Learn the best ways to communicate more effectively with customers while fostering deeper connections and engagement during rate design changes.
The focus on creating new rate design solutions is escalating across the country. In addition to helping utilities address the challenges created by Distributed Energy Resource (DER) systems and steady declines in load growth, rate designs have the potential to improve customer satisfaction by giving consumers more control and choice.
If you’re one of the 44 utilities in 25 states that were either involved in or proposed a rate hike in the last 12 months, you’ll need to effectively engage customers through strategies that make them think differently about how they’re charged for energy.
Brand Cool has been working with utilities for quite some time to test, refine, and deploy the most effective approaches to rate changes, particularly Time-Of-Use (TOU) models. It’s been an eye-opening experience with many lessons learned along the way. Here are just of few of the takeaways that can benefit your work.
- Be clear that people have a choice. When it comes to energy pricing, most people don’t have any sense of how they’re charged. They aren’t aware that there are rate choices, and only a few can tell you what type of rate plan they’re on. This makes the task of engaging in rate discussions extremely difficult. Rather than assume that they’ll want to be engaged, utilities first need to figure out what customers need to know. Here’s a hint: it’s not necessarily more information. This is especially true if there is also a movement occurring statewide to engage people in rate conversations. Instead of layering message after message to tell people what’s happening and why, cut to the chase. Customers only want to know what action they need to take and when. If you try to belabor people with your business case, they’ll shut you out.
- Emphasize choice over change. Research conducted in California shows that when people are told they have rate choices, they generally react positively. However, when they’re told only that “changes are coming,” negativity takes over. They automatically assume that any change means their rates are going up. Why? Because they believe the utility wants to be more profitable or that the business is being poorly managed. To counter this, utilities need to tie rate conversations to what people care about in addition to simply educating them on rate plans, energy management tools, and rate plan pricing. Potential benefits like having the option to choose the best rate plan, being able to predict energy usage and costs more effectively and accurately, and helping to protect the environment are common motivators that align with different customer interests and inspire more meaningful action.
- Make it personal. You might be tempted to prey on fear, anxiety, or anticipation to catch people’s attention and get them to act. But very few people are experiencing the threat of blackouts, the promise of grid modernization, or the possibility of bill reductions. These concepts are simply too abstract, too far in the future, or too good to be true to elicit an immediate response. Communications that are personalized and/or localized, however, are more relevant and give people the data they need to make informed decisions about which rate plan is best for them, and how their consumption behavior during peak times impacts energy costs. This personalization can include savings projections based on a customer’s historical energy consumption patterns, communication formats that match the way they like to receive information, and more.
- Use design to engage your audience. In addition to personalizing content, utilities should be exploring how they present information visually. It’s no secret that people scan materials quickly—you have approximately eight seconds to capture someone’s attention before they decide to toss or keep your materials. By adopting what’s proven to work in direct mail and online design, utilities can minimize dead weight while leveraging a host of techniques. This includes presenting options and recommendations based on analysis, and then laying out that information in ways that capture more attention, such as using F-format, eye-tracking, native language patterns, directional imagery, postscripts, handwritten notes, and a host of other best practices.
- Anticipate low engagement. As utilities offer new value in the form of energy efficiency programs, DER, clean energy options, etc., there’s a belief that consumers will be interested. But outside of paying a bill each month or calling when lines are down, most customers haven’t had to deal with their utility. They’re used to a minimal relationship and aren’t actively looking to manage energy use in different ways. Utilities can get around this barrier by creating a clear path for a deeper, richer relationship. This starts with plotting the customer experience to identify key relationship touchpoints. Having this holistic view will enable utilities to see where they can integrate offerings, streamline communications, and address gaps that impact engagement and satisfaction. While some will value the improved relationship, remember that there will be a portion of the population who won’t want to engage with you on a deeper level, no matter how hard you try.
- Help people along the ease and motivation curve. Getting people into rate engagement should follow a process like a sales funnel. Just because people have expressed an interest doesn’t mean they’re ready to act. Utilities can increase conversion rates by paving the way for change within every process stage. Pacific Gas & Electric, for example, makes it easy for customers to see what their bills would look like on different rate options using an online comparison tool. Because the information is based on prior usage, it helps set expectations for how rates will affect bills over time, particularly during peak seasons when energy pricing is higher. UK Power employs a different strategy, offering several types of online energy tools including a smart meter calculator (which shows how much gas or electricity customers use), a running cost calculator (which displays the cost to run appliances and electric devices), a rate comparison tool (which lists the prices and tariffs of every local energy provider to support switching), and instant quotes for business electricity. Because not every customer wants to do business online, these organizations also train call-center personnel to perform comparisons. This allows the customer to easily access only the information they need to make their decision.
- Once engaged, don’t leave customers hanging. If you get people engaged enough to change their rate, that’s a HUGE sweet spot for communication. Leverage it by moving customers into a cadence designed to strengthen the relationship. This doesn’t have to be highly creative, but it does have to be authentic. A simple thank you note to recognize their loyalty or to ask if they have questions can create a memorable impression and improve satisfaction.
- Don’t make cost savings your only message. Saving people money has been positioned as the silver bullet in this industry. While these types of messages help utilities get initial enrollment going, running a campaign solely on savings will lead to more costs later on. Several behavioral economics factors are responsible for this. First, most utilities express financial benefits in annual savings. The problem here is, people don’t annualize utility costs—they only think about what they need to pay at the end of the month. And, they’re more eager to benefit from deals now than to take advantage of one in the future—no matter how practical or good the deal might seem. Second, there will always be winners and losers in rate changes. Even the winners might feel the projected savings aren’t worth the hassle of signing up for a different rate plan. This is especially true with low-income and ethnic populations who often need help navigating eligibility, literacy, or language barriers.
- Time your messages properly. The adage “timing is everything” truly applies to rate engagement. Asking people to switch when their bills are the highest is the absolute worst time to run a campaign. Writing a large check to pay a utility bill puts customers in a negative mindset toward their provider. As a result, they’re often less motivated to interact and more likely to perceive that interaction as a risk.
- Remember that Time-of-Use takes time. Humans are creatures of habit, and those habits are hard to break. So, getting people to shift daily routines and behaviors won’t happen overnight—even if you make it technically convenient or financially beneficial for them to do so. This is where insight and testing can help significantly. Conduct customer segmentation research to understand the different personas, motivators, barriers, and media preferences that define distinct groups within your customer base. Next, personalize the creative, TOU messaging, and outreach strategies to reflect the interests of each group. Before fully implementing campaigns, field test them using small sample sets to identify what people respond to most. Even when you find things that work, keep testing. Explore factors like, “What needs to change based on customers in hotter climates versus cooler climates?”, “Will customers need more or less frequent communications based on their load usage patterns?”, or “How does the type of household they live in factor into the ability to shift behaviors?” Answers to questions like these will enable you to gain deeper insights that can be used to foster sustained behavior change. They will identify where topics like energy efficiency upgrades can be introduced and nurtured to improve TOU impacts. And, they will help minimize the marketing waste that inherently comes when companies treat all customers the same.
If rate engagement is in your utility’s future, perhaps the most important lesson learned is this: start now. Get people on the path to making their homes and businesses more energy efficient and provide tips to help them see that their actions make a difference. Preparing customers now can reduce the risk of having to default millions into rates plans they don’t understand and won’t know how to deal with.