The government has issued a public call to action for the adoption of carbon reduction measures in UK homes. But there is no compulsory scheme, so adoption of energy efficiency solutions will depend on how well providers motivate customers to act.
Customers are not the rational calculators we think they are. Accenture’s research indicates that for two-thirds of UK consumers, saving money and reducing energy use are not sufficient reasons to invest in energy efficiency. Consumers demand additional results, such as a nicer and more comfortable home that is more convenient to manage. They must also be confident that the process will be easy, appointments will be kept, and the installation will be painless. Word of mouth about early experiences will spread on social media and will help providers who get this right – and could paralyse the ones who don’t.
The economics of energy saving measures must also be carefully understood. Providers must be able to deliver solutions at a profit. Accenture’s analysis reveals that many Green Deal measures, such as solid wall insulation and micro-combined heat and power, will not meet the Golden Rule when costs such as financing and management are considered. They simply cost more than they save.
Despite these challenges, there are growth opportunities for organisations that understand what motivates consumers and that put together solutions they value. In a recent report by Accenture, five critical factors are put forward for providers to stimulate growth in the home
energy market.
First, providers must develop ways to target specific customer segments and harness what motivates them.
Second, providers need to be able to reach customers and get them to take action. This includes leveraging the government’s call to action, the strengths of their own brands, and social media and other communication channels to make it easy for consumers to commit.
Third, providers can deal with challenging economics by bundling measures together, making solutions more profitable through co-ordination of installation and scale. Profit potential could be even greater if Green Deal solutions are combined with home improvement, security, or home automation solutions. Even if a bundled solution was only partially funded by the Green Deal, bundling offers customers flexibility in choice and bespoke offerings and could motivate them to adopt.
Fourth, trustworthy advice and a good service experience are vital in influencing consumers’ purchasing decisions. A workforce capable of advising consumers on the most appropriate solutions will differentiate providers from one another.
Finally, those providers that thrive will be those able to integrate a wide range of services and solutions. Partnerships will be key because partnering provides access to vital technical skills, delivery capability, and referral relationships, as well as access to new technologies.
Greg Bolino, partner, resources management consulting, Accenture
Tooled up: Oracle gives the low-down on Green Deal systems
The Green Deal has great potential to improve the energy efficiency of UK homes and contribute to the country’s bigger goal of reducing carbon emissions. However, utilities must make sure that they are not caught unprepared by the challenges the scheme will bring, and instead turn these into an opportunity to develop a dialogue with their customers.
It will be vital for suppliers to ensure they have systems in place to manage customer calls that come in seeking information about changes to energy bills, as well as when and what upgrades will be taking place. These systems should be capable of handling every aspect of a connection, including billing, payment processing and collections. If a customer moves home, the utility should be able to quickly and efficiently transfer the bill for their home improvements to the next occupant, making sure the bill is fairly shared between existing and future owners or tenants. If the customer chooses to change energy supplier, the responsibility to collect payments must be passed over to the future supplier.
The Green Deal will increase the number of interactions that customers will have with their energy providers, so suppliers must harness this opportunity to build loyalty and encourage customer satisfaction. For instance, customers who apply for the Green Deal show a willingness to help control