easier to connect renewable energy sources to the electricity grid. TOTAL IMPORTANCE Important, but at no additional cost Important, willing to pay more, but unable at this time Important, and will pay more * Sum of the three importance responses from B1, B4, B5 Consumer Pulse and Market Segmentation Study Wave 5 pa g e 16

17 The only segment in which less than 8 agree that improved reliability is an important Smart Grid benefit is Status Quo (7). About one-fourth of Green Champions (24%) and one-fifth of Savings Seekers (2) say that they are willing to pay more now for this benefit. Technology Savings Movers and Green Total Status Quo (A) Cautious (B) Seekers (C) Shakers (D) Champions (E) n= A smart grid senses problems and reroutes power automatically. This prevents some outages and reduces the length of those that do occur. Total Important BCDE Important, will pay now 1 2 AB 1 24% AB Important, will pay later 1 14% 24% 1 Important, but at no cost 48% 44% 60% ACE 44% 54% 45% Not Important 1 2 BCDE 1 1 B1. Tell me how important each one is to you personally? In four out of five segments, at least than 85% agree that reducing greenhouse gas emissions is an important Smart Grid benefit; among the Status Quo segment, 74% agree. Three in ten (30%) Green Champions say this benefit is important and they are willing to pay more now to achieve it. Technology Savings Movers and Green Total Status Quo (A) Cautious (B) Seekers (C) Shakers (D) Champions (E) n= The Smart grid reduces greenhouse gas emissions by making it easier to connect renewable energy sources to the electricity grid. Total Important 8 74% 85% BCDE Important, will pay now 8% 2 AB 1 AB 30% ABD Important, will pay later % 2 2 Important, but at no cost 4 45% 55% 44% 4 44% Not Important 1 2 BCDE 14% CE 1 E B4. Tell me how important each one is to you personally? Consumer Pulse and Market Segmentation Study Wave 5 pa g e 17

18 In four out of five segments, at least than 8 agree that providing near real time energy usage information is an important Smart Grid benefit; among the Status Quo segment, 68% agree. About one-fifth of Green Champions (2) and Savings Seekers () say that they are willing to pay more now for this benefit. Technology Savings Movers and Green Total Status Quo (A) Cautious (B) Seekers (C) Shakers (D) Champions (E) n= The Smart grid help consumers save money by providing near real time energy usage information and the ability to manage electricity use. Total Important 8 68% 8 90% 90% 8 BCDE Important, will pay now 15% AB 1 2 AB Important, will pay later 2 14% 24% B 28% B Important, but at no cost ACE 4 5 AE 40% Not Important 14% 2 BCDE 14% B5. Tell me how important each one is to you personally? Consumer Pulse and Market Segmentation Study Wave 5 pa g e 18

19 Consumers Relationship with the Environment Many consumers, regardless of segment, are concerned about the environment and their personal role and impact on the environment. Consumers agree (94%) that saving energy helps the environment. And most agree that minimizing our impact on the environment based on daily actions matters (8). Further the majority (7) believe climate change is real and requires immediate action. As with most metrics in this study, the strength of these beliefs varies somewhat by segment, but the belief that saving energy helps the environment is very prevalent in all five segments. Total Status Quo (A) Technology Cautious (B) Savings Seekers (C) Movers and Shakers (D) Green Champions (E) n=1004/ W5 W1 I believe that saving energy helps the environment Total Agree 94% 95% % 9 Strongly Agree 75% 7 68% % 80% A Somewhat Agree % 1 1 Neutral Disagree 4% 5% E 5% E 4% 4%!! indicate a significant increase or decrease between current and previous waves EN5. Please tell me if you agree or disagree with the following statement? Consumer Pulse and Market Segmentation Study Wave 5 pa g e 19

20 Among the Green Champions and Technology Cautious consumers, more than nine in ten (9) say they try to minimize their environmental impact; more than eight in ten consumers in the other three segments agree. Total Status Quo (A) Technology Cautious (B) Savings Seekers (C) Movers and Shakers (D) Green Champions (E) n=1004/ W5 W1 I try to minimize my impact on the environment through my daily actions Total Agree Strongly Agree 5 50% 4 5 AC 4 64% AC 58% AC Somewhat Agree 34% 3 4 D 35% D 40% D 2 3 Neutral 1 B 4% 8% 5% Disagree 5% E E!! indicate a significant increase or decrease between current and previous waves EN3. Please tell me if you agree or disagree with the following statement? Green Champions and Savings Seekers are the segments most concerned about global warming, but in every segment, at least 65% agree that global warming is real and we need to make immediate, substantial efforts to combat it. Total Status Quo (A) Technology Cautious (B) Savings Seekers (C) Movers and Shakers (D) Green Champions (E) n=1004/ W5 W1 I believe that climate change is real and we need to make immediate, substantial efforts to combat it Total Agree 7 70% % 65% 7 ABD Strongly Agree 50% 4 44% 4 5 B 50% 55% B Somewhat Agree % 15% 24% Neutral 8% 1 CE 8% 5% 8% 5% Disagree 2 2 E 1 2 E 14%!! indicate a significant increase or decrease between current and previous waves EN4. Please tell me if you agree or disagree with the following statement? Consumer Pulse and Market Segmentation Study Wave 5 pa g e 20

