Actionable Insights for the New Energy Consumer - Accenture

Actionable Insights for theNew Energy ConsumerAccenture end-consumerobservatory 2012

ContentsForeword 03Accenture’s New Energy Consumer research program 04Consumer choice 08No. 1 Offer the “right” mix of products and services 09No. 2 Maximize consumer willingness to pay 12No. 3 Maximize consumer desire to save 15No. 4 Create a value proposition with bundles 18Consumer connection 22No. 5 Optimize the value of self-serve 23No. 6 Unlock social media 26Consumer loyalty 30No. 7 Manage consumer engagement 31No. 8 Understand churn 36No. 9 Engage the next generation 40Implications for energy providers 44Appendix: Summary of previous findings fromAccenture’s New Energy Consumer research program 482

ForewordAround the world, energy providers face rapidly evolvingmarketplaces and an environment of continuous change.Concerns over climate change, volatile energy prices andsecurity of supply continue to provide momentum to therollout of disruptive technologies. Consumers are nowcentral to these deployments. At the same time, newconsumer opportunities are emerging with the increasingadoption of smart technology, mobile devices and theintegration of web-enabled platforms, such as socialmedia. The energy landscape is increasingly defined by thevalues and preferences of the new energy consumer.More than ever, consumers are seekingadded value, personal connection andproducts and services that align withtheir lifestyles—all of which go beyondthe traditional energy experience. Even ashome automation, energy managementand digital consumer technologiesare enabling a new marketplace forenergy providers, nontraditionalplayers are quickly emerging anddeveloping new value propositions forconsumers. Current global economicconditions have also placed a renewedfocus on the bottom line for bothconsumers and energy providers.Within this environment, energy providersneed to move quickly to define and delivervalue in traditional energy markets and inthe “beyond-the-meter” market. Providersneed to carefully address a broad set ofstrategic and operational imperatives,including:• How do providers adapt to theconstantly changing needs of consumersand anticipate the needs of the future?• How do providers effectively balanceand embed consumer preferences intotheir operations and product offeringswhile maintaining the lowest possiblecost-to-serve?• What traditional capabilities need tochange? What new capabilities need to beaddressed?Standing still is not an option. And yet,more than ever, energy providers facea difficult balancing act of managingoperational realities while creating andcapturing value in the evolving energymarketplace. Accenture’s New EnergyConsumer research program and ourexperience working with providers aroundthe world have shown that a numberof market and consumer trends haveemerged. Previous Accenture studieshave revealed findings around how toengage, educate and create value withsmart technologies and in the beyondthe-metermarket. To help understandthe new energy consumer landscapeand study the specific operationalsteps required for energy providersto achieve high performance todayand in the future, Accenture presentsour latest research in this report.The companion reference guide to ourresearch, The New Energy Consumer:Balancing Strategic and OperationalImperatives, provides global perspectiveson the critical areas of focus, emergingbusiness models, and actionable steps forenergy providers to prepare their retailbusiness or customer operations for thenext decade. For more information, seepage 47.“The energy consumer landscapeis constantly shifting with smarttechnologies, new products andservices and challenging economicrealities. Developing long-termstrategies and practical next stepsis a complex endeavor. Successrequires a balanced and targetedapproach to identify and delivervalue at scale.”Greg Guthridge, global managing directorAccenture Retail and Business Servicesfor Utilities3

Accenture’s New Energy Consumerresearch programTo help energy providers successfullymeet the challenges and opportunitiespresented by the evolving energymarketplace, Accenture launched amultiyear global research program aimedat gaining a deeper understanding ofconsumers’ attitudes, opinions andpreferences toward energy efficiency,energy management and value-addedproducts and services.Understanding ConsumerPreferences in Energy EfficiencyCompleted in 2010, phase one of theprogram, Understanding ConsumerPreferences in Energy Efficiency, was aglobal consumer survey that producedvaluable insights into consumer behaviors,preferences and attitudes towardenergy efficiency, awareness, readinessand willingness to take action. Thefindings provide a view of consumers’understanding of energy and theirrelationship with providers.Revealing the Values of the NewEnergy ConsumerAccenture built upon those insightswith phase two of the program—2011’sRevealing the Values of the New EnergyConsumer. This worldwide end-consumersurvey explored consumer preferences,opinions and priorities related tobeyond-the-meter products and servicesoffered by utilities or other emergingproviders. With clear signals in theenergy marketplace that new businessmodels and nontraditional competitorswere emerging, the findings explored thepossible scope of the energy ecosystemand provided insights on the consumerpreferences shaping opportunities todayand in the future.Actionable Insights for the NewEnergy ConsumerWith a firm view of the consumervalues and preferences related toenergy efficiency, beyond-the-meterproducts and services and emerging newcompetitors, in 2012, we embarked on thethird phase of the program. Phase threefocuses on developing actionable insightsand tactical implications for providers.Recognizing that smart technologyrepresents just one of the trendscreating opportunities and challenges forproviders, Accenture’s latest consumerinsights take a multidimensional approachto exploring consumer preferences andbehaviors that define the operationalconsiderations for addressing the newenergy consumer. Actionable Insightsfor the New Energy Consumer exploresquestions such as:• What energy and nonenergy-relatedproducts and services are consumersinterested in receiving from theirproviders?• How do consumers want to interactwith providers and what expectations arethere for self-service, social media andother nontraditional channels?• What opportunities exist to betterbalance cost-to-serve with consumerexpectations?• How can utilities differentiatethemselves to more effectively acquireand retain consumers or increaseparticipation in specific programs?• What are the preferences and behaviorsof the next generation of energyconsumers?Recognizing that energy providers want totake strategic and operational steps today,the findings are provided in the contextof a consumer’s energy experienceand specifically explore the consumerelements of:• Choice. As consumer values related toenergy change, so are the options andvalue propositions they want.• Connection. Changes in technology andthe continued consumer move to onlinechannels are shifting the traditionalpreferences for interactions.• Loyalty. Engaging consumers andunderstanding the drivers of loyaltyand satisfaction are critical to ongoingsuccess.For an overview of the key findings fromour previous end-consumer research,Understanding Consumer Preferences inEnergy Efficiency and Revealing the Valuesof the New Energy Consumer, please seepage 48.4

Methodology and sampleAccenture’s third global survey isbased on questionnaire-led interviewswith 10,158 residential end consumersin 19 countries, conducted online innative languages in December 2011 forAccenture by Harris Interactive.The selected countries represent a rangeof regulated and deregulated markets.For countries with large and/or diversepopulations, participants were selectedfrom a broad spectrum of locations.The survey explored consumer valuesrelated to electricity, additional energyand nonenergy-related products, andservice perceptions related to theirelectricity providers. The survey includedattitudinal, behavioral and demographicquestions. The survey also presentedchoice-based questions about variouscombinations of five key elements ofenergy product and service packages.The information was evaluated usinga conjoint analysis to understand howconsumers weigh each component of apackage in their adoption decision andto identify consumer preferences amongdifferent options.In total, across three years of research,nearly 30,000 consumers have beensurveyed worldwide. The survey samplewas statistically representative of thegeneral population in each country,with the exceptions of Brazil, China andSouth Africa, where the sample wasrepresentative of the urban populations.Countries included in the multiyear research program, with number of participantsCountry 2012 research 2011 research 2010 researchAustralia 500 500 500Belgium 500 512 -Brazil 500 510 518Canada 500 500 500China 500 502 500Denmark 514 505 500France 500 514 500Germany 500 500 513Italy 500 548 527Japan 500 530 530Netherlands 500 544 500Norway 500 - -Singapore 505 510 501South Africa 512 500 500South Korea 500 537 500Spain 500 550 500Sweden 500 511 514United Kingdom 627 724 500United States 1,000 1,202 1,005Total individuals surveyed 10,158 10,199 9,1085

Actionable insights overviewCustomer choiceConsumers will opt for products and services that align withtheir evolving values.No. 1: Offer the "right" mix of products and services.Consumers are increasingly interested in receivingadditional energy and nonenergy-related productsand services from electricity providers.No. 2: Maximize consumer willingness to pay.When it comes to paying a premium,consumers are more attracted todifferentiated products than services.No. 3: Maximize consumer desire to save.The majority of consumers would forgocustomer service in return for price discounts.No. 4: Create a value proposition with bundles.Consumers are interested in bundled packages thatbetter suit their lifestyles and needs, particularly whenthey deliver savings, convenience or ease of use.Customer connectionChanges in technology and the continued consumer move onlineare shifting the traditional preferences for interactions.No. 5: Optimize the value of self-serve.Low-touch channels and self-service havereached a tipping point where consumersprefer these options for most transactionalinteractions.No. 6: Unlock social media.Consumers in many geographies are interested inengaging with their electricity providers throughsocial media, in particular, for service convenience.Customer loyaltyEngaging consumers and understanding the drivers ofloyalty and satisfaction are critical to ongoing success.No. 7: Manage consumer engagement.Satisfaction and engagement actually decreasebased on the length of time consumers interactwith their providers.No. 8: Understand churn.In competitive markets, while switching decisionsare largely price driven, loyalty rewards areemerging as an effective motivator for consumersto stay with their current provider.6No. 9: Engage the next generation.Younger consumers can offer a paradox: theyprefer a complex mix of high-touch interactions,self-service and social media engagement.

