So, You Want to be the Amazon of Energy?
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- May 30, 2019 7:36 pm GMTMay 30, 2019 7:22 pm GMT
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This item is part of the Special Issue - 2019-05 - Customer Care, click here for more
As public utilities search for new revenue streams in the face of declining energy sales and increasing competition for their customers’ attention and wallets, more than a few utilities have been overheard saying they want to become “the Amazon of energy.” But what does that mean, really? And is it attainable?
A growing number of utility-driven marketplaces across the country show promise for expanding revenue streams. Several turnkey vendors are making it easier for utilities to build and support e-commerce or marketplace platforms. Here, we’ll provide an overview of the current options and share what customers expect from utilities in these engagements. This will ensure that utilities build marketplaces for success and avoid the pitfall of turning it into just another channel for fulfillment.
What’s the potential?
Expanding products and solutions through e-commerce or a marketplace is an attractive option for generating revenue and deepening customer engagement. The question today is not whether it’s possible, but how can utilities meet high—and growing—customer expectations for fulfillment, communications, and service? After decades of investment in brand equity, strong J.D. Power scores, and the trust of many long-term customers, it is critical that utilities embark on these efforts carefully to protect and build on already strong relationships.
While customer engagement alone is a worthwhile goal, developing an online engagement platform can deliver value immediately and in the future. In uncertain times, these platforms can not only be used as an avenue for selling traditional energy efficiency products, they can open lines of communication with customers to promote a wide-range of services such as rate options, DR programs, and subscription services. As utilities explore their options, it is important to think through emerging business models. By focusing on long-term competitive and customer needs, they can develop these platforms proactively, rather than reactively, to ensure the solution is built to last.
Business-to-consumer sites that enable online commercial transactions (e.g., Home Depot).
A type of e-commerce solution that provides product information and processes transactions but third-parties handle delivery and fulfillment (e.g., Etsy).
What’s out there?
There are two main models for today’s marketplace platforms: electronic (e-) commerce or online marketplace. While terminology for the two is frequently interchanged, these are different offerings with different capabilities, customer experiences, and back-of-the house operations. Several providers offer solutions for utility-branded e-commerce and marketplace offerings ranging from turnkey solutions to platforms where you can select relevant offerings. There are also digital marketing agencies specializing in e-commerce starting to dip their toe into the energy market. There are a lot of options out there, so utilities should focus on matching the provider to their goals.
What is available through e-commerce sites and marketplaces?
- Traditional energy efficiency products: DTE Energy, Georgia Power, Pacific Gas & Electric (PG&E), Sacramento Municipal Utility District (SMUD), Xcel Energy and other utilities offer efficient products such as smart thermostats and LED bulbs that customers can purchase directly with an instant rebate.[i]
- Products beyond energy efficiency: Baltimore Gas and Electric (BGE), SMUD, and Southern Maryland Electric Cooperative (SMECO) offer products such as connected home devices (e.g., smart locks, sensors, and smoke and CO detectors).[ii]
- EV services: FirstEnergy offers EV charger leases.[iii] Con Edison provides customers with information to compare and shop for EV chargers.[iv]
- Solar planning services: Con Edison and National Grid facilitate bids for customers interested in PV by compiling customer information and usage data to estimate bill savings in partnership with solar aggregators.[v]
- Partner-fulfilled service and protection plans for a monthly fee: CenterPoint Energy offers appliance maintenance and repair coverage.[vi] Duke Energy Florida offers 24/7 emergency services for HVAC or water heating.[vii] FirstEnergy and Georgia Power offer surge protection services.[viii]
- Third-party home services (aggregator model): Orange & Rockland Utilities connect customers with trade allies for home services ranging from HVAC tune-ups to home audits.[ix] SMUD offers home services like flooring through contractors in partnership with HomeAdvisor.[x]
- Monitoring and information services: Central Hudson provides enhanced tips and features for a monthly fee.[xi] DTE Energy offers energy monitoring through a free app.[xii]
What do customers expect?
The opportunity is large, but the stakes of meeting customer expectations are high. We are firmly in the era of customer-centric product development and customer experience management and there is no going back. Gaining customers through a marketplace or e-commerce platform will require that utilities and their providers (a) uphold utility brands and customer relationships, (b) meet e-commerce standards set in other industries, and (c) give customers a reason to choose the utility over other online providers.
The data privacy and security utilities deliver best: Utilities have a leg up because they know the rules of the road when it comes to privacy laws and are already protective of customer information. In a moment of data and privacy insecurity, utilities are uniquely positioned to help customers make the most of connected devices and new services while protecting data.