21 Most consumers feel as though they are personally addressing the issue to save energy and lower costs. Almost nine out of ten consumers (88%) agree it s important that their home is energy efficient and that they have done all they can to lower their costs. However, this is significantly lower than the percentage that agreed with the statement in Compared to other segments, a larger share of Status Quo consumers are neutral or disagree (2). Total Status Quo (A) Technology Cautious (B) Savings Seekers (C) Movers and Shakers (D) Green Champions (E) n=1004/ W5 W1 Importance of home being energy efficient and you have done all you can to lower energy costs Total Important (%6 10) 88%! % 8 9 A A A 9 A Very Important (%9 10) 54%! 60% 44% 6 ACDE 5 54% 55% Somewhat Important (%6 8) 34% Neutral (%5) 4% BE 8% Not Important (%0 4) 5% 1 BCDE 4%!! indicate a significant increase or decrease between current and previous waves EU1. How important is it to know that your home is energy efficient and that you have done all you can to lower your energy costs? More than one-third (3) now agree that buying appliances that save time and effort is more important than the energy used by those appliances, up from 24% in In two segments, Status Quo and Technology Cautious, more than four in ten agree that convenience is more important. Apparently, over the past four years, convenience has become more important to consumers and energy conservation has become less important. Technology Savings Movers and Green Total Status Quo (A) Cautious (B) Seekers (C) Shakers (D) Champions (E) n=1004/ W5 W1 I like to buy appliances that save me time and effort I am less concerned about how much energy they use Total Agree 3! 24% 44% D 4 D 3 25% 3 Strongly Agree 1! % Somewhat Agree 1 15% Neutral Disagree 5! 65% % A 6 AB 5!! indicate a significant increase or decrease between current and previous waves ES1. Please tell me if you agree or disagree with the following statement? Consumer Pulse and Market Segmentation Study Wave 5 pa g e 21

22 When it comes to HVAC, comfort (5) clearly trumps conservation (3); Movers and Shakers are the least comfort-focused. The segments with high disagreement on this measure Movers and Shakers, Green Champions, and Savings Seekers would be the good marketing prospects for programs that may at times impinge on comfort to some extent, such as direct load control. Total Status Quo (A) Technology Cautious (B) Savings Seekers (C) Movers and Shakers (D) Green Champions (E) n=1004/ W5 W1 The most important thing about my home s heating and cooling equipment is how comfortable it makes my family, not how much energy used Total Agree % DE 6 D 5 D 4 54% Strongly Agree D 35% DE 2 D 15% 24% Somewhat Agree % 30% Neutral C 1 CE 8% Disagree A 3 A 38% A!! indicate a significant increase or decrease between current and previous waves AB1. Please tell me if you agree or disagree with the following statement? Consumers feel knowledgeable about the actions to take to become more energy efficient. Most consumers (74%) believe they understand the actions to take in order to make their homes more energy efficient. Status Quo is least likely to feel knowledgably (5) about what actions to take. Total Status Quo (A) Technology Cautious (B) Savings Seekers (C) Movers and Shakers (D) Green Champions (E) n=1004/ W5 W1 Level of knowledge about actions to make home more energy efficient 31 Total Knowledgeable (%6 10) 74% 75% 5 84% AC 70% A 88% ACE 7 A Very Knowledgeable (%9 10) % 38% ACE 2 A 38% ACE 1 Somewhat Knowledgeable (%6 8) 48% % A 5 A Neutral (%5) 14% 15% 2 BDE BD 8% 1 Not knowledgeable (%0 4) 1 2 BCDE 4% 1 D!! indicate a significant increase or decrease between current and previous waves KN1. How knowledgeable do you feel you are about actions you can take to make your home more energy efficient? Consumer Pulse and Market Segmentation Study Wave 5 pa g e 22

23 Consumers Relationship with Their Electric Utility Most consumers are satisfied with their electric utility. Most consumers ( on a 0-10 scale) are at least satisfied with their electric utility, and over one in three are very satisfied ( on a 0-10 scale). There is, however, a large variance in very satisfied response by segment. Technology Cautious (7) and Status Quo (60%) are by far the most likely to say they are very satisfied, while Movers & Shakers () and Savings Seekers (1) are less likely to be very satisfied with their electric utility. Total Status Quo (A) Technology Cautious (B) Savings Seekers (C) Movers and Shakers (D) Green Champions (E) n=1004/ W5 W1 Overall satisfaction with electric utility Total Satisfaction (%6 10) CD 98% CDE 6 64% 85% CD Very Satisfied (%9 10) 3 40% 60% CDE 7 ACDE 1 3 CD Somewhat Satisfied (%6 8) 45% AB 55% AB 54% AB Neutral (%5) 1 B 1 AB 1 AB 1 B Dissatisfied (%0 4) 0% 1 ABE 1 ABE!! indicate a significant increase or decrease between current and previous waves SU1. How satisfied are you with your electric utility? Consumer Pulse and Market Segmentation Study Wave 5 pa g e 23