Applicability offindings beyondelectricityAccenture’s end consumerresearch program has beendesigned to provide insightsthat are applicable to providersacross gas, electricity and water.Some survey questions are askedspecifically within the context ofa consumer’s “electricity provider.”This specificity helps simplifyquestions and focus consumerresponses—ultimately providingmore clarity in the findings.From our experience working withutilities across different commoditytypes, we understand the uniquechallenges of different providers;however, the new energy consumeris having an impact not just onelectricity providers but also ongas and water providers. Insightsrelated to channel preferences,interest in additional products andservices, acquisition and churncharacteristics and engagementaround conservation are universaland can help to inform consumerstrategies across providers.7

Consumer choiceRegardless of market type, convergingtechnologies and innovative rate and serviceoptions are enabling new value propositions.Across industries, consumerism is on the risewith ubiquitous connectivity and productpersonalization becoming the norm. It is nowcommonplace for consumers to shop aroundfor the best deal and the greatest personalrelevance. Energy consumers are no different.Today, they are looking for a wide array ofproducts and services from their energyproviders—even some that are not relatedto energy.8

Actionable insight No.1Offer the “right” mix of products andservicesConsumers are increasingly interested in receiving additionalenergy and nonenergy-related products and services fromelectricity providers.Energy-related products andservicesSurvey respondents were providedwith a list of energy-related productsand services. We asked consumers toindicate which products and services theycurrently receive from their electricityprovider. Not surprisingly, for consumerswho receive multiple products or services,natural gas and/or water ranks the highestat 38 percent (see Figure 1). However,the survey results also highlight thatconsumers currently receive a limitednumber of energy-related products andservices from their electricity provider; infact, 49 percent receive only electricity.Figure 1. Which of the following products and services do you currently receivefrom your electricity provider?Natural gas and/or waterInstallation and/or maintenance services for homeenergy devices (e.g., thermostat, furnace, water heater,air conditioner, major home appliances, solar panels)Products and materials to make simple improvements toyour home in order to save electricity (e.g., weatherstripping, compact fluorescent light bulbs)Home energy audits/consultations to identifyopportunities to save electricityMulti-response9%13%13%38%Warranty and/or financing plans for home energydevices (e.g., furnace, water heater, air conditioner,major home appliances, solar panels)Devices or services to automate home energy managementbased on your preferences (e.g., remotely control andautomate lighting, heat in your home and some homeappliances)Home energy generation products (e.g., solar,geothermal, wind)8%7%5%None of the above49%Base: All respondents.9

When asked what additional productsand services they may be interestedin signing up to receive from theirelectricity provider, consumers currentlynot receiving additional products andservices from their electricity providerexpress significant interest in a rangeof offers. In Figure 2, 57 percent ofconsumers cite interest in products andmaterials to make simple improvementsto their homes to save electricity (suchas weather stripping and compactfluorescent light bulbs) and home energygeneration products (such as solar orwind). In addition to these products, 55percent of consumers are interested inhome energy audits and consultationsto identify areas to save electricity.Consumers also indicate an appetitefor signing up for customized homeenergy management devices or servicesfrom their electricity providers. Fiftytwopercent are interested in receivinga device or service to automate homeenergy management with featuressuch as the ability to remotelycontrol and automate lighting, heatand home appliances. Consumersalso express interest in additionalinstallation or financing services, with47 percent interested in installationor maintenance for devices such asfurnaces, water heaters and solarpanels, and 46 percent are interestedin warranty and financing plans.Figure 2. How interested are you in signing up for the following products and services if they were offered by yourelectricity provider?Products and services currently received from electricity providerProducts and materials to make simple improvements to yourhome in order to save electricity (e.g., weather stripping,compact fluorescent light bulbs)Interest in products and services providedby electricity providers (very/somewhatinterested)13% 57%Home energy generation products(e.g., solar, geothermal, wind)5%57%Home energy audits/consultations to identify opportunities tosave electricity9%55%Devices or services to automate home energy management basedon your preferences (e.g., remotely control and automate lighting,heat in your home and some home appliances)Installation and/or maintenance services for home energydevices (e.g., thermostat, furnace, water heater, air conditioner,major home appliances, solar panels)Warranty and/or financing plans for home energy devices(e.g., furnace, water heater, air conditioner, major homeappliances, solar panels)7%8%13%47%46%52%Natural gas and/or water 38%25%Base: All respondents.Base: Consumers who do not currently receive the specificproduct and service from their electricity provider.10

Nonenergy-related servicesConsumer interest in receivingadditional products and services fromtheir electricity providers extends tononenergy-related services. Figure 3illustrates that 52 percent of consumersare somewhat or very interested inreceiving home repair services such as aplumber. And 49 percent are interested intelecommunications services.Interest also extends to other consumerlifestyle services. Forty percent areinterested in receiving home servicessuch as security or video monitoring.Consumer satisfactionA closer analysis of the number ofproducts and services consumers currentlyreceive from their providers versusconsumer satisfaction shows a trendwhereby satisfaction is correlated withthe number of products/services received(see Figure 4). Consumers who receiveone to three products/services from theirelectricity provider report a satisfactionlevel of 67 percent, but satisfaction rateincreases to 71 percent when lookingat consumers who receive four to sevenproducts/services from their providers.Figure 3. In addition to energy-related products and services, how interestedwould you be in receiving the following from your electricity provider?Home repair services(e.g., plumber)Telecommunications services(e.g., television, Internet, phone, mobile)Home services(e.g., home security, video monitoring in your home)Insurance services(e.g., home, auto, life)Banking services(e.g., bank account, credit card, mortgage)Somewhat interestedBase: All respondents.Very interested29%27%22%36%11% 33%19% 10% 29%20% 49%13% 40%16% 52%Figure 4. Consumer satisfaction versus number of products/services received fromtheir current electricity provider.%80Consumer satisfaction75Consumer satisfaction706566%67%71%60No products/servicesN= 49491-3 products/servicesN= 46624-7 products/servicesN= 548Number of products/services received from current electricity providerSatisfactionBase: All respondents; N = number of respondents.11

Actionable insight No. 2Maximize consumer willingness to payWhen it comes to paying a premium, consumers are moreattracted to differentiated products than services.Premium electricity service“Premium electricity service” conjuresup a number of expectations fromconsumers. When considering what theywould expect from a premium service,we found that 54 percent of consumersexpect personalized energy reports andtools that would help them understandand manage their electricity usage (suchas electricity used per appliance), and 53percent expect a greater mix of renewableenergy sources (see Figure 5).Figure 5. Which of the following products/services would you expect a “premiumelectricity service” to include?Mentioned in top threePersonalized energy reports and tools that help meto understand and manage my electricity usage(e.g., electricity used per appliance)Greater mix of renewable energy sources(e.g., wind, solar, etc.)Availability of home energy generation products(e.g., solar, geothermal, wind)41%54%53%When directly asked whether or not theywould be willing to pay a premium forthese additional products/services, onethirdof consumers report that they wouldbe willing to pay more to receive such apremium electricity service (see Figure 6).Improved service priority(e.g., shorter wait times when calling yourelectricity provider)Multiple billing and payment options(e.g., choice of billing dates, ability to pay bycredit card, etc.)Availability of additional programs and technologies(e.g., home automation service, home energy audit,annual heating/cooling maintenance plan, etc.)Access to a personal energy advisor (e.g., personaladvice on decreasing costs, seasonal maintenancereminders, proactive contact when bill increases)36%35%32%29%Base: All respondents.Figure 6. Would you be willing to pay a premium for your electricity in order toreceive these additional products/services?Yes, certainlyYes, probably5%26%31% of consumerswould be willing topay a premium toreceive theseadditionalproducts/servicesNo, probably not43%No, certainly not26%Base: All respondents.12

Around the world, though, we foundthat consumer willingness to pay moreto receive a premium electricity servicevaries. Consumers in emerging countriessuch as Brazil, China, South Africa andSouth Korea are most willing, with 50percent or more of consumers reportingthey are “certainly” or “probably”willing to pay a premium. That resultis significantly above the average anda marked contrast to consumers inSweden, Belgium and the Netherlands,which trail the pack in their willingnessto pay for a premium electricity serviceat 17 percent each (see Figure 7).Figure 7. Would you be willing to pay a premium for your electricity in order toreceive these additional products/services?ChinaBrazilSouth AfricaSouth KoreaSingaporeDenmark49% 20%43% 18%47% 11%46% 5%37% 6%29% 2%Average26% 5%Italy28%1%Australia23% 5%Spain21%4%Canada21% 3%Germany21%2%United States19%3%Japan19% 3%Norway17% 2%United Kingdom16% 3%France17% 1%Sweden15%2%Belgium16% 1%Netherlands15% 2%Yes, probablyYes, certainlyBase: All respondents.13

