March 2017 Combining Utility Customer Analytics with Smart Implementation
EXECUTIVE SUMMARY Combining Utility Customer Analytics with Smart Implementation to Dramatically Improve Utility Program Metrics Utility Customer Analytics enable programs to more effectively and cost-effectively achieve their goals and provide real value to their customers. Currently, only 35% of small and medium business (SMB) customers believe their utility offers them targeted solutions (Accenture), and the vast majority of business customers don t even know what programs their utility provides (JD Power 2016). Advanced customer analytics based on individual usage data can enable the level of custom engagement that customers want, leading to greater program success. Baltimore Gas and Electric (BGE), ICF International (ICF), and FirstFuel Software partnered to use customer analytics to engage mid-size customers, a historically underserved segment, in a retrocommissioning program. As a result, BGE doubled the number of Building Tune Ups completed in a year. Conversion rates more than doubled, 60% of engaged customers completed project applications, and projects were completed 1.5 times faster. The key to this success was to combine advanced customer analytics with a redesigned program and process to focus on the customer s needs first. The new program design looked at the whole sales process and used available analytics intelligence at each step to increase value for customers, trade allies, account managers, and the overall program. The redesigned program focused on improving three key aspects of the process: focusing on the right customers, streamlining the customer experience, and creating value for all stakeholders, especially trade allies. Early iterations of the program were only partially successful: they both failed to take advantage of many useful parts of the technology, and they did not consider the impact of the technology on the process. An in-depth review of the program process highlighted the need for additional process innovations and adoption, requiring careful change management. Adopting a customer-centric approach can lead to success for all programs and service territories. Analytics that leverage the data that utilities and energy providers already have provides tailored insights and recommendations, and a program that focuses on relevant customers and streamlines the customer process will create valuable customer interactions that increase customer satisfaction and program conversion. Weaving analytics into a program process creates a truly customer-focused, customized approach that delivers great results. 1
INTRODUCTION Combining Utility Customer Analytics with Smart Implementation to Dramatically Improve Utility Program Metrics Utility Customer Analytics can be incredibly helpful in driving successful programs: programs that achieve their goals, are cost-effective, and, most importantly, provide real value to their customers. Currently, only 35% of small and medium business (SMB) customers believe their utility offers them targeted solutions (Accenture), and the vast majority of business customers don t even know what programs their utility provides (JD Power 2016). Advanced customer analytics based on individual usage data can ONLY 35% OF SMB CUSTOMERS BELIEVE THEIR UTILITY OFFERS THEM TARGETED SOLUTIONS - Accenture enable the level of custom engagement that customers want, leading to greater program success. "This program has created a paradigm shift in the way Account Representatives represent EmPower Maryland Programs" - BGE in Empower Maryland 2016 filing Baltimore Gas and Electric, ICF International, and FirstFuel Software partnered to use customer analytics to engage mid-size customers, a historically underserved segment, in a retrocommissioning program. Within seven months, program conversion rates more than doubled to 49% and projects were completed 1.5 times faster. The BGE, ICF, and FirstFuel partnership used customer analytics to create a win-win-win: value for customers, for trade allies, and for the utility. According to BGE, this approach has created a paradigm shift in the way Account Representatives present the EmPower Maryland programs," providing a more customized, valuable experience for customers with a very high probability of a customer taking action. 2
PROGRAM BACKGROUND Complex program made SMB customers hard to access BGE and ICF have offered a retrocommissioning program since 2010, with participants primarily consisting of large customers such as universities and hospitals: customers with high energy bills and dedicated facility management staff. These customers knew which energy efficiency projects they were interested in, and they would approach BGE with project proposals in hand to request incentives. However, it was difficult for the BGE and ICF teams to engage small and medium business customers who weren t already interested in participating in the program. Like many programs across the country, many SMB customers find it challenging to participate in highly technical programs. Many of these customers come from non-technical backgrounds and don t immediately understand what retrocommissioning or its benefits are. Additionally, the original program process required a complex mix of meetings, measurements, and procedures lasting up to 18 months before any energy savings were realized. Early on in this complex process, customers were often asked to commit dollars and resources to just understand the size, scope, and expense of a project through a detailed onsite engineering report. In many cases, trade allies were unwilling to go through such an elaborate process for medium-sized buildings because the profit from these relatively small jobs didn t warrant the effort. As a result of these challenges, few energy efficiency projects start within this segment at BGE or utilities across the country - and even fewer move to completion. Nonetheless, BGE and ICF were resolved to helping these customers realize the benefits of cost-saving programs and improving their satisfaction with their BGE experience.. 3