24 Consumers are seeing the benefits of technology through their electric utility As recently as 2009, Smart Meter penetration in residential households was less than, while penetration in late 2014 stood at around 40%. Most consumers have had the same electric utility for the past five years. These consumers were asked if selected energy issues aided by technology had improved from five years ago, regardless of whether Smart Meters were the technologies that led to these improvements. Most consumers reported that all of four metrics were about the same as five years ago, (ranging from 5 to 7). However, for every measure, the percentage indicating that their electric utility was performing better was higher than those indicating the utility was performing worse. 3 Accuracy of Restoration Times 5 Using Technology to Conserve the Environment 30% 58% 2 Reliability of Electric Service 7 8% Helping to Manage Energy Use 7 8% Better Same Worse Base: Among those with the same electric provider for the past five years A7.-A10. Where consumers are most likely to believe their utility is doing better is on using technology to improve the accuracy of restoration times (3 better versus worse). Green Champions and Technology Cautious consumers are especially prone to notice improvement. Accuracy of Restoration Times in Past 5 Years Technology Savings Seekers Movers and Green Total Status Quo (A) Cautious (B) (C) Shakers (D) Champions (E) n= More accurate 3 14% 50% ACD 2 AC 58% ACD About the same 5 80% BDE 3 E 84% BDE 48% E 24% Less accurate A 2 ABC 1 A Base: Among those with the same electric provider for the past five years A10. Would you say the time your electric utility gives you for having your power restored is Consumer Pulse and Market Segmentation Study Wave 5 pa g e 24

25 The largest positive gap between better and worse performance perceptions is for using technology to conserve the environment (30% say better versus just worse). Technology Cautious consumers are the most likely to cite improved performance on this measure. Technology Savings Seekers Movers and Green Total Status Quo (A) Cautious (B) (C) Shakers (D) Champions (E) n= Using Technology to Conserve the Environment in Past 5 Years Better 30% 2 4 AC 24% 2 3 About the same 58% 60% % 55% Worse A A9. Would you say your utility uses technology to help conserve the environment Base: Among those with the same electric provider for the past five years All segments report that reliability is the same or better, with Technology Cautious and Green Champions most likely to perceive improvement. Reliability of Electric Service in Past 5 Years Technology Savings Seekers Movers and Green Total Status Quo (A) Cautious (B) (C) Shakers (D) Champions (E) n= Better ACD 14% 1 2 AC About the same 7 8 BE 58% 7 B 7 B 65% Worse 8% 5% 5% 1 A Base: Among those with the same electric provider for the past five years A7. Would you consider the reliability of your electric service to be Consumer Pulse and Market Segmentation Study Wave 5 pa g e 25

26 In a surprising finding, one issue on which electric utilities are not perceived to have improved as much is in helping consumers better manage their usage only say this is better, and 8% say worse, than five years ago. Two segments Technology Cautious and Green Champions are more likely than the other three to recognize improvements. The finding is surprising because many utilities have focused on improved energy management as a key potential benefit of new energy technologies. There are a number of reasons why this may be the case. Some utilities have enhanced online information tools, but these appeal to some segments and not others. Some consumers may have improved their efficiency in some areas but have not seen their bill decrease due to rising energy costs or increased appliance usage. They may not perceive the utility to be helping manage their energy use because their bill has not gone down. Consumers may also not be aware that some programs rely on the installation of new technologies. There may be a need for more communications explaining this linkage. Another point to note is that the success of most existing energy management programs and innovative rates depends on the willingness of the customer to engage actively. Perhaps the opportunity for utilities is in solutions that help to automate energy management and circumvent potentially low customer engagement. Helping to Manage Energy Use in Past 5 Years Technology Savings Seekers Movers and Green Total Status Quo (A) Cautious (B) (C) Shakers (D) Champions (E) n= Better 2 ACD 15% 15% 2 AC About the same 7 85% BCDE Worse 8% 4% 1 AB 1 AB Base: Among those with the same electric provider for the past five years A8. Would you say your utility helps you to manage your energy use Consumer Pulse and Market Segmentation Study Wave 5 pa g e 26