Figure 8. Which of the following products/services would you expect a “premium electricity service” to include?Would you be willing to pay a premium for your electricityin order to receive these additional products/services?Greater mix of renewable energy sources72%Yes, certainly/probably31%Improved service priority39%Multiple billing and payment options32%Personalized energy reports and toolsthat help me to understand and managemy electricity usageAvailability of home energy generationproducts31%No, certainly/probably not69%Availability of additional programs andtechnologies18%17%Access to a personal energy advisor14%Base: All respondents.Base: Consumers who say they would "certainly" or "probably" pay a premium for electricity in order to receive theseadditional products/services.Greener energy mixOn closer inspection, the 31 percentof consumers who are “certainly/probably” willing to pay more for apremium electricity service have specificexpectations for the service. Of those whoreport they are willing to pay, 72 percentexpect a “greener energy mix.” This resultpoints to a preference for a premiumelectricity service to include a tangibleproduct over improved service options.In fact, the issue of “improved servicepriority” ranks as a distant second at 39percent (see Figure 8).Consumer preferences for a premiumelectricity service, as shown in Figure 8,align closely with their actual behaviorswhen asked to make trade-offs to create apackage that suits their needs. When giventhe opportunity to trade off a number ofdefined elements of an energy productand service package, nearly one-thirdof consumers would adopt a premiumgreen package that includes renewableenergy sources, automated electricityconsumption control and the best serviceat a 5 percent bill increase (see Figure 9).Figure 9. Premium green package.“Save the planet” energy bundleGive me peace of mind with the best service and greenoptions (Package adoption ~ up to 29%)Package attributes• Variable electricity price fluctuating based on the time of day• Automated consumption control• Full service and support available across multiple channels of interaction• A considerable portion of the fuel mix is from renewable energy sources• Personalized energy reports are provided with tips to reduce consumption• Bill increase of 5%Methodology note: Results based on a conjoint analysis.Base: All respondents.14

Actionable insight No. 3Maximize consumer desire to saveThe majority of consumers would forgo customer service inreturn for price discounts.Consumer savingsSaving money is paramount for mostconsumers and their households—nosurprise there. Having explored consumerinterest in a premium electricity service,we looked to understand the other endof the spectrum—discounted electricity.When directly asked, more than threequartersof consumers have some levelof interest in receiving limited customerservice to get a discount on electricityprices (see Figure 10).Figure 10. Would you be interested in receiving discounted electricity prices if itmeant receiving limited customer service?Very interestedSomewhat interested28%48%76% of consumers areinterested in receivinglimited customerservice if it meantreceiving discountedelectricity pricesNot very interestedNot interested at all17%7%Base: All respondents.15

Mirroring interest in a premium electricityservice, consumers in emerging marketsshow the most interest in receivinglimited customer service in return fordiscounted electricity prices. In fact,interest in China is just shy of 100percent. As illustrated in Figure 11, mostcountry respondents track fairly close tothe geographic average of 76 percent,with the exception of the Netherlands,where respondents report only 50 percentinterest.Figure 11. Would you be interested in receiving discounted electricity prices if itmeant receiving limited customer service?China 45% 51%South Korea 51% 41%South Africa 43%44%Singapore 52% 33%Brazil 38% 46%Sweden 45% 35%Denmark 45%35%Canada 51% 26%Australia 51% 26%Average 48% 28%Belgium 53%22%Japan 56% 19%Norway 48% 25%Italy 54% 18%United Kingdom 49%24%Spain 47% 23%France 52% 16%United States 46% 21%Germany 46% 17%Netherlands 39%11%Somewhat interestedVery interestedBase: All respondents.16

Figure 12. Which of the following options would you select in order to get discounted electricity prices?Would you be interested in receiving discountedelectricity prices if it meant receiving limitedcustomer service?Mentioned in top threeElectronic billing only (no paper bill) 88%Very/somewhatinterested76%Preauthorized payment plan where bills areautomatically withdrawn from your bankaccountPhone support only available between10:00 – 14:00 Monday to Friday55%68%Online customer support with the option ofpay-per-call phone support46%Not very/notinterested at all24%Phone support is provided by representativesoutside of your home countryMinimum 20-minute wait time to speak witha representative on the phone20%19%Base: All respondents.Base: Consumers who say they would be "very" or "somewhat" interested in receiving discounted electricityprices if it meant receiving limited customer service.Exploring further, we asked consumersto rank the limited service optionsthey would select in order to receivediscounted electricity prices. We foundthat consumers would select optionsthat include mandatory electronic billing,automated payments, limited phonesupport and online-only service (seeFigure 12).What are other ways consumers wouldlike to save money? When we gave themthe opportunity to trade-off definedelements of an energy package, 70percent of consumers would be willingto adopt a package that combines avariable electricity price with onlineonlycustomer service and a 10 percentdecrease on their electricity bill (seeFigure 13).The results highlight that consumers’actual behavior, when forced to maketrade-offs between package componentssuch as cost and level of customerservice, closely match reported interest inreceiving discounted electricity.Figure 13. Money-saving package.“Save money” energy bundleGive me the lowest possible cost and I’ll do the rest(Package adoption ~ up to 70%)Package attributes• Variable electricity price fluctuating based on the time of day• Manual actions required to control consumption and costs• Online service only and electronic billing• No renewable energy in fuel mix• Personalized energy reports are provided with tips to reduce consumption• Bill decrease of 10%Methodology note: Results based on a conjoint analysis.Base: All respondents.17

Actionable insight No. 4Create a value proposition with bundlesConsumers are interested in bundled packages that bettersuit their lifestyles and needs, particularly when they deliversavings, convenience or ease of use.Product and service bundlesBuilding on the insights into whatproducts consumers are interested inreceiving from their providers, surveyrespondents were provided with ascenario in which electricity providersmay bundle additional products andservices with electricity. The scenarioexplained that, in the future, consumersmay be able to purchase a bundle thatincludes electricity as well as other homeservices (e.g., natural gas and water,home phone and Internet, home security,financial services, home energy audit).We then asked consumers to rank the topfactors that would influence their decisionto sign up for such bundles. Consistentwith how consumers have grown used tobundling in other industries, 89 percentsay receiving a discount is “somewhat”or “very” important. But for today’sbusy consumer, convenience and easeof use also emerged as important whenconsidering whether or not to sign up fora bundle, with the availability of a singlepoint of contact and a single bill bothranking at more than 70 percent (seeFigure 14).Figure 14. How important would each of the following factors be in your decisionto sign-up for one of these bundles?In the future, electricity providers may bundle additional products and services with electricity. You maybe able to purchase a bundle that includes electricity as well as other home services (e.g., natural gas andwater, home phone and Internet, home security, financial services, home energy audit, etc.).Gives me a discount 32% 57%89%Provides me with a single point of contactfor installation, service and issueresolutionAllows me to receive a single bill formultiple servicesEnables additional features (e.g., bundlinghome automation and electricity allows meto control my lights and appliances from mymobile phone)Incorporates the latest technologies(e.g., a tablet computer or netbook)Somewhat importantBase: All respondents.Very important44% 32% 76%43% 28% 71%36% 19% 55%35% 19% 54%Interestingly, more than half of consumersalso indicate that enabling additionalfeatures (such as home automation) orincorporating the latest technologies(such as a tablet computer) would be animportant consideration when signing upfor a bundle.18

Optimal introduction timeTiming is of the essence when introducingbundled products and services. Almosthalf of consumers indicate they wouldbe interested in learning about productand service bundles when their providerintroduces a new bundled offer or whenthey are moving into a new home (seeFigure 15). These moments were followedclosely by other trigger points, such aswhen their electricity bill is higher thanusual or when a consumer is signing upfor electricity service. Interestingly, atraditional moment of communicationwith consumers—the bill—rankedbehind other moments, with 36 percentof consumers stating they would beinterested in learning about product andservice bundles when receiving their bill.To examine the interest in learningabout product and service bundles fromanother perspective, we considered theinfluence of age. In some cases, youngerand older consumers stand on opposingsides of when the time is right for themto learn about new bundles. For example,the 18- to 24-year-old segment is mostinterested (at 58 percent) when they havea major life event, such as moving into anew home. In contrast, the 55+ segmentis most interested (at 58 percent) whenthe electricity provider makes a change byintroducing a new product/service bundle(see Figure 16).Figure 15. When would you be interested in learning about product and servicebundles from your electricity provider?When my electricity provider introduces a newproduct or service bundleWhen I am moving into a new homeWhen my electricity bill is higher than usualWhen I sign up for electricity serviceWhen I get my billWhen I sign up for another home service(e.g., telephone, Internet, insurance, security, etc.)When I am renovating my homeWhen I am purchasing new appliances/householdelectronicsBase: All respondents.Mentioned in top threeFigure 16. When would you be interested in learning about product and servicebundles from your electricity provider?27%25%23%Mentioned in top three36%43%49%48%47%To generate deeper insights into consumerpriorities across a spectrum of variablesrelated to electricity bundles and valuepropositions, we asked consumers totrade off components—namely, electricityrate options, consumption managementoptions, renewable energy options,customer service options and electricityusage reports. Based on the optionsselected, there was a correspondingimpact on the bill. In the exercise,our surveyed consumers ranked theirpreferences and traded off elements tocreate energy packages that meet theirneeds (see Figure 17). Diverse preferencesemerged and our analysis shows thatinterest in different packages differs bygeography, income, gender, amount oftime available for energy managementand other factors.When my electricity provider introduces a newproduct or service bundleWhen I am moving into a new homeWhen my electricity bill is higher than usualWhen I sign up for another home service(e.g., telephone, Internet, insurance, security, etc.)18-24 years 25-34 years 35-54 years 55+ yearsBase: All respondents.36%43%54%58%58%56%45%39%47%45%45%49%45%46%43%42%19

