A Smarter Customer Segmentation Approach for Utilities
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The document discusses the importance of customer segmentation in enhancing energy efficiency and water conservation efforts in utilities by tailoring strategies to diverse customer demographics. It highlights challenges utilities face in improving customer engagement and program participation, emphasizing the need for specific messaging and multi-channel engagement strategies. Additionally, it presents data-driven approaches, like the use of cloud-based analytics, to effectively track utility performance and drive customer action towards energy efficiency initiatives.
A Smarter Customer Segmentation Approach for Utilities
- 1. Using Customer Segmentation to Improve Energy Efficiency, Water Conservation, and Program Participation Robert Brnilovich, Black &Veatch & Harman Sandhu, SUS | @Black_Veatch| www.bv.com
- 2. About the Speakers Harman Sandhu • 15 years in analytics and technology • Experienced executive helping utilities with management strategy, Smart Grid, and technology roadmaps Robert Brnilovich • 31 years in enterprise management & technology consulting • Focused on helping E&U companies become more customer focused and solve environmental issues with technology. | @Black_Veatch| www.bv.com
- 3. Utility Customer is changing • Continued focus on energy efficiency and water conservation requires engaged customers and demand side management. • Customer side technologies (DER, EV, Home Automation) will require specific interactions for different customers. • Utility customer is rapidly changing from a homogenous group to a multi cohort population with unique aspirations! Multi-channel EngagementEnergy Efficiency & Water Conservation Distributed Energy Resources Home Automation Electric Vehicles | www.bv.com | @Black_Veatch
- 4. Translating Consumer Awareness Into Action: 58% customers want efficiency recommendations, only 7% access rebates 60% dishwashers purchased are eligible for rebates, only 29% are claimed 80% of consumers are broadly aware of energy efficiency, but limited action (Source: McKinsey & Company, 2015 & Accenture, 2013) A 2013 EPA survey of households revealed that incremental improvements in consumer and awareness about energy efficiency are small and take time While progress is being made in moving customers from greater awareness to taking action, much work remains. | @Black_Veatch| www.bv.com
- 5. Utility Expectations & Experiences (Picture Source: https://www3.epa.gov/region9/greenbuilding/codes/standards.html#labeling ) Electric & water utilities face many hurdles to improving energy efficiency and water conservation adoption rates among their customers: Greater levels of differentiation among customer segments: Household demographics (age, family size, family structures) Differences by income level(s) and/or educational attainment Variations in lifestyles, including constraints on time Limited utility resources available for marketing programs and customer outreach Greater regulatory scrutiny to verify operational effectiveness & results Efficiency programs vary widely: A “one-size-fits-all’ approach to marketing and customer outreach is no-longer an effective strategy. Standardized labeling of energy and bill savings obtainable through energy efficiency is an important first step. | @Black_Veatch| www.bv.com
- 6. Tracking Utility Program Performance & Results is Key MEASURABLE & VERIFIABLE ENERGY AND WATER SAVINGS Measured energy savings of 8-9% in the 1st year Measured water conservation savings of 5-6% CUSTOMER ADOPTION RATE(s) Energy Efficiency Technology Penetration Rate of Somewhere between 4% and 18% per year MARKETING & OUTREACH $3-$5 per customer on energy efficiency marketing = A Utility budget of between $180k - $300k/year Performance Tracking Must Be Done for Each Major Market Segment Targeted By the Utility. | @Black_Veatch| www.bv.com
- 7. Measurements to Drive Change “You can’t manage what you can’t measure.” - Peter Drucker …we can measure, therefore we can change! | @Black_Veatch| www.bv.com
- 8. A Look at Segmentation Segmentation is the process of dividing the customer base into groups of individuals that are similar in particular ways such as demographics, usage habits, interests, attitudes, etc. Traditionally Utilities have used segments based on customer class or the type of program offered. | @Black_Veatch| www.bv.com
- 9. However the Energy Use Profiles vary… PG&E ACEEE Summer Study (2012) 15-minute residential electric usage data 8,337 households, 43 days Aggregated data to 6 peak load shapes We believe that you can solve the problem by getting in front of the right person with the right message, than we can grow participation. | @Black_Veatch| www.bv.com
- 10. Multi-factor Segmentation Data on customers easily accessible today – More sources, better resolution Micro segmentation of customers based on past behavior, demographic data, and energy/water end use How much they use? When do they use? Who are they? Why they use? | @Black_Veatch| www.bv.com
- 11. Cloud Technologies Make it Easy The cloud-based analytics requires little effort to setup and can create detailed signature energy and water use profiles for each customer along with an Efficient Use Baseline for each segment. • Real-time analysis using continuous data processing • Data from third party sources for property, weather, and customer demographics • Social Norm based messaging through multi- channel customer engagement showing customer comparisons and call to action Property Attributes Weather Profile Energy Usage Customer History Smart iQ Energy Platform (Continuous Data Processing, Multifactor Correlation Modeling, Machine Learning, Delivery Services) Customer Energy/Water Signature Profile + Efficient Use Baseline (Property, Use, and Weather Normalized) Social Norm Based Messaging | @Black_Veatch| www.bv.com
- 12. Reduce Cost Improve Participation Achieve Targets New Data Sources Energy / Water Analytics Access To Information Energy / Water Management INFORMED AND ENGAGED CUSTOMER • Real-time, two-way Communication • Usage Analysis • Efficiency Ranking • Consumption Projection Portal / IOS / Android + Social Media Integration Smart Meters Smart Thermostats (Green Button Data) Coupling Analytics with Engagement
- 13. Utilities can increase the response rates, reduce the outreach costs, and improve the program impact by using the right combination of segmentation analytics and engagement techniques. Bringing it Together Key Success Factors Customer Segmentation Relevant Messaging Multi Channel Engagement Real-time Information Two-way Communication | @Black_Veatch| www.bv.com
- 14. Black & Veatch Study SUS commissioned Black & Veatch to conduct a statistical analysis of the Smart Customer Mobile Portal (SCM) portal service to determine if customers w/ SCM modify electricity and water use compared to non-SCM customers: Multivariate Statistical Model Control for other factors influencing Usage: o Weather o Seasonal variations in usage o Trend changes that occur over time Include customers that do not have SCM (i.e. a control group ) | @Black_Veatch| www.bv.com
- 15. Black & Veatch Findings A robust statistical revealed that customer use of the Smart Customer Mobile Portal (SCM) contributed to: Lower electricity use among regular residential customers (without PV-solar), following registration in SCM Lower electricity usage among customers that did have solar panels, following registration in SCM Water usage was also measurably lower among both residential customers w/ and w/o solar panels that registered for SCM Innovative Technology Delivers Measurable and Verifiable Customer Value! | @Black_Veatch| www.bv.com
- 16. Group Discussion Further Questions, Contact Us! | @Black_Veatch| www.bv.com