27 If they had a choice of electric providers, only about half say they would choose to stay with their current provider. In general, residential customers surveyed don t have (6), or don t know if they have a choice of electric utilities. Technology Savings Movers and Green Total Status Quo (A) Cautious (B) Seekers (C) Shakers (D) Champions (E) n= Having a choice of which company you can buy electricity from Yes, I have a choice 28% 25% % 3 No, but I would like to have a choice 3 3 A 45% AB 54% ABE 3 A No, I don t need to have a choice 30% 48% BCDE 3 DE 25% 24% CHOICE. Do you have a choice, or would you like to have a choice of companies from which you can buy electricity Over half of those who don t have a choice (5) would like a choice. Movers & Shakers (75%) are most likely to report a desire for a choice whereas Status Quo (30%) are least likely to report a desire for choice. If they had a choice, 4 say they would stay with their current electric utility. Two in ten () say they would look to a company that installs solar panels as an option, with one in ten (1) saying they would go with another electric utility company. Technology Savings Movers and Green Total Status Quo (A) Cautious (B) Seekers (C) Shakers (D) Champions (E) n= If you had a choice of which company you can buy electricity from, who would you choose Current electric utility 4 6 CDE 70% CDE 30% 24% 4 CD Another utility company 1 14% 1 1 A telecom provider E 0% A company that installs solar panels 28% AB 3 AB 2 AB Other/it depends 0% A 8% AB AB AB CHOICE2. If you had a choice of which company you can buy electricity from, would you choose. Consumer Pulse and Market Segmentation Study Wave 5 pa g e 27

28 Competency and consistency of the electric utility are not an issue for most customers, although credibility may well be. Most consumers agree that their electric utility is competent (85%). Technology Cautious and Status Quo have the most favorable perception, with Movers and Shakers expressing the least favorable view. My utility is competent in what they do Technology Savings Seekers Movers and Green Total Status Quo (A) Cautious (B) (C) Shakers (D) Champions (E) n= Total Agree 85% 9 CDE 94% CDE 7 74% 84% Strongly agree 4 5 CDE 6 CDE Somewhat agree % AB 3 4 B Neutral 5% 8% A A Disagree 1 AB 1 ABE B C2. For each statement tell me whether you agree, disagree, or neither agree nor disagree? Most consumers also agree that their electric utility consistently does what it says it will do (7); again, Movers and Shakers express the least favorable opinion. 18 Technology Savings Seekers Movers and Green Total Status Quo (A) Cautious (B) (C) Shakers (D) Champions (E) n= My utility consistently does what it says it is going to do Total Agree % 8 CD CD D Strongly agree 45% 55% CD 5 CD CD Somewhat agree 34% 3 30% 3 38% 3 Neutral 5% 8% BCE Disagree 5% 1 ABE 1 ABE 8% A C3. For each statement tell me whether you agree, disagree, or neither agree nor disagree? 19 Consumer Pulse and Market Segmentation Study Wave 5 pa g e 28

29 However, when asked about their electric utility acting in the best interest of the consumer, only 58% agree. This area shows opportunity for improvement, compared to the other measures. Aligning closely with earlier findings, Movers & Shakers brought the average down only 38% agreed their electric utility acts in their best interest. The more positive ratings for this measure are found among Technology Cautious (75% agree) and Status Quo (6 agree). My utility acts in my best interest Technology Savings Seekers Movers and Green Total Status Quo (A) Cautious (B) (C) Shakers (D) Champions (E) n= Total Agree 58% 6 CD 75% CDE 48% 38% 58% D Strongly agree 2 CDE 3 3 CDE 14% 1 1 Somewhat agree 35% % 2 4 D Neutral 2 B B 1 Disagree AB 3 ABE 24% AB C1. For each statement tell me whether you agree, disagree, or neither agree nor disagree? The impact on satisfaction of contact with the utility appears to depend on the reason for the contact, and the channel used. Overall satisfaction with the electric utility varies by segment: relatively high for Status Quo and Technology Cautious, relatively low for Savings Seekers and Movers and Shakers, with Green Champions in the middle. Total Status Quo (A) Technology Cautious (B) Savings Seekers (C) Movers and Shakers (D) Green Champions (E) n=1004/ W5 W1 Overall satisfaction with electric utility Total Satisfaction (%6 10) CD 98% CDE 6 64% 85% CD Very Satisfied (%9 10) 3 40% 60% CDE 7 ACDE 1 3 CD Somewhat Satisfied (%6 8) 45% AB 55% AB 54% AB Neutral (%5) 1 B 1 AB 1 AB 1 B Dissatisfied (%0 4) 0% 1 ABE 1 ABE!! indicate a significant increase or decrease between current and previous waves SU1. How satisfied are you with your electric utility? Consumer Pulse and Market Segmentation Study Wave 5 pa g e 29