Figure 17. Energy product and service packages to meet diverse values.“Make it predictable”energy bundleGive me a consistent bill withno-frills servicePackage attributes• Fixed electricity price requiring no actions to manage usageat particular times• Manual actions required to control consumption• Online service only and electronic billing• No renewable energy in fuel mix• Basic consumption history provided• Bill decrease of 5%Consumer attributes• Higher adoption by consumers with higher income• Higher adoption by home owners versus renters“Save money”energy bundleGive me the lowest possible cost andI’ll do the restPackage attributes• Variable electricity price fluctuating based on the time of day• Manual actions required to control consumption• Online service only and electronic billing• No renewable energy in fuel mix• Personalized energy reports are provided with tips to reduceconsumption• Bill decrease of 10%Consumer attributes• Higher adoption by those who report they have time tomanage electricity consumption• Higher adoption by home owners versus renters“Save time”energy bundleDeliver a set-it-and-forget-it solution formanaging my energyPackage attributes• Variable electricity price fluctuating hourly• Automated consumption control• Full service and support available across multiple channelsof interaction• No renewable energy in fuel mix• Basic consumption history provided• No impact on billConsumer attributes• Higher adoption by males• Higher adoption by consumers age 18-34“Save the planet”energy bundleGive me peace of mind with the best serviceand green optionsPackage attributes• Variable electricity price fluctuating based on the time of day• Automated consumption control• Full service and support available across multiple channels ofinteraction• A considerable portion of the fuel mix is from renewableenergy sources• Personalized energy reports are provided with tips to reduceconsumption• Bill increase of 5%Consumer attributes• Higher adoption by consumers age 18-24Note: Illustrative energy packages created based on conjoint analysis.20

ConsumerconnectionThe Web, mobility and social media areincreasingly creating a consumer worlddefined by connectivity. For energy providers,engaging consumers is a balancing actbetween managing operational realities andconnecting with consumers—on their terms.22

Actionable insight No. 5Optimize the value of self-serveLow-touch channels and self-service have reached a tippingpoint where consumers prefer these options for mosttransactional interactions.High-touch versus low-touchThe consumers participating in our studyreport a dramatic move toward low-touchchannels of interaction such as e-mail orweb portal. We asked consumers abouttheir preferred channels of interaction forspecific moments across the consumerlife cycle. We then grouped channelsthat had direct, immediate interactionwith a representative as “high-touch”and those that did not as “low-touch.”Not surprisingly, when asked about theirpreferred method of interaction, forroutine items such as receiving their bill,100 percent of respondents prefer lowtouchchannels (see Figure 18). In fact,for eight of the nine interactions, themajority of consumers prefer low-touchchannels. As the complexity of serviceissues increases, consumer preference forlow-touch channels decreases. On theother side of the spectrum, for resolvingbilling issues, 60 percent of consumersprefer high-touch channels such as inpersonor on the phone.Figure 18. Please select your preferred method of interaction with your electricity provider for the following events.%100100%9084%80706071%70%67%67%61%59%60%50403029%30%33%33%39%41%40%2016%100%0Receive billPay billLearn aboutnew homeenergy servicesLearn aboutnew energypackagesGet outageinformationChange youraddress/moveSwitch to anew electricityprovider*Sign-up fornew electricitypackages andservicesResolve issues(e.g., billingissues)Low-touch channels (e-mail, portal, social media,mobile applications, paper, SMS)High-touch channels (in-person, telephone,online chat)* Only in deregulated markets.Base: All respondents.23

Looking more closely at consumerinteraction preferences, consumersoverwhelmingly prefer “Web-enabledchannels” (such as web portals, mobileapplications and email) for the majorityof their interactions (see Figure 19).For example, 57 percent of surveyrespondents prefer Web-enabled channelsfor changing their address and 71 percentfor receiving their bill.the phone. The importance of in-personinteractions was also highlighted in thefindings from our 2011 survey, Revealingthe Values of the New Energy Consumer.In this survey, when asked how theywould prefer to purchase a SetAndForgetprogram, 63 percent of consumersreported that they would prefer topurchase from a staff member in a storeor at their home. 1However, in-person and phone interactionwith a representative remain importantfor learning and purchasing experiences.When it comes to learning about newservices, 17 percent of consumers preferin-person channels and 11 percent preferinteraction over the phone. Similarly,when signing up for new electricitypackages and services, 21 percent preferin-person channels and 17 percent overFigure 19. Please select your preferred method of interaction with your electricity provider for the following events.Receive bill Pay bill Learn aboutnew homeenergy servicesLearn aboutnew energypackagesGet outageinformationChange youraddress/moveSwitch to a Sign-up fornew electricity new electricityprovider* packages andservicesResolveissues (e.g.,billingissues)In person (e.g., at yourhome or in a store)7% 17% 17% 7% 15% 21% 10%Over thetelephone9% 10% 11% 33% 22% 21% 17% 44%Online chat2% 2% 4% 3% 3% 6%Web-enabled channels71% 69% 52% 51% 54% 57% 50% 45% 40%SMS/text message2% 1% 1% 13% 1%Paper mail27% 15% 18% 18% 10% 11% 13%High-touch channelsLow-touch channels*Only in deregulated markets.Base: All respondents.24

Mastering self-serve channelsEncouraging consumers to use self-servechannels and delivering an effectiveexperience are increasingly important.To better understand expectations, weexplored what characteristics are mostimportant for consumers when theyconsider using self-service. Ninety-onepercent of consumers cite simplicityand ease of use, along with the abilityto resolve a request the first time, asimportant characteristics (see Figure 20).Furthermore, 89 percent of consumershighlight the importance of havingtechnical support available—wheneverthey need it.Figure 20. How important are the following characteristics when you consider usingself-serve channels to interact with your electricity provider?Resolves my request the first time 33% 58%91%Simple and easy to useTechnical support is availablewhenever I need itKeeps my information privateand secureProvides tools to understand myusage and get tips to reduce my bill34%28%38%44%60%57%51%41%91%89%88%85%Faster than speaking to a representative43%38%81%More convenient than speakingto a representative43% 33%76%Somewhat importantVery importantBase: All respondents.25

Actionable insight No. 6Unlock social mediaConsumers in many geographies are interested in engagingwith their electricity providers through social media, inparticular, for service convenience.Interacting through social mediaSocial media is not new, but its reach andvariety of uses continues to grow. Whenit comes to energy-related interactions,consumers are increasingly comfortableusing social media. More than one-thirdof our survey respondents use, or planto use, social media to discuss energyrelatedissues with other consumers orgroups (see Figure 21).Figure 21. Have you used or do you plan to use social media to discuss or learnabout energy-related issues or to interact with your electricity provider?Yes, I currently doNo, but I planto in the next12 months11%25%36%8%22%8%30% 30%22%Consumers also show interest in passivelyfollowing or actively interacting withtheir electricity providers through socialmedia. Thirty percent of consumersinteract (or plan to interact) with theirelectricity provider on popular networks,such as Facebook© and Twitter©, postingcomments or writing “tweets.” Thisactivity represents a sharp rise comparedto our 2010 survey, in which only 1percent of consumers opted for usingsocial media to get customized advice onthe best electricity management programsfor their own situation. 2No, and I donot plan to64%Discuss or learnabout energy-relatedissues with otherconsumers or groups70%Follow myelectricity provider(e.g., follow onTwitter, “like” onFacebook, etc.)70%Interact with myelectricity provider(e.g., follow onTwitter, “like” onFacebook, etc.)Base: All respondents.26