A NEW APPROACH Re-engineered program design - a customer-centric approach The key to reaching small and medium businesses was a program re-design putting the customer first. After the initial launch of the program, a team from BGE and ICF surveyed where applications most commonly faltered, and they found that they needed to more deeply consider the customer perspective. To start, BGE renamed the program from Retro-Commissioning to Building Tune-Up," a term more familiar to customers, who regularly tune-up their cars to optimize gas mileage. To make the program truly customer-focused, BGE and ICF worked with FirstFuel to embed advanced analytics into their sales process. Where the initial program launch simply handed remote audits to account managers who requested them, the new program design looked at the whole sales process and used available analytics intelligence to optimize for customer, trade ally, account manager, and overall program value at each step. The smart adaption of the process to optimize the use of newly available analytics enabled BGE and ICF to improve value in both operational metrics and overall experience. In particular, the program re-design focused on three primary areas of the sales process: 1. TARGET THE RIGHT CUSTOMERS 2. IMPROVE THE CUSTOMER INTERACTION 3. CREATE MORE VALUE FOR TRADE ALLIES 4
1. TARGET THE RIGHT CUSTOMERS Many utilities have historically found it challenging to engage mid-size business customers, where generic mass marketing outreach has not been cost-effective. BGE and ICF shifted to a model of targeted outreach, focusing on buildings that were determined to be prime candidates for a Building Tune-up. FirstFuel's models analyzed meter data of thousands of potential program candidates and highlighted those with high potential to save, based on actual consumption patterns and other customer-specific data. Using advanced techniques such as neural networks and random forest methods, the technology could accurately target appropriate customers for the program. The targeting analysis outlined the type of business, where they used the most energy, and how they could be more efficient and save money on their energy bills. This gave BGE and ICF a narrow list of customers to focus on for this program, so that they could selectively market to customers who would actually benefit from participating. Process Change: Based on the analytics results, BGE and ICF conducted qualification phone calls with targeted customers. An initial call verified customer data and solicited interest in a no-cost report from a new analytics tool. Customers who agreed received a tailored follow-up based on the results of the analysis, along the lines of: The comprehensive analysis of your facility's energy use indicates a potential annual energy reduction of [customer kwh savings potential] and that equates to an annual savings of [customer estimated bill savings] That's money that you could be investing elsewhere! To conduct these calls, BGE and ICF trained and dedicated a few representatives solely to handle outbound calls to customers to solicit and encourage interest. The majority of customers, intrigued by the new technology and the tailored, building-specific savings estimates, agreed to proceed. This targeting created a customer experience that stood in stark contrast to previously available approaches, in which customers were presented with a list of available programs, often without sufficient information to determine which were relevant to them. Transitioning from a generalized, mass-market communication to a personalized, targeted message transformed customer-account manager relationships from being a high-touch, low-yield interaction to a low-touch, high-yield one. 5
1. TARGET THE RIGHT CUSTOMERS Results: With the verified customer data, BGE and ICF had a list of high-quality leads. Account managers, trade allies, and customers were now guaranteed that a building had significant operational improvement potential, even before investing in substantial or onsite interactions with the customer. In other words, customers could be confident that their building actually needed a Tune-Up. CALL TO MEETING RATIO IS MORE THAN 15X BETTER THAN TYPICAL MARKETING PROGRAMS As a result of this new process, 30% of these proactive phone calls resulted in a live meeting customer meeting in which the customer agreed to take the next step in the process. As a point of comparison, cold-calling in other services typically results in 0.5-2% of calls agreeing to move forward or indicating interest (Baylor University & Direct Marketing Association). "BGE Account Representatives are effectively using the building analytics reports to prioritize customer contacts based on buildings that have the highest energy saving potential. The ability to make the customer aware of high savings potential areas has increased customer interest and made it easier for Account Representatives to schedule appointments." - BGE in Empower Maryland 2016 filing CUSTOMER SUCCESS 6