30 In general, as one might expect, consumers who have had fewer contacts of any kind with their electric utility report higher satisfaction. Overall Satisfaction by Those Who Contacted Their Utility Versus Those With No Contact (%6-10 ratings) 88%! 8 No Contact in Last 6 months (n=150) Had Contact in Last 6 months (n=833)!! indicates a significant difference between the two groups SU1. How satisfied are you with your electric utility? CONT2. Which of the following methods have you used to contact your electric company or has your electric company used to contact you in the last 6 months? But despite having more contact with their utility, Green Champions have significantly higher satisfaction than Movers & Shakers and Savings Seekers. Why? One hypothesis is that much of Green Champions contact isn t about fixing problems, but rather seeking useful information and otherwise engaging with the utility. Note that Green Champions are the segment most likely to visit their electric company s website, and to communicate with their utility via or text. Method of Contact: Top Mentions Technology Savings Seekers Movers and Green Total Status Quo (A) Cautious (B) (C) Shakers (D) Champions (E) n= By telephone 5 48% 6 A 65% AD 5 6 A Visited my electric company's website 28% 15% 2 AB 30% AB 44% ABCD Received or sent an to my electric company 5% 1 AB 2 AB 34% ABCD Had someone from the electric company come to my house ADE 1 1 Visited an office or service center 15% 15% A 25% ABDE 1 15% A Mail 1 14% 1 No contact in past 6 months 15% 3 BCDE 15% E 1 E 5% CONT2. Which of the following methods have you used to contact your electric company or has your electric company used to contact you in the last 6 months? Consumer Pulse and Market Segmentation Study Wave 5 pa g e 30

31 Consumer Participation and Interest in Electric Utility Energy Programs Interest in energy pricing programs varies greatly from Critical Peak Rebates down to Demand Response. Few customers currently participate in the four pricing strategies that were tested in the survey, which are still relatively innovative and may not reflect the options that are actually available in many places. However, since these types of programs are critical to the value both utilities and consumers can realize from smart energy technology, it is important to understand the relative appeal of each type of program for electricity customers. Consumer response to the four programs tested indicates that consumers respond well to programs that give them control and rewards rather than penalties. The energy pricing program with the most interest is Critical Peak Rebates three out of five say they would participate in this offer. (The descriptions of the programs that were read to survey respondents are provided in Appendix 3.) Likelihood to Participate in: Critical Peak Rebates TOU Pricing Demand Response Pricing Critical Peak Pricing Already Participating Total Would Participate 60% 44% 3 24% Definitely Would 24% 15% Probably Would Might or Might Not 1 28% 2 2 Would Not 2 38% 5 AP1.-AP2B. If you were offered this program, how likely would you be to participate? Consumer Pulse and Market Segmentation Study Wave 5 pa g e 31

32 Critical Peak Rebates is especially appealing to Savings Seekers and Green Champions. Likelihood to Participate: Critical Peak Rebates Total Status Quo (A) Technology Cautious (B) Savings Seekers (C) Movers and Shakers (D) Green Champions (E) n=1,004/1, W5 W1 Already Participating 0% 0% 0% Total Would Participate 60% % A 8 ABD 4 A 8 ABD Definitely Would 24% 2 14% 3 ABD 1 3 ABD Probably Would % 5 ABD 2 45% ABD Might or Might Not CE 2 CE 1 3 CE 8% Would Not! 1 4 BCDE 2 CE 5% 2 CE!! indicate a significant increase or decrease between current and previous waves AP2. If you were offered this program, how likely would you be to participate? Time of Use and Demand Response pricing plans receive the 2nd and 3rd most support, again led by Savings Seekers and Green Champions. Status Quo has relatively low interest in either pricing strategy. Likelihood to Participate: TOU Pricing Total Status Quo (A) Technology Cautious (B) Savings Seekers (C) Movers and Shakers (D) Green Champions (E) n=1,004/1, W5 W1 Already Participating Total Would Participate 44% % 5 AB 44% 5 AB Definitely Would 15% 1 1 A 15% A 2 AB Probably Would % 24% 34% 2 3 Might or Might Not 28% 2 28% % 30% Would Not % CDE 3 CDE 2 2 1!! indicate a significant increase or decrease between current and previous waves AP1. If you were offered this program, how likely would you be to participate? Consumer Pulse and Market Segmentation Study Wave 5 pa g e 32