When it comes to social media, youngerconsumers once again exhibit specificpreferences. Figure 22 illustrates that 50percent of 18- to 24-year-old consumerscurrently use or plan to use social mediato discuss or learn about energy-relatedissues with other consumers or groups.Figure 22. Have you used or do you plan to use social media to discuss or learnabout energy-related issues or to interact with your electricity provider?Discuss or learn about energy-relatedissues with other consumers or groups50%45%36%34%22%However, the decline in appeal of socialmedia with older generations is not asmarked as one might expect. Even oldergenerations of consumers are “cyberactive.”For example, 22 percent ofconsumers 55 years and older currentlyuse or plan to use social media to discussor learn about energy-related issues.Follow my electricity provider (e.g., followon Twitter, “like” on Facebook, etc.)18-24 years44%18-24 years25-34 years39%25-34 yearsAverage30%Average35-54 years28%35-54 years55+ years15%55+ yearsGlobal use of social mediaFurther analysis on geographic differencesin social media interest shows a splitbetween mature and emerging economies.One-fifth of consumers in emergingeconomies currently use social media todiscuss energy-related issues with otherconsumers or groups (see Figure 23).But almost 50 percent of consumers inemerging economies plan to use it in thenext 12 months. These percentages aremore than double the response rates ofconsumers in mature economies.Interact with my electricity provider (e.g.,comment on Facebook wall, mention onTwitter, etc.)Currently use social media to interact with electricityprovider or plan to in the next 12 monthsBase: All respondents.44%18-24 years40%25-34 years30%Average28%35-54 years14%55+ yearsFigure 23. Have you used or do you plan to use social media to discuss or learnabout energy-related issues or to interact with your electricity provider?Discuss or learn about energy-related issues withother consumers or groupsYes I currently do11%9%21%No, but I plan to in the next12 months25%20%47%No, and I do not plan to64%71%32%TotalMatureeconomies*Emergingeconomies**Mature economies include: Australia, Belgium, Canada, Denmark, France, Germany, Italy, Japan, Netherlands, Norway,Singapore, Spain, Sweden, United Kingdom, United States.*Emerging economies include: Brazil, China, South Korea, South Africa.Base: All respondents.27

Social media as an informationsourcePossibilities for social media continue togrow. To understand consumer interestin using social media as a source ofinformation, we presented consumerswith a hypothetical situation: If electricityprices fluctuate throughout the day,how would you prefer to be notified?Figure 24 shows that younger consumersare the most interested in being notifiedof changes in electricity prices via socialmedia. The average rate of interest amongall age groups is 13 percent, but the18- to 24-year-old group nearly doublesthat rate at 24 percent of consumersexpressing interest in receiving priceupdates via social media.Encouraging social media useAlthough it’s fair to say that connectingconsumers with utility companieswas not the original intent of socialnetworking, such connection is oneway that social media has evolved.Many energy providers are activelytrying to engage consumers throughsocial media to extend the consumerrelationship or meet other goals.Social media can take many forms andbe used in many ways. To understandwhat would engage consumersthrough social media, our surveyexplored some specific tactics thatenergy providers might pursue.Interestingly, consumers emphasizethat receiving quick, convenient servicethrough social media is a critical factorin encouraging them to interact withtheir electricity providers. In Figure 25,we see that 50 percent of consumerswould be encouraged to use social mediaif they received quick and convenientservice such as responses to complaintsor to find out about power outages.Figure 24. In the future, electricity prices may fluctuate throughout the day,making it more expensive to use electricity at certain times. If this were the case,how would you like to be notified when there is a significant change in the price ofelectricity?Social media*18-24 years25-34 yearsAverage35-54 years55+ years* Mentioned in top three.Base: All respondents.Figure 25. Would the following options encourage you to interact with yourelectricity provider through social media?Quick and convenient service from yourelectricity provider (e.g., responds to complaints,outage notifications through Facebook/Twitter)Online community managed by your electricityprovider to discuss and learn about energy-relatedproducts, services and tips to reduce your billAccess to exclusive offers from your electricityprovider through social media (e.g., free ticketsto a sporting event)Recognition from your electricity provider for yourengagement through social media (e.g., awards forcontributing energy-saving tips)Fun and entertaining content created by yourelectricity provider (e.g., YouTube videos, Facebookgames, etc.)ProbablyBase: All respondents.Certainly5%11%13%18%32% 18%33% 14%32% 14%29% 13%23% 8%31%24%42%47%46%50%Another 47 percent would be encouragedto join the conversation if an onlinecommunity was managed to providemore information about energy-relatedproducts and tips on how to reduce bills.28

As we illustrated previously, the 55-andolderage group shows the least interestin using social media. Even so, this lowerturnout should not be interpreted as “nointerest.” Figure 26 shows that there issignificant opportunity to encourageinteraction through social media.Figure 26. Would the following options encourage you to interact with yourelectricity provider through social media?Quick and convenient service from your electricityprovider (e.g., responds to complaints, outagenotifications through Facebook/Twitter)34%49%63%59%For example, one-third of consumers 55years or older would be encouraged to usesocial media if it offered a community todiscuss and learn about energy-relatedproducts or tips to reduce their bill.Looking at younger consumers 18 to 24years old, 64 percent report that theywould be encouraged to interact throughsocial media if electricity providersoffered access to exclusive rewards suchas free tickets to sporting events. Thedifferences across ages highlight thatproviders need a targeted approach fordifferent groups of consumers.Online community managed by your electricityprovider to discuss and learn about energy-relatedproducts, services and tips to reduce your billAccess to exclusive offers from your electricityprovider through social media (e.g., free tickets toa sporting event)Recognition from your electricity provider for yourengagement through social media (e.g., awards forcontributing energy-saving tips)Fun and entertaining content created by yourelectricity provider (e.g., YouTube videos, Facebookgames, etc.)15%26%25%59%53%45%33%44%40%49%40%29%64%57%59%51%18-24 years 25-34 years 35-54 years 55+ yearsBase: All respondents who would “certainly” or “probably” be encouraged to interact with their electricityprovider through social media.29

Consumer loyaltyConsumer satisfaction, engagement and loyaltyare complex and intertwined. Understanding thedrivers of satisfaction and consumer stickiness isbecoming increasingly important for successfulenergy providers.30

Actionable insight No. 7Manage consumer engagementSatisfaction and engagement actually decrease based on thelength of time consumers interact with their providers.Consumer satisfactionConsumer satisfaction is a common metricaround the world. To understand basiclevels of satisfaction, consumers wereinvited to rate their satisfaction with theircurrent electricity provider. In Figure 27,we see that consumers in the Netherlandsexhibit the highest levels of satisfaction at82 percent, whereas consumers in SouthAfrica and Japan indicate the lowest (29percent and 27 percent, respectively). Theaverage for all country respondents is asatisfaction score of 59 percent with theirelectricity providers.Figure 27. What is your level of satisfaction with your current electricity provider?Netherlands 61%21%United States 43%29%Canada 43%23%Norway 44%22%United Kingdom 41%24%France43% 22%Germany 43% 21%Australia 42% 20%Denmark 39% 23%Sweden37%24%China46%15%Brazil38%21%Belgium 47%12%Average 41%18%Italy46% 10%Spain41% 9%Singapore39% 8%South Korea 32%7%South Africa23%6%Japan21%6%SatisfiedVery satisfiedBase: All respondents.31

How involved are consumers?To measure the engagement of consumersspecifically in deregulated markets, oursurvey asked three pointed questions andinstructed the consumers to rate theirresponses on a scale from 1 to 10, with10 being the highest:• Satisfaction: “What is your level ofsatisfaction with your current electricityprovider?”• Recommendation: “Would yourecommend your current electricityprovider to your family/friends?”• Switching: “Are you consideringswitching to another electricity providerin the next 12 months?”Figure 28. Engagement score with electricity provider (deregulated markets only).Engagement score 67%Components of the engagement scoreSatisfiedLikely to recommendNot likely to switchBase: Respondents in deregulated markets only.Note: The engagement score is the average of the numeric values of the three main components in the figure. Theengagement score is the percentage of individuals that are considered engaged (e.g., an index of 67 means that 67 outof 100 individuals—or 67 percent—are engaged).68%65%68%To create a holistic view of consumerengagement with their providers incompetitive markets, we aggregatedresponses to these three questions. Theresulting consumer engagement scorerepresents one of the most critical metricsfor energy providers. Averaging the totalresponses, we learned that globally 67percent of consumers are engaged withtheir electricity providers (see Figure 28).Figure 29 illustrates that in deregulatedmarkets across geographies, responsesby country do not stray too far from themedian score of engagement—only a 7percent difference up or down. Consumersin France take top spot as the mostengaged (at 74 percent), while SouthKorean consumers are the least engaged(at 60 percent).Figure 29. Engagement score with electricity provider.FranceNetherlandsUnited States*Canada*NorwaySwedenUnited KingdomAverage74%72%71%70%69%68%68%67%Denmark66%Australia65%Italy65%Germany65%Belgium64%Spain62%South Korea60%32Engagement score* Includes only deregulated states and/or provinces.Base: Respondents in deregulated markets only.