2. IMPROVE THE CUSTOMER INTERACTION Simplifying the experience Most mid-sized buildings have property managers who have neither the time nor the expertise to engage in complex engineering discussions: they're interested in quick, simple explanations with documentation that they can re-use to make their case internally to solicit funds. They need to quickly understand what the energy improvement is, the costs, and the return on investment (ROI). Process Change: BGE began providing customers with a simple analytics report that identifies key energy savings opportunities and building energy use patterns: how consumption changes with the weather and business hours, what processes use the most energy, and more. Customers can understand how their energy usage changes, enabling them to recognize how business actions affect their bill. This report also included cost savings from each energy efficiency improvement, whereas customers previously had to rely on conversations with trade allies to learn about their building s consumption and weren t able to fully understand how they could save energy. CUSTOMER SUCCESS "We were able to use these reports as a tool to not only quantify the potential savings of energy conservation measures to the finance team, but we were able to add new projects and prioritize our current proposed projects." - BGE in Empower Maryland 2016 filing This change required BGE, ICF, and FirstFuel to train their account managers to have an interactive, data-based discussion with customers. In the early days of the program, this included focusing the effort through a few well-trained account managers, and then scaling the effort further. Account managers were trained to use call scripts and supporting outreach documents to prepare them to talk about the technology, answer customer questions, and point to other successes. Weekly meetings were held to discuss best practices and revise strategies and documents as necessary. Results: Having account managers present these reports to customers, focusing on relevant opportunities, potential savings, and incentives, was highly effective. Customers were able to understand the proposed measures in simple terms, without getting lost in engineering technicalities. This data-based information and hassle-free experience helps reinforce and leverage a key utility asset: customer trust. Customers trust their energy providers and are looking to them for help. 76% of report recipients reported that they planned to take action to reduce their building s energy consumption. 7
2. IMPROVE THE CUSTOMER INTERACTION Eliminating a key barrier - taking action Early in the program, the BGE/ICF program managers found that they were very effectively piquing customers interest, but had not yet seen an impact in program participation rates. Looking at their sales process, they realized that excited, interested customers were getting "stuck" after meetings: they had to call a trade ally to do a job they didn't fully understand, and they had no idea what the project would cost. Customers didn t even know how much it cost to receive an estimate of the project cost, since the costs of an engineering report depend on how much time a trade ally needs. 60% OF CONTACTED CUSTOMERS COMPLETED A PROJECT APPLICATION Process change: Account managers began offering customers a direct introduction to qualified trade allies who committed to offer a full ASHRAE Level 1 Building Tune-Up audit and report at a fixed price of $1,400 for all buildings under 75,000 square feet. The rebate structure ensured that the customer was responsible for $350 (25%) of this fee, and the rest was paid via program incentives. The report provides an engineering estimate for each ECM including the total costs, scope and exact savings of the project. Further, customers would agree to use the trade ally as the preferred vendor unless there was a meaningful reason to consider alternatives. Results: Customers immediately began to take action following their initial interest from the onsite analytics report. They also reported that they appreciated the transparent next step and associated cost. As a result of this new process, 60% of customers that were contacted completed a project application. 8
3. CREATE MORE VALUE FOR TRADE ALLIES Trade allies typically focus less energy on the mid-market segment. Low hit-rates and lower returns make them reluctant to market in this segment and force them to run audits as a 'for-profit' business line, since they can't depend on getting the follow-on work. BGE and ICF recognized this as a project barrier and wanted to create value for trade allies to focus on these customers. 6 TRADE ALLIES NOW PARTICIPATING IN THE BUILDING TUNE UP PROGRAM Process change: BGE and ICF negotiated a lower, set price of $1,400 for an audit for buildings under 75,000 GSF, and BGE subsidized the cost of the audit by 75%. By guaranteeing that trade allies would get the job if a customer completed a project application, BGE and ICF began providing trade allies with high-probability, qualified leads, generating interest among and value for trade allies. Process change: With customer permission, trade allies were provided with the same analytics report that customers received, enabling them to communicate better with the customer and 'cut to the chase' on measure identification. Trade allies used the analytics report to identify inefficient processes that are difficult to assess in a typical on-ground audit, such as simultaneous heating and cooling. As a result, trade allies were able to be more productive on-site, knowing where to focus their time to refine the analytics-provided recommendations. Rather than spending time investigating every possible issue, trade allies can focus on specific areas that need further investigation, answer customer questions, and determine how they can both move forward. CUSTOMER SUCCESS "These building analytics reports not only aid the customer, but help the Building Tune Up contractors isolate savings opportunities that would be difficult to find through simple mechanical inspections." - BGE EmPower Maryland 2016 Report Results: These improvements yielded immediate returns. BGE and ICF piloted the approach with one trade ally and quickly overloaded him with business. Trade ally enthusiasm was so strong that BGE was able to add 5 additional trade allies in just a few months. All of the trade allies have been enthusiastic about the program and its positive impact on their business. 9