33 Likelihood to Participate: Demand Response Pricing Technology Savings Seekers Movers and Green Total Status Quo (A) Cautious (B) (C) Shakers (D) Champions (E) n= Already Participating 4% E 0% Total Would Participate ABD 2 5 ABD Definitely Would 4% 1 A 1 AB Probably Would ABD 4 ABD Might or Might Not 2 25% 28% CE 1 24% Would Not 38% 5 CE 44% CE 3 4 CE 25%!! indicate a significant increase or decrease between current and previous waves AP2B. If you were offered this program, how likely would you be to participate? Critical Peak Pricing is generally less appealing. Savings Seekers show the most interest (34%). Likelihood to Participate: Critical Peak Pricing Technology Savings Seekers Movers and Green Total Status Quo (A) Cautious (B) (C) Shakers (D) Champions (E) n= Already Participating 0% 0% 0% Total Would Participate 24% 1 34% ABD 1 2 Definitely Would 5% Probably Would ABDE 1 Might or Might Not Would Not 5 5 C 54% 45% 5 50%!! indicate a significant increase or decrease between current and previous waves AP2A. If you were offered this program, how likely would you be to participate? Consumer interest in a Critical Peak Rebate program which rewards behavioral change but does not penalize inaction was over twice that of Critical Peak Pricing, which provides either a reward or a penalty depending on consumer response. Consumers were similarly reluctant to give up control through an automated Demand Response program, with nearly equal numbers reporting that they would or would not participate in such a program. Indeed, of the four approaches, it appears that Critical Peak Rebate and Time-of-Use pricing programs enjoy the most widespread interest from consumers. 10 Consumer Pulse and Market Segmentation Study Wave 5 pa g e 33

34 Many customers expect significant savings from these programs, averaging 25 30%, depending on segment. Based on SGCC research conducted in 2014, saving as much as 40% is possible, in some situations, but the range tends to be from 10 30%. Hence consumer expectations of a 25 30% average savings can be termed high. This suggests that stakeholders need to do more to educate consumers about potential savings, and that interest levels in the programs may well be reduced as the potential savings are better understood. So, the inference here would be: Percent of Savings Needed Content with Technology Actively Seeking Energy Movers Green Total Status Quo (A) Adverse (B) Savings (C) and Shakers (D) Champions (E) n= or less 25% % 28% % 4% 1 AC % B 30% 25% 30%-3 8% 8% 40%-4 4% 5% 4% 50% % 15% 1 60% or more 4% 5% Average 28% 3 C 3 C 25% 2 2 Base: Those who might, probably or definitely would participate in any of the offered programs SAVE. What percent of savings would you need to see on your bill to participate in any of the mentioned programs? Consumer Pulse and Market Segmentation Study Wave 5 pa g e 34

35 Consumer Participation and Interest in Electric Utility Energy Products & Services While current products and service penetration is low, there are opportunities across segments. Current penetration of electric utility programs and services is low. By far the highest is Online Bill Pay at, led by Green Champions (3). Status Quo () and Technology Cautious (8%) trail. Movers & Shakers have shown interest in Programmable Thermostats (1 participate) and Incentives or Rebates (14% participate). Utility Programs & Services: % Already Use It Online billing and payment Programmable thermostat and credit Incentives or rebates Energy reports with energy usage comparison Online outage reporting and tracking Technology Savings Seekers Movers and Green Total Status Quo (A) Cautious (B) (C) Shakers (D) Champions (E) n= Pre-pay program 4% 4% 4% 0% 4% 8% 8% 5% AB 4% A 2 AB 1 AC 14% A 1 C 8% AC 3 ABCD Online analysis of specific energy usage 5% Energy audits 4% Energy assistance programs 4% A smart phone app for billing and payment 0% 0% A smart phone app that provides analysis of your energy usage 0% 0% QAC1-QAC11. How interested would you be in using the following if your electric company provided it? Consumer Pulse and Market Segmentation Study Wave 5 pa g e 35

36 Interest among those not participating is highest for Incentives or Rebates (80%), although all programs and services tested were welcome by at least 4 of those not already participating. Interest in all programs is highest for Green Champions, and interest in all but one program is lowest for Status Quo. The Technology Cautious show somewhat higher interest than Status Quo. Savings Seekers and Movers & Shakers are more interested than Technology Cautious but far less than Green Champions. Technology Savings Seekers Movers and Green Total Status Quo (A) Cautious (B) (C) Shakers (D) Champions (E) n= Utility Programs & Services: Level of Interest (Among Those Not Currently Using) % Somewhat/Very Interested Incentives or rebates 80% 60% A A A ABCD Programmable thermostat and credit 7 48% % A AB AB AB Online analysis of specific energy usage 64% % 6 8 AB AB ABCD Energy reports with energy usage comparison 64% 44% 58% 68% 6 7 A A A AB Energy assistance programs 6 45% 58% 75% 5 7 A ABD ABD Online outage reporting and tracking 60% % 8 AB A ABCD Energy audits 5 38% 44% AB AB AB Online billing and payment 55% 3 28% AB AB ABCD A smart phone app that provides analysis of your energy usage % 5 50% 7 AB AB ABCD Pre-pay program 4 28% 40% A 5 AB 4 A 64% ABD A smart phone app for billing and payment 4 24% 2 48% 4 74% AB AB ABCD Base: Consumers Not Currently Using Program/Service QAC1-QAC11. How interested would you be in using the following if your electric company provided it? 21 Consumer Pulse and Market Segmentation Study Wave 5 pa g e 36