Extent of consumer interactionIn general, electricity and energyproviders are not necessarily top ofmind for consumers; however, manytrends in the marketplace today—smartmetering, value-added products andservices, and energy conservation—requiregreater levels of consumer interaction.Respondents spent, on average, 9 minutesinteracting with a representative of theirelectricity provider over the past 12months (see Figure 30). Highlighting thelow level of interaction, 54 percent statedthat they have not interacted with theirelectricity provider in the past 12 months.Figure 30. In the past 12 months, how much time did you spend in total interactingwith a representative of your electricity provider (e.g., over the phone, e-mail, in astore, in your home, etc.)?I have not interacted with myelectricity provider in the past12 monthsLess than 5 minutes5 to 10 minutes10 to 20 minutes9%12%12%54%Average timespent interacting:9 minutes20 to 30 minutes5%30 minutes to one hour4%Greater than one hour4%Base: All respondents.33

Further analysis of specific geographiesshows that in the emerging economyof South Africa, the interaction time ismore than double the average (see Figure31). Additionally, it is interesting to notethat a handful of mature economies withderegulated electricity markets, such asBelgium, Australia, Spain and the UnitedKingdom, also rank above the average.Figure 31. In the past 12 months, how much time did you spend in total interactingwith a representative of your electricity provider (e.g., over the phone, e-mail, in astore, in your home, etc.)?South Africa 19Brazil 14Belgium 13China 13Australia 12Spain 11United Kingdom 10Average 9Italy 8Denmark 8Netherlands 8United States 7Norway 7Singapore 7France 7Sweden 7Germany 6Canada 6South Korea 5Japan 3Average time spent in minutesBase: All respondents.34

Taking a closer look, we can see that themore time consumers spent interactingwith representatives of their electricityprovider over the past 12 months,the more their levels of satisfactionand engagement seem to decrease. Ifconsumers have interacted with theirenergy provider for more than one hourin the past year, satisfaction drops by 7percent compared to those who have notinteracted at all. The drop in engagementover the same range is even moredramatic—falling a full 10 percent (seeFigure 32).Figure 32. Consumer satisfaction and consumer engagement versus time spent interacting with a representative of electricityprovider in the past 12 months.%100Consumer satisfaction%100Consumer engagement9595909085858080Consumer satisfaction75706560555067%67%68%I have not Less than 5 to 10interacted 5 minutes minutesin the past12 months67%10 to 20minutes66%20 to 30minutes64%30 minutesto onehour60%Greaterthan onehourConsumer engagement75706560555069%67%66%I have not Less than 5 to 10interacted 5 minutes minutesin the past12 months65%10 to 20minutes63%20 to 30minutes63%30 minutesto onehour59%Greaterthan onehourTime spent interacting with a representative of yourelectricity provider in the past 12 monthsTime spent interacting with a representative of yourelectricity provider in the past 12 monthsSatisfactionBase: All respondents.Consumer engagementBase: Respondents in deregulated markets only.35

Actionable insight No. 8Understand churnIn competitive markets, while switching decisions are largelyprice driven, loyalty rewards are emerging as an effectivemotivator for consumers to stay with their current provider.Willingness to recommend andswitchIn deregulated utility markets, high ratesof consumer churn can erode revenue andmay be a sign of trouble in the business.After measuring consumer satisfactionlevels, we wanted to better understandtwo other factors that influenceengagement: willingness to recommendand retention.In deregulated markets, 55 percent ofconsumers would recommend theirelectricity provider to family and friends(see Figure 33). While 14 percent ofrespondents would not recommend theirprovider, 25 percent are consideringswitching to another electricity providerin the next 12 months.Figure 33. Willingness to recommend and retention.Would you recommend your current electricity providerto your family/friends?Are you considering switching to another electricity providerin the next 12 months?CertainlyProbably19%36%55% of consumerswould recommendtheir electricityproviderCertainly switchProbably switchNeutral11%14%24%25% of consumersare consideringswitching to anotherelectricity providerProbably not switch13%Neutral31%Certainly not switch38%Probably not8%Certainly not6%Base: Respondents in deregulated markets only.36

Consumer willingness to switch electricityproviders differs across geographies.Notably, consumers in France report thelowest intention to switch electricityproviders with a mere 7 percent sayingthat they are considering switching inthe next 12 months (see Figure 34).Germany and Belgium rise to the topwith 19 percent and 16 percent ofconsumers, respectively, reporting thatthey “certainly” intend to switch providersin the next 12 months.The drivers behind churnWhat drives a consumer to end therelationship with his or her electricityprovider? Perhaps unsurprisingly, theprimary factor is that consumers switchfor savings (see Figure 35). Eighty-ninepercent of consumers in deregulatedmarkets report that a reduced electricitybill is a main factor that motivatesswitching providers.While price is important, it is not theonly factor consumers consider. Sixtypercent of consumers would be motivatedto switch providers for a rate plan thatbetter suits their needs. Renewable energyoptions are also enticing for one-third ofthe survey respondents, as are productand service bundles, loyalty rewards andbetter customer service.Figure 34. Are you considering switching to another electricity provider in the next12 months?GermanyBelgiumItalyAustraliaUnited KingdomSpainSwedenNetherlandsAverageDenmarkUnited States*NorwaySouth KoreaCanada*FranceProbably switch13%15%Certainly switchBase: Respondents in deregulated markets only.* Includes only deregulated states and/or provinces16% 19%20% 8%16% 11%12% 14%17% 9%14% 11%12% 8%12%9% 9%4% 3%15% 16%13% 12%14%7%4%11%11%Figure 35. What factors would motivate you to switch to a new electricityprovider?Mentioned in top threeReduced electricity bill 89%Rate plans that better suit my needs(e.g., fixed price, reduced price inevenings, etc.)60%Provides renewable energy options(e.g., wind, solar, etc.)Product and service bundles that bettersuit my needs (e.g., bundle natural gas,home phone, Internet, home energy audit,etc.)Better loyalty rewards program33%32%32%Better customer service/support31%Better payment options17%Base: Respondents in deregulated markets only.37

Loyalty rewards programsLoyalty rewards programs have long beena retention tool in many industries. Asa result, consumers have grown usedto being rewarded by their providers.Our findings show that, indeed, loyaltyprograms are an effective tool tomotivate consumers to stay with theircurrent electricity provider. In deregulatedmarkets, 69 percent of consumers wouldbe motivated to stay if their currentelectricity provider rewarded them with“points” that can be used to purchase avariety of products and services. Otherloyalty constructs such as surpriserecognition programs or rewards pointsthat are only redeemable at specific timesin the future do not fall far behind (seeFigure 36).Figure 36. Would the following rewards programs motivate you to stay with yourcurrent electricity provider?Yes, greatlyYes, somewhatNo23%46%31%69%Ongoing traditionalloyalty-points programearns points that canbe used to purchase avariety of products andservices20%40%40%Surprise customerrecognition programwhere you receiveunexpected rewardsfrom your electricityprovider60%20%43%37%63%An ongoing rewardsprogram where youaccumulate pointsthat are redeemable ata specific time in thefutureBase: Respondents in deregulated markets only.Loyalty rewardsA closer lookEnergy providers in competitive markets are increasingly using loyalty rewardprograms as a tool to retain consumers and encourage certain behaviors.Accenture’s consumer research has explored loyalty rewards programs from anumber of angles, shedding light on the way that consumers perceive rewards.Interestingly, while more than 60 percent of consumers report that loyaltyprograms would encourage them to stay with an existing provider (see Figure36), only 32 percent of consumers say that a better loyalty program wouldbe a reason to switch (see Figure 35). Furthermore, in Revealing the Valuesof the New Energy Consumer, consumers reported that after price, loyaltyrewards were the most critical element considered when adopting an energymanagement program. 3These results suggest that consumers have differing values toward loyaltyprograms when assessing their current provider or specific energy programsversus externally assessing another provider. When evaluating their currentprovider and making decisions about adopting an energy management program,loyalty rewards are top of mind. However, when evaluating a different provider,loyalty rewards are less of a differentiator.38

Consumer satisfaction, interactionand switchingAs previously stated, there is arelationship between the amount oftime consumers spend interacting withtheir providers and their satisfaction.Our survey results show an evenstronger correlation between time spentinteracting and a consumer’s likelihoodto switch providers (see Figure 37). Asconsumers spend more time interactingwith a representative of their electricityprovider, satisfaction level drops and thelikelihood of switching providers increasesdramatically. Thirty-eight percent ofconsumers who have not interacted withtheir provider in the past 12 monthsreport that they are likely to switch;however, this number grows to 55 percentfor consumers who have spent more thanan hour interacting with their provider inthe past 12 months.Figure 37. Consumers’ likelihood to switch electricity provider versus time spent interacting with a representative of theelectricity provider in the past 12 months.%100Consumers’ likelihood to switch and satisfaction90Consumers’ likelihood to switch and satisfaction8070605040302010069%38%I have notinteracted inthe past 12months68%45%Less than5 minutes69%48%5 to 10minutes68%48%10 to 20minutes67%51%20 to 30minutes65%50%30 minutesto one hour62%55%Greater thanone hourTime spent interacting with a representative of your electricity provider in the past 12 monthsSatisfactionBase: Respondents in deregulated markets only.Consumers’ likelihood to switch39

