4 Tips for Targeting New Customers in the Deregulated Energy Market
At least 17 million residential consumers and most large business consumers shop competitively for electricity, according to Distributed Energy Financial Group’s (DEFG) Annual Baseline Assessment of Choice in Canada and the United States (ABACCUS). The deregulated energy industry is worth over $210 billion, making competition for new customers fierce.
One of the key features for consumers when it comes to energy choice is pricing. The majority of customers seek to lock in a price that is not subject to the volatility of the market. However, others engage in constant bargain shopping, always on the lookout for the lowest price. The good news is that most consumers do not shop on price alone. They are also looking for convenient features, innovative products and services, and personalized advice on their energy consumption.
To compete for these consumers, energy suppliers are learning to use data and analytics in innovative ways to target and acquire new energy customers.
One: Target Pre and New Movers
Key to any successful customer acquisition strategy is targeting pre and new movers – before they are inundated with offers from other competitors in the market. Homes can be on the market for months and every pre or new mover list is not created equal. Energy marketers must be diligent when sourcing this data, looking for lists with names of homeowners with homes currently under contract or sold. This allows for targeting at the precise moment consumers are making their decisions—one to six weeks before they leave their current home. According to USPS.com research, 85% of those identified as pre-movers will use the first vendor that contacts them when it comes to home communications services, regardless of their satisfaction with their current provider.
Two: Use Customer Segmentation to Target with the Right Message
In order to meet rising customer expectations, utilities must understand their key customer segments and cater to each of them with the right products, programs, and services. With targeted analysis, energy marketers can predict which customers are most likely to participate in programs, products and services; develop new programs, products and services that benefit both the utility and the customer; and provide more customized communication that drives customer engagement.
This involves blending both demographics and consumer behaviors to create the right messages. Demographic segmentation (for example, by age, home size, or zip code) provides a basic understanding of a customer or prospect base. For example, research by McKinsey & Company shows that the presence of elementary-school children corresponds with a 10 to 20 percent increase in interest in home improvement and green sentiment, while women are more likely (by 6 to 10 percent) to engage in energy-saving behavior than men. By combining demographics with consumer behaviors and attitudes, the right messaging can be developed and deployed to audiences most likely to respond to specific offers.
Three: The Power of Digital Engagement
Digital engagement will have a more profound impact on utilities in 2016. Digital marketing and technologies means utilities can provide a range of tools to provide better customer experiences as well as deliver tailored messaging at the right time and through the channels to boost acquisition and retention strategies. For example, consider these statistics by Accenture in regards to self-service digital capabilities:
- 76 percent of consumer respondents say that receiving mobile notifications for bill payments would make them view their service provider in a more positive light.
- 65 percent of smartphone owners use their phone to pay at least one of their bills.
- 62 percent of respondents said it is important or very important that they’re able to pay their utility bill with a mobile device.
An Energy Central study asked utility respondents what channels they would focus on to address issues including first contact resolution, time to resolution, self-service utilization, and customer satisfaction score. Respondents chose:
- Mobile: applications, websites and self-service (59%
- Web chat (42 %)
- Mobile: live chat and text (35%)
Four: Engage Through Social Channels
The use of social media also represents a huge opportunity to improve the customer experience. For example, during an outage, people turn to social media. Their posts reveal where outages are occurring and when power has been restored. If utilities can use this information, they can improve customer service efforts tremendously.
A report by Talkwalker, “Utilities & Social Listening: 5 Ways to Power Your Business Strategy,” studied ways utilities use social media. “For utilities companies in particular, understanding trends and public sentiment online can have important business implications,” the report explained. “For example, in countries where customers have a choice as to which utilities provider they opt for, understanding perception towards your brand or the industry in general can help to combat customer churn.”
Although many utilities might think of Facebook as the first step in social media, Twitter has been proven to be an important customer service tool. According to the report, “outside of telephone calls, [Twitter] is the most direct link that utilities customers have to a customer service representative.”
Listening to customer feedback as well as responding in a timely manner has shown provides consumers with a better brand experience and can add information on why customers react in certain ways.
These media are critical in reaching customers during power outages but also in providing energy savings tips, bill pay and other customer engagement services, according to a new study published by Northeast Group, LLC.
As the market faces continued deregulation, customers have more choices. Energy marketers must use rich data and analytics to create better, more personalized experiences and offer the programs their customers seek. Utilities that embrace the evolving market and revamp their business models will maintain their position in the value chain.