37 Implications The Updated SGCC Consumer Segmentation has great potential to guide the design and marketing of Smart Grid programs and services for consumers. Because this segmentation framework is ready to be adopted at low cost by any SGCC member organization, it offers an effective tool to improve Smart Grid/Meter communications, program planning, and consumer acceptance nation-wide. Examples of specific applications include: Identify which segments are the better prospects for current offerings, and which are not Evaluate market potentials for offerings in relation to the more relevant segments Ideate to develop potential new offerings to fill a need of one or more segments Understand priority of benefits for a segment to help plan promotional communications that are in sync with target segments Identify which segments are not good prospects for an offering to avoid waste strategy is as much about what you do not do as what you do Develop a portfolio of offerings to fit the wants and needs of each promising segment Analyze take rates for various offerings relative to customer segments to help guide further promotional targeting and messages Specific examples of opportunities by segment are suggested in the Residential Consumer Segments section of this report. In 2014, SGCC s Segmentation Successes study showed that leading SGCC member utilities are increasingly sophisticated in their ability to apply consumer segmentation to their customers. By leveraging the updated SGCC segments, additional Smart Grid stakeholders can develop more effective programs, services, products and messaging that appeal to the specific characteristics of these groups. Specific programs and benefits are what appeal to consumers, much more than the technologies behind them. Consumer Pulse Wave 5 shows that consumers are embracing, and interested in further embracing, programs and benefits that are provided by Smart Grid technology. Though knowledge of Smart Grid and Smart Meters remains stable and favorability toward Smart Grid and Smart Meters is actually down slightly since 2011, consumer interest is high in programs, products and services that Smart Grid technology can offer. After three years and five waves of tracking, the key question for SGCC stakeholders may no longer be whether knowledge and favorability of Smart Grid and Smart Meters can be improved. In future waves of Consumer Pulse, the more important objective should be to measure adoption of, and interest in, products and services that are delivered through Smart Grid technology. Consumer Pulse and Market Segmentation Study Wave 5 pa g e 37

38 Interest in innovative pricing programs is high, but consumers may overestimate potential savings Interest in innovative pricing programs is quite high, although it varies depending on program design and consumer segment. However, to some extent, this interest is influenced by consumers assumptions that may overestimate the potential for savings. There is a need to educate consumers and set realistic expectations. Rooftop solar has emerging appeal One-fifth of consumers say that, if they had a choice, they would choose to purchase electricity from a company that installs solar panels. While this result does not take into account a full understanding of the costs and benefits of rooftop solar, it does suggest that rooftop solar is of interest to a large number of consumers, and will continue to present opportunities and challenges for stakeholders. The benefits of Smart Grid have broad consumer appeal and should be leveraged to build trust. Across a range of performance measures that are impacted by technology, most consumers report their utility s performance is about the same as five years ago. However, for every measure, the percentage indicating that their utility is performing better is higher than those indicating the utility is performing worse. However, nearly a quarter (2) of consumers currently disagree with the statement that, my utility acts in my best interest. Taken together, these findings suggest a need, and a win-win opportunity, to build trust by communicating more about how smart technologies are designed to help consumers directly. Consumer Pulse and Market Segmentation Study Wave 5 pa g e 38

39 Appendix 1: About Segmentation The first commandment of marketing is to segment the market, choose the best segments, and develop a strong position in each chosen segment. Phillip Kotler, Northwestern University, Ten Deadly Marketing Sins We know that people are not all alike, that they differ in many ways. If we act as if our customers are all alike, our communications and marketing efforts will be less effective and efficient. It is only now becoming possible, through big data analytics, for some organizations to address each customer as a completely unique individual. Segmentation is an excellent first step on the journey towards one-to-one marketing. Segmentation divides customers into groups of individuals who are similar to each other and different from those in other groups. For convenience, we sometimes do this based on available data, such as how much electricity they use, where they live, and various demographic characteristics such as age, income, household size, etc. While helpful for some purposes, this does not work well with Smart Grid issues, because customer motives, priorities, lifestyles, and behaviors do not divide neatly across geographic, demographic, or usage lines. The SGCC segmentation approach divides residential customers into five distinct segments that are defined holistically in terms of attitudes, values, behaviors, motivations, lifestyles, technology adoption, etc. as they relate to Smart Grid issues. Importantly, this is a systematic and objective segmentation based on relevant considerations rather than our impressions, best guesses, or wishes. Appendix 2: Segment Typing The segmentation framework is ready to be adopted at low cost by any SGCC member organization, it offers a valuable tool to improve Smart Grid/Meter communications, program planning, and consumer acceptance nation-wide. There are two ways that SGCC members can leverage the segmentation at low cost: Append commercially available third-party data (10-12 variables) to a customer database in order to categorize all customers by segment. Because these third party data were part of the process used to create the SGCC segments, it is possible to type your customers into the segments using only the third party data, without incurring the expense of conducting a new survey. Analysis of the Consumer Pulse Wave 5 data show that this approach types people into the segments with more than 55% accuracy. Embed 10 questions (along with region code) from the SGCC segmentation into other research instruments that may already be in use, such as ongoing customer satisfaction or brand surveys. Analysis of the Consumer Pulse Wave 5 data show that this approach types people into the segments with more than 7 accuracy. Using the SGCC segments, stakeholders can identify and capture opportunities to design programs, services and communication strategies targeting the specific needs and preferences of each segment, thereby increasing cost-effectiveness of the likelihood of success. Consumer Pulse Consumer and Market Pulse and Segmentation Market Segmentation Study Wave Study 5 Wave 5 pa g e 39