Actionable insight No. 9Engage the next generationYounger consumers can offer a paradox: they prefer a complexmix of high-touch interactions, self-service and social mediaengagement.Less loyal and more interactiveNearly a third of 18- to 34-year-oldconsumers indicate strong loyalty totheir electricity provider indicatingthey will “certainly not switch” in thenext 12 months (see Figure 38). Incomparison, nearly half of consumersaged 55 or older say that they will“certainly not switch” electricityproviders in the next 12 months.Interestingly, younger consumers alsospend more time interacting withrepresentatives of their electricityproviders. Consumers who are 18 to 34years old interact with their providers 11minutes a year, compared to an averageof nine minutes (see Figure 39). Whilea difference of two minutes may soundsmall, the operational cost implicationsfor utilities can be significant.Young with diverse channelpreferencesCountering widely held beliefs thatyounger consumers prefer low-touchcontact and self-serve channels, 18- to24-year-old respondents have a strongerpreference for high-touch channels forspecific events, such as in person or onthe phone, than older consumers. Figure40 illustrates that they prefer to interactwith a customer service representativemore than other age groups and inparticular to learn about and sign up fornew electricity packages or in deregulatedmarkets, to switch providers.Figure 38. Are you considering switching to another electricity provider in the next12 months?Certainly switchProbably switchNeutralProbably not switchCertainly not switch9%17%26%17%Base: Respondents in deregulated markets only.12%31% 32%18-24 years13%16%27%25-34 years11%14%26%12%37%35-54 years9%10%19%13%49%55+ yearsFigure 39. In the past 12 months, how much time did you spend in total interactingwith a representative of your electricity provider (e.g., over the phone, e-mail, in astore, in your home, etc.)?18-24 years 1125-34 yearsAverage91135-54 years855+ years7Average time spent in minutesBase: All respondents.40

Figure 40. Please select your preferred method of interaction with your electricity provider for the following events.18-24 years25-34 years35-54 years55+ years43%34%29%22%Learn about new energypackages57%66%71%78%Learn about new homeenergy services42%58%32%68%27%73%20%80%Sign-up for new electricitypackages and services56%44%46%54%38%62%34%66%Change your address/move47%37%30%24%53%63%70%76%24%18%14%10%Pay bill76%82%86%90%Resolve issues (e.g., billingissues)38%62%41%59%40%60%43%57%Switch to a new electricityprovider(deregulated markets only)53%47%44%56%37%63%31%69%High-touch channels (in-person, telephone, online chat)Low-touch channels (e-mail, portal, social media, mobile applications, paper, SMS)Base: All respondents.41

In addition, Figure 41 shows that interestin interacting through social media issignificantly higher among youngerconsumers. Thirty-nine percent or moreof 18- to 34-year-old consumers arecurrently using or planning to use socialmedia to discuss or learn about energyrelatedissues with other consumers orgroups, to follow their electricity providersor to interact with their provider.Figure 41. Have you used or do you plan to use social media to discuss or learn about energy-related issues or to interact withyour electricity provider?Discuss or learn aboutenergy-related issues withother consumers or groupsFollow my electricityprovider (e.g., follow onTwitter, “like” on Facebook,etc.)Interact with my electricityprovider (e.g., comment onFacebook wall, mention onTwitter, etc.)18-24 years50%44%44%25-34 years45%39%40%Average36%30%30%35-54 years34%28%28%55+ years22%15%14%Currently use social media to interact with electricity provider or plan to in the next 12 monthsBase: All respondents.42

Implications for energyprovidersOur findings illustrate that the preferences andvalues of the new energy consumer are diversebut offer opportunities to deliver on multipleimperatives—consumer satisfaction, cost reductionand revenue growth. Energy providers, regulatedand deregulated alike, will need new capabilities andstrategies in order to develop solutions that redefinethe value proposition for consumers while creatingnew opportunities for themselves.44

Create value with consumer choice:Use choice to create targetedpropositions that deliver value tothe provider and consumerConsumer choice has emergedas a powerful tool for definingnew value propositions, shapingconsumer expectations and creatingtargeted offerings that alignwith consumer preferences. Theconcept of choice is applicable notonly in deregulated markets.Consumers are interested in receivingadditional energy and nonenergyrelatedproducts and services fromtheir providers. Seizing this opportunityrequires a move beyond the commodity,developing innovative offerings that blendthe optimal mix of products and services—such as different rate structures, energymanagement technology, renewableenergy sources, and other energy ornonenergy-related products and services.Bundling energy and value-addedproducts or services can also be aplatform to personalize the energyexperience, helping develop uniqueand targeted value propositions forspecific groups of consumers whileaddressing providers’ cost, revenueand satisfaction objectives. For manyproviders, implementing bundling willlikely require a significant shift in termsof the people, process and technologycapabilities required to create, scale andmanage a portfolio of bundled productsand services.Establishing differentiated premium ordiscounted offerings can help energyproviders deliver on diverse consumerexpectations, manage cost-to-serveand ultimately create a more compellingenergy offering for consumers. To pinpointopportunities, providers must identifythe cost and consumer satisfactionlevers across channels with a focus onrationalizing service with little to noimpact on consumer satisfaction. In short,providers will need to excel at innovation,whether it is in product development,bundling or consumer messaging.Redefine consumer connection:Develop a multifaceted consumerrelationship that delivers low-costself-service for the majority oftransactions and high-value servicefor critical interactionsEnergy providers have an opportunityto reinvent their approach to customerservice by creating an interaction mixthat reduces operational costs anddelivers what consumers want.To succeed at developing multifacetedrelationships, providers will need to buildeffective self-serve capabilities and thenwork to drive consumer adoption forcertain transactions. At the same time,interactions with provider representativesmust become value added, resolvingissues and delivering targeted treatmentsthat create positive experiences.Social media has entered the mainstreamas a distinct channel of interactionfor utilities. It is no longer enough forproviders to simply monitor consumersentiment through social media. Rather,energy providers need to have a socialmedia presence and use it holistically tobetter understand the consumers who useit and interact with those interested inbeing engaged through social media.As providers develop this multifacetedrelationship with consumers, they willneed to seamlessly accommodate awide array of consumer channels andalign messaging under a single point ofaccountability within the organization.Engage to build consumer loyalty:Develop operational and consumerinsights to engage consumers andbuild loyaltyIt is becoming clear that for energyproviders, data analysis and theability to drive insights through toaction are critical competencies.Providers need to develop analyticscapabilities and processes to learnfrom consumers, understand thepreferences of different segmentsand implement targeted experiencesthat cost-effectively build loyalty andcreate new revenue opportunities.Consumers have limited interactionswith their energy providers. The moreinteractions they have, the less satisfiedthey are, and in deregulated markets,the more likely they are to churn. Thesefindings suggest that the majority ofcurrent interactions are neutral ornegative. Providers have an opportunity todevelop operational and consumer insightsto identify the root cause of contacts andthen manage them to support positiveoutcomes. This requires analysis andcontinuous improvement capabilitiesthat apply equally to developingconsumer and operational insights.In addition, younger consumers interactmore with their energy providers, areless loyal and have differing channelpreferences, all of which increase servicecost and complexity. To effectivelyengage different groups of consumers,energy providers must develop targetedapproaches that balance cost-to-servewith consumer preferences.45

ConclusionConsumer values and preferences arechanging as the energy marketplaceevolves. Providers have an opportunityto harness these changes to create value,engage consumers and build loyalty.To develop the competencies criticalfor the future, providers may choose todevelop an ecosystem of partnershipsand collaboration that extends theconsumer relationship and createsagility and scalability for new productsor services. These partnerships mayinclude operational outsourcing to allowproviders to focus on core strengths, ormay extend to the broader community ofother retailers, academia, governments,cities and other stakeholders.As the energy marketplace continuesto evolve and providers assess theirapproach to markets and consumers,dynamic new business models areemerging. Some providers are movingto capture value beyond the meterwhile others are developing roles astrusted energy advisors. Regardless ofthe business model (or combination ofmodels) a provider selects, there is alsoa need to transform traditional utilityoperating models to create organizationsthat are more consumer focused, agileand cost effective.The most successful energy providers willbe those that deeply understand consumerbehaviors, attitudes and preferences andtake a balanced and targeted approachto identify and deliver value at scale.46

Learn about The NewEnergy Consumer:Balancing Strategicand OperationalImperativesAccenture believes that as newtechnologies, consumer trendsand regulatory changes intensify,energy providers face a dynamicenergy marketplace that presentsa host of new opportunities andchallenges. The range of possibilitiesand areas for focus are vast andwill differ for each provider. Withthis in mind, we have developed acompanion reference guide, The NewEnergy Consumer: Balancing Strategicand Operational Imperatives.The guide contains perspectives andglobal insights based not only onAccenture’s end-consumer researchprogram, but also on a wide variety ofother industry research, interviews withclients and industry experts, crossindustryexperiences and Accenture’sown knowledge of managing utilityoperations. It covers areas such as:• The macro trends creating theevolving energy marketplace inboth regulated and deregulatedenvironments.• The critical focus areas utilitiesmust consider for the evolvingenergy marketplace: the need forinnovation, shifts in the consumerutilityrelationship, the challenges andopportunities of increased data and theneed for collaboration.• The strategic business model optionsavailable to utilities to navigate thedisruptive changes in the industry.• Immediate actions utilities cantake to balance current challengeswhile creating a foundation to takeadvantage of the opportunities of thefuture.• The key capabilities that willdetermine success as providers selecta path forward in the evolving energymarketplace.47