Upholding the utility brand and relationships: Customers generally trust utilities (even if they do not always like them) and brand perceptions are strong. From our research on the smart home, compared to some national brands in retail and consumer products (e.g., Amazon, Nest, Samsung SmartThings, Xfinity), utilities are seen as reliable, accessible, trusted, and local. Customers feel that if something goes wrong or they need help, their utility will be there. This is the brand promise they have created through swift storm and outage responses. But how do they capitalize on it?
In the early days of a new technology, having access to reliable support may matter more to utilities’ core customers than having the latest, shiniest product. Early adopters will chase shiny products and may not be looking to utilities to deliver them. Let them! Utilities can democratize new technologies by making them accessible to a broader audience. They have a huge opportunity to package, market, and deliver products or services to markets not proactively seeking them out. Mid-market customers will be more receptive to new opportunities and more trusting of emerging products and services if they are backed by a reliable provider—their utility.
What does it take to uphold customer expectations?
Offer superior customer service and technical support: To uphold the utility’s hard-earned brand reputation they should be ruthless in their standards to support the customer through decision-making, ordering, shipping/fulfillment, installation, and ongoing use or maintenance. This is particularly important for any fee-based models where customers expect accessible customer service. If the utility can’t provide top-tier service, they should step aside for a partner or vendor to enter.
Cultivate and manage partnerships that truly enhance the utility brand: Energy efficiency programs are pros at working with partners, vendors, and trade allies. This gives utilities a huge advantage in managing partner-based models for online platform providers as well as on-the-ground service providers. They already know what makes a good customer experience and how to measure performance and drive continuous improvement. Now they just need to apply these skills to a new competitive landscape. Leveraging new models, like pay-for-performance, utilities can get what they need and create and enforce metrics of customer satisfaction and process excellence.
Make relationships transparent: In a true marketplace model, utilities may be providing a sales platform for vendors that they don’t control. When not in control, they should be transparent about it. The same marketplace may promote existing programs side-by-side with less regulated vendors. Spread the risk by clearly displaying and defining the utility-provider relationship so that customers understand who is responsible for service.
Market and design like the pros: Customers expect complete and transparent information, easy comparisons, intuitive searches and filters, personalized recommendations, timely communications in the right channel, and fast and personal service. Though it’s understandable, most utilities lag behind major retailers and e-commerce players in customization. At this point, competitors have already set expectations for utilities. Here are some guidelines for what customers expect:
- Deliver inspiration, not widgets: Market the capabilities—what a household or business can achieve—rather than the products. Customers can find the same products on Amazon, Best Buy, Home Depot, or manufacturer websites, but few sellers are really showing customers how products come together to enhance their lives. Creating this vision is incredibly important for emerging technologies like the smart home, renewables, and EVs. The landscape for these technologies is increasingly complex and customers are looking for a guide. Your typical customer is unlikely to research technical specifications and find their own way. Mid-market adopters are more likely to act if decision-making is streamlined, for example, in personalized or bundled offerings. If utilities make it compelling and easy, customers will follow.
- Show what you know: Utilities are in a unique position to provide personalized, Netflix-style recommendations based not only on energy usage, but on past transactional and engagement data like billing and rate preferences, home energy audits, and rebates. This data is invaluable for moving a customer along their journey. Utilities have everything they need to acknowledge customers. They know where customers are on their path to a modern home or business and how their offering can help customers take the next step. By leveraging best practices in data management, digital marketing, and behavioral science, utilities can build from their competitive edge.
- Seamlessly integrate with customer accounts: Customers want one bill. This means on-bill charges, if possible, and instant rebates to make customers’ lives easier. It is a unique service and a core value only utilities can offer.
- Leverage usage data: Use energy consumption metrics to show personalized savings and payback estimates to market renewables or energy-saving products. This is a differentiator: most competitors can’t tie in energy information.
- Match leading e-commerce capabilities: Customers will shop where it’s easy to find and compare products, see transparent pricing, review technical specifications, and see customer reviews. To get there, utilities should create the same shopping and transaction functionality as the leading sites and make sure their team is actively managing these online interfaces with personalized, highly-responsive outreach.
When comparing their utility to mass market players, we heard customers’ reservations and high expectations based on the services utilities already provide:
- “Reputable and reliable company. My sense is that my utility would conduct thorough research prior to selecting products to include in a smart home package and would stand behind their functionality and service.”
- “Reliable company that can come out and provide service if needed.”