40 Appendix 3: Pricing Program Descriptions (Note: These are the actual questions asked in the survey.) DESIGN: RANDOMIZE QUESTIONS AP1-AP2B Next I m going to ask how likely you would be to participate in programs that you may be offered using smart grid technology. AP1. {SHOW IF FIRST QUESTION IN ROTATION: One program} {SHOW IF NOT FIRST QUESTION IN ROTATION: Another program} would be a rate plan that would charge different prices for electricity depending on when it is used. Rates would be lower when the demand for electricity is low during off-peak periods such as nights and weekends. Rates would be higher when demand is higher like mid-day. You would have the opportunity to save money by using electricity during off-peak periods. If you were offered Time of Use pricing as I described it, how likely would you be to participate? (READ CODES 1 5) 1 Definitely wouldn t participate 2 Probably wouldn t participate 3 Might or might not participate 4 Probably would participate 5 Definitely would participate 6 Already on TOU pricing [VOL] DK REF break Consumer Pulse Consumer and Market Pulse and Segmentation Market Segmentation Study Wave Study 5 Wave 5 pa g e 40

41 [BLOCK AP2 and AP2A] AP2. {SHOW IF FIRST QUESTION IN ROTATION: One program} {SHOW IF NOT FIRST QUESTION IN ROTATION: Another program} would encourage people to reduce their energy use during peak periods when energy usage is expected to be high, such as on very hot days. At these critical times, people who are enrolled in the program would receive a notice by , text, or phone asking them to reduce their energy use. They would not be penalized for keeping their energy use the same, but would receive a rebate on their bill for reducing their usage. If you were offered this program, how likely would you be to participate? (READ CODES 1 5) 1 Definitely wouldn t participate 2 Probably wouldn t participate 3 Might or might not participate 4 Probably would participate 5 Definitely would participate 6 Already on critical peak rebate [VOL] DK REF break AP2A. {SHOW IF FIRST QUESTION IN ROTATION: One program} {SHOW IF NOT FIRST QUESTION IN ROTATION: Another program} would encourage you to reduce your energy use during these critical times by pricing electricity significantly higher during these times. You would receive a higher bill if you did not shift your usage out of a critical time. If you were offered this program, how likely would you be to participate? (READ CODES 1 5) 1 Definitely wouldn t participate 2 Probably wouldn t participate 3 Might or might not participate 4 Probably would participate 5 Definitely would participate 6 Already on critical peak rebate [VOL] DK REF break Consumer Pulse Consumer and Market Pulse and Segmentation Market Segmentation Study Wave Study 5 Wave 5 pa g e 41

42 AP2B. {SHOW IF FIRST QUESTION IN ROTATION: One program} {SHOW IF NOT FIRST QUESTION IN ROTATION: Another program} would provide your utility with the ability to turn off big electrical loads in your house like air conditioning and pool pumps during periods of high demand on the grid. As a participant, you would receive a bill credit each time your utility made use of this ability. If you were offered this program, how likely would you be to participate? (READ CODES 1 5) 1 Definitely wouldn t participate 2 Probably wouldn t participate 3 Might or might not participate 4 Probably would participate 5 Definitely would participate 6 Already on critical peak rebate [VOL] DK REF break {IF AP1=3-5 OR AP2=3-5 OR AP2A=3-5 OR AP2B=3-5 ASK SAVE SAVE. What percent of savings would you need to see on your bill to participate in any of these programs just mentioned? Record percent [0-100% ] DK REF break Consumer Pulse Consumer and Market Pulse and Segmentation Market Segmentation Study Wave Study 5 Wave 5 pa g e 42

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44 Working for a consumer-friendly, consumer-safe smart grid SGCC is a consumer focused non-profit organization aiming to promote the understanding and benefits of modernized electrical systems among all stakeholders in the United States. Membership is open to all consumer and environmental advocates, technology vendors, research scientists, and electric utilities for sharing in research, best practices, and collaborative efforts of the group Smart Grid Consumer Collaborative. All rights reserved.