Appendix: Summary ofprevious findings fromAccenture’s New EnergyConsumer research program48

In previous years, Accenture’s endconsumerresearch focused onunderstanding consumer preferences andrevealing attitudes and behaviors that arechanging their relationship with energyproviders. Following is an overview ofthe key findings from our previous endconsumerstudies.Understanding ConsumerPreferences in Energy EfficiencyIn 2010, Accenture developed the firstend-consumer study, UnderstandingConsumer Preferences in EnergyEfficiency, to investigate consumerattitudes and behaviors toward electricitymanagement programs. The research setout to understand consumer opinionsand preferences toward electricitymanagement programs by answering sixcore questions:1. Do consumers have a clearunderstanding of the impact of electricityconsumption on the environment?2. Do they understand how they canoptimize their electricity consumption?3. Do they feel social pressure to do so?4. Which organizations do they trust toinform them about actions they can taketo optimize their electricity consumption?5. Are they aware of electricitymanagement programs?6. What are the drivers and barriers toadoption of electricity managementprograms?The online survey, which involved morethan 9,000 individuals in 17 geographies,provided insights into the emerging trendsin new energy consumerism:• There is a significant contradictionbetween consumer perceptions and theiractual knowledge of energy efficiency.• Consumers’ first instinct is to contacttheir utilities/electricity providers forenergy-efficiency activities; however,providers still need to build trust andcredibility.• While price remains a key factor toadoption, the extent of the utilities’/electricity providers’ control over energyuse has emerged as a potential barrier.• Channels and contact points forutilities/electricity providers tocommunicate with consumers are diverse.• Adoption of electricity managementprograms is influenced by fragmented andnontraditional consumer preferences.The findings illustrated that consumerbehaviors for energy-efficiencysolutions are highly complex withbroad diversity in perceptions, attitudesand preferences. For providers, thetraditional customer service model hashistorically focused on cost and riskpriorities. It was clear from the findingsthat these priorities and capabilitieswould not provide adequate supportto new broad-based programs aroundmass-market energy efficiency andconservation. Thus, providers, regulatedand deregulated alike, face the need fornew consumer-centric competenciesand differentiated energy efficiency andconservation programs to attract andengage a diverse consumer market.Revealing the Values of the NewEnergy ConsumerIn 2011, Accenture embarked on phasetwo of the end-consumer researchprogram—Revealing the Values of the NewEnergy Consumer. Building on the findingsfrom Understanding Consumer Preferencesin Energy Efficiency, we recognizedthat the energy ecosystem is quicklyevolving. Smart technologies are enablinga marketplace for in-home consumertechnologies, demand-side managementprograms and related support services.However, proliferation in the beyond-themetermarket also creates new pressuresfrom nontraditional players.To dig deeper into the emerging energymarketplace, the worldwide endconsumersurvey included more than10,000 respondents and exploredconsumer preferences, opinions andpriorities related to beyond-the-meterproducts and services offered by utilitiesor other emerging providers. Through theresearch, Accenture set out to investigate:1. What are the energy consumer’straditional and nontraditional valuessurrounding in-home technologies,electricity management programs, andrelated products and services?2. How much value do consumers placeon smart home technologies, mobileapplications and nontraditional channels?3. How can providers differentiateelectricity management programs?4. Do consumers value electricitymanagement programs that areconvenience focused?5. Are consumers interested in thedelivery of energy management programsthrough third parties?49

The findings from Revealing the Valuesof the New Energy Consumer highlightedthe emergence of a complex new energyecosystem. The insights shed lighton some of the likely nontraditionalcompetitors emerging and the potentialfor beyond-the-meter products andservices. Following is an overview of thekey findings.While consumers regard theirutilities as the primary providerfor energy-related products andservices, dynamic business modelsare emergingWhile consumers indicated that their firstinstinct is to go to their utility for energyrelatedservices, products and advice(see Figure 42), when asked directly, mostconsumers would be willing to consideralternative providers for purchasingboth electricity and beyond-the-meterproducts and services.Figure 42. Please select all of the providers that you would be ready to consider for the following products and services.Purchase electricity and choosean electricity pricing program foryour homePurchase energy-efficientproducts (e.g., smartthermostat)Get personalized information onyour electricity usage allowing youto understand which appliances areusing the most electricityUtility 73% 54% 67%Your retailer 25% 50% 26%Your online site(e.g., Amazon, Google)21% 32% 29%Your phone or cable provider23% 22% 27%Base: All respondents.Source: Revealing the Values of the New Energy Consumer, Accenture 2011.50

Price is the pivotal factor inthe acceptance of electricitymanagement programs, but pricealone will not drive adoptionThe consumers participating in our studysaid that the opportunity to reduce theirelectricity bill is the most importantfactor that would encourage themto adopt an electricity managementprogram (see Figure 43). However, otherfactors were also gaining in importance,especially the opportunity to gain greatercontrol over domestic heating and cooling.A wide array of consumerpreferences is driving the need fordifferentiated propositions andexperiencesTo generate deeper insights intoconsumers priorities around thevarious elements of an electricitymanagement program, we analyzed theinterrelationships between their responsesacross the full spectrum of adoptionvariables—namely information display,service/set-up, usage adjustment, providerand loyalty rewards.Consumers will respond toprograms that consider their fullspectrum of values and preferencesOur respondents further underlined theneed for tailored solutions by expressinginterest in a broad set of unconventionalvalues and preferences, many of whichwere more emotional rather than practicalor financial in nature. Figure 44 illustratessome of those preferences.Figure 43. What factors would most encourage you to use electricity managementprograms?It would decrease the amount of myelectricity billIt would decrease my personal environmentalimpactIt would better allow me to control theheating/cooling in my homeIt would decrease the time required to managemy electricity useKnowing that I am one of the highestelectricity users in my peer group20112010Top three factors*Base: All respondents.*All factors appeared among respondents’ top three.Source: Revealing the Values of the New Energy Consumer, Accenture 2011.Figure 44. How important would each of the following characteristics be in yourselection of an electricity management program?Is customized to my personal needs and usageSimplifies my lifeIs easy to use for the whole family9%16%41%38%51%69%66%42% 50%68%91%88%92%45% 45% 90%40% 49% 89%Is fun to use39% 14% 53%Includes the latest technologies 36% 15%51%Allows me to connect with a community to shareexperience and tips36%11%47%Is regarded as trendy by my family and friends18% 6% 24%Somewhat importantVery importantBase: All respondents.Source: Revealing the Values of the New Energy Consumer, Accenture 2011.51

References1 “Revealing the Values of the New EnergyConsumer,” Accenture, 2011, www.accenture.com/us-en/Pages/insightrevealing-values-new-energy-consumersummary.aspx.2 Understanding Consumer Preferencesin Energy Efficiency, Accenture, 2010,www.accenture.com/us-en/Pages/insightunderstanding-consumer-preferencesenergy-efficiency-utilities-summary.aspx.3 “Revealing the Values of the New EnergyConsumer,” Accenture, 2011.ContactsGregory S. GuthridgeGlobal managing director, Accenture Retailand Business Services for Utilitiesgregory.s.guthridge@accenture.comAnn V. BurnsAsia Pacific, Accenture Retail and BusinessServices for Utilitiesann.v.burns@accenture.comGregory S. GuthridgeNorth America, Accenture Retail andBusiness Services for Utilitiesgregory.s.guthridge@accenture.comPierfederico PelottiEurope, Africa and Latin America,Accenture Retail and Business Servicesfor Utilitiespierfederico.pelotti@accenture.comResearch teamOwen BlackwellStephanie BronchardQaid DamjiMichael DaryNicholas HandcockRichard HepworthNaomi Manley-CasimirTim PorterCharlotte RautSimon VardyMelina ViglinoBarb WestAbout Accenture ResearchAccenture Research is Accenture’s globalorganization devoted to economic andstrategic studies. The staff consists of 150professionals in economics, sociology andsurvey research from Accenture’s principaloffices in North America, Europe and Asia/Pacific. This study involved our Europeanexperts in survey research.About the AccentureInnovation Center for Energyand UtilitiesThe Accenture Innovation Center for Energyand Utilities is a research entity focusedon accelerating the industry’s pace to highperformance through the facilitation ofindustry dialogue and thought leadershipdevelopment across key industry areas—policy and sustainability, consumerinfluence, technology, innovation, capital,talent and resources.About AccentureAccenture is a global managementconsulting, technology services andoutsourcing company, with more than246,000 people serving clients in morethan 120 countries. Combining unparalleledexperience, comprehensive capabilitiesacross all industries and business functions,and extensive research on the world’smost successful companies, Accenturecollaborates with clients to help thembecome high-performance businesses andgovernments. The company generated netrevenues of US$25.5 billion for the fiscalyear ended Aug. 31, 2011. Its home page iswww.accenture.com.Copyright © 2012 AccentureAll rights reserved.Accenture, its logo, andHigh Performance Deliveredare trademarks of Accenture.Other names may be trademarks,copyrights and/or service marksof their respective owners. 12-0043 / 02-3849