- “Single point of contact for troubleshooting.”
- “If it is backed up with my utility’s assistance, I would like it.”
- “My utility has always been honest with me. My cable / internet provider borders on criminal. I would rather go with someone I trust.”
Expectations for the products themselves were mixed. Many customers felt that the utility’s offerings couldn’t compete with the name brands, though some expected more from their utility:
- “Possibility of lesser advancements than a national/international brand.”
- “Wonder if it is the ‘latest’ in technology. Samsung and other brands are known for being on the cutting edge in technology….”
- “May not be as expert as the other companies.”
- “They do not develop the technology themselves.”
- “I would expect them to be top of the line products that would focus on energy efficiency.”
Who should utilities be for their customer?
A key decision utilities face is whether to control the product or experience end-to-end or host an open model where partners and vendors play a larger role. There are pros and cons for each option. It may be tempting to take a turnkey approach in the name of customer experience management, but most utilities are not logistics companies, and lack the infrastructure to make good on the customer promises implicit in every new product or service. It also may put utilities in a position where they are competing against their own customers, retailers, and providers offering or selling the same products and services. Working with the market can help address this, but partners and vendors that fail to deliver the level of service that customers expect may impact the utility’s reputation.
Ultimately, each organization needs to decide how to manage customer expectations and uphold trust. It is not enough to take the stock model from vendors and say it is “good enough for now” because of the risk of losing the interest, faith, and engagement of customers. To ensure success, utilities should get clear on who they want to be and build a platform to accommodate a long-term vision.
 The utility partners with provider(s) and offers the service seamlessly and directly to customers (i.e., customers do not select a specific provider).
[i] “DTE Energy Marketplace,” DTE Energy, accessed August 1, 2018, https://www.dteenergymarketplace.com; “Georgia Power Marketplace,” Georgia Power, accessed August 1, 2018, https://www.georgiapowermarketplace.com/; “PG&E Online Marketplace,” PG&E, accessed August 1, 2018, https://marketplace.pge.com/; “SMUD Energy Store,” SMUD, accessed August 1, 2018, https://www.smudenergystore.com; “Xcel Energy Store,” Xcel Energy, accessed August 1, 2018, https://www.xcelenergystore.com/.
[ii] “BGE Smart Energy Savers Program, Smart Home Pilot Recruitment,”EmPOWER Maryland, accessed August 1, 2018, https://bgesmartenergy.com/residential/smart-home-pilot; “SMUD Energy Store, Home Energy Efficient Products,” SMUD, accessed August 1, 2018, https://www.smudenergystore.com/; “SMECO Smart Home Pilot Program,” SMECO, accessed August 1, 2018, https://www.smeco.coop/save-energy-and-money/smart-home-pilot-program.
[iii] “Electric Vehicle Charger Lease,” SmartMart by FirstEnergy, accessed August 1, 2018, https://www.smart-mart.com/smartmart/en/Home-Products/Smart-Home/Electric-Vehicle-Charger-Lease/p/FEP-S0000225.
[v] “Go Solar with Con Edison,” Con Edison, accessed August 1, 2018, https://marketplace.coned.com/solar/?utm_source=coned.com&utm_medium=referral&utm_campaign=coned_solar_page; “National Grid, New York Solar Marketplace,” energy sage, accessed August 1, 2018, https://www.energysage.com/ngny/.
[vi] “Home Service Plus® Plans,” CenterPoint Energy, accessed August 1, 2018, https://www.centerpointenergy.com/en-us/home-service-plus/plans.
[vii] “Heating and Cooling Repair Plans,” Duke Energy, accessed August 1, 2018, https://www.duke-energy.com/home-services/heating-and-cooling-repair.
[viii] “Connected Home Plan,” SmartMart by FirstEnergy, accessed August 1, 2018, https://www.smart-mart.com/smartmart/en/Home-Products/Smart-Home/Connected-Home-Plan/p/FEP-S0000219; “SurgeDefenderTM Protection,” Georgia Power, accessed August 1, 2018, https://www.georgiapower.com/surgeprotection.
[xi] “Looking to better understand your energy usage?”, Central Hudson Insight+, CenHub Store, accessed August 1, 2018, https://www.cenhubstore.com/tools/enrollment/overview.
[xii] “DTE Energy Insight,” DTE Energy, accessed August 1, 2018, https://www.newlook.dteenergy.com/wps/wcm/connect/dte-web/insight/insight-app/?utm_source=universal&utm_medium=vanity%20url&utm_campaign=dte%20insight.