THE NET RESULTS Better metrics and the right kinds of interactions The redesigned program has been highly effective in engaging customers that had rarely participated in BGE's energy-savings programs. By building analytics into their approach, BGE doubled the number of Building Tune Ups completed in a year. 49 million kwh in energy savings have been identified, of which customers have expressed serious interest in 110 measures worth 7,850,000 kwh in savings. 76% of report recipients report that they plan to take action to reduce their building's energy consumption, and 60% of customers that have been engaged have already completed project applications. Project completion times have come down dramatically, from 12 months to under 8 months. Perhaps most importantly, customer surveys have rated the experience associated with this program an average of 4.5 on a 5.0 scale. This score shows that the newly re-designed program not only helps BGE achieve its EE/DSM goals more effectively, but also helps towards the larger goal of improving customer satisfaction. Conclusions: Lessons for the Future of Customer Centric Utility Programs This partnership and program have shown the importance of analytics in creating highly effective, customer-centric programs. As a result of this success, BGE and ICF are considering expanding this program to include trade ally agreements for buildings above 75,000 square feet. In 2017, BGE also plans to unveil a new proactive, analytics-powered customer engagement portal with building analytics and recommendations, designed to drive increased behavioral savings while minimizing account manager involvement by directly contacting the customer through customer selected modes. As utilities consider analytics-based programs in other contexts, BGE, ICF and FirstFuel recommend consideration of some of the key lessons from the experience profiled here. CUSTOMERS EXPRESSED INTEREST IN MEASURES WORTH 7,850,000 kwh IN ENERGY SAVINGS 4.5/5.0 AVERAGE CUSTOMER SATISFACTION RATING CUSTOMER SUCCESS "Rather than presenting customers with a description of all applicable BGE programs and then asking the customer to do more research, the BGE Account Representatives are now presenting specific recommendations with the associated savings and potential rebates." - BGE in Empower Maryland 2016 filing. 10
LESSONS LEARNED Lesson 1: Creating a win-win-win for customers, trade allies and the utility The program found success not by focusing initially on program metrics, but rather on creating a win-win-win for the program s stakeholders, with the understanding that better metrics would follow. Customers benefited by more streamlined use of their time; earlier and better information about the program and project costs and benefits; clearer action steps; customized collateral to make the internal case for investment; and simpler, easier to understand information throughout the experience. Trade allies benefited from increased project revenue; direct access to highly qualified leads in a previously difficult to reach market; analytics-derived insights into each project; and added credibility and branding from a closer relationship with the trusted utility provider. BGE benefited from improved customer experience; new access to a hard-to-reach market; and improved EE program metrics, such as conversion rates and ultimately program effectiveness. These changes also benefited the individual ICF account managers who participated in the program, improving their technical credibility, reducing their driving time, and increasing their value-added time helping customers. These account managers valued members of the BGE-ICF team and the face to many key business customers all reported positive reviews of the analytics-enabled experience. Lesson 2: More than just great technology, great change management Early iterations of the program were only partially successful, as they simply added remote audits to the one piece of an existing sales process. These iterations not only failed to take advantage of many useful parts of the technology, such as targeting tools and data, but they did not consider the potential impact on the process itself. Only after a careful examination of the process, which included BGE and ICF program managers joining their account managers in customer interactions, were many key process innovations conceived and implemented. Targeting, simplified customer interactions, and trade ally integration to the sales process were all enabled by technology, but required real innovation and change management by the program teams to implement. Adopting a customer-centric approach can lead to success for all programs and service territories. Analytics that leverages the data that utilities and energy providers already have provides tailored insights and recommendations, and a program that focuses on relevant customers and streamlines the customer process will create valuable customer interactions that increase customer satisfaction and program conversion. Weaving analytics into a program process creates a truly customer-focused, customized approach that delivers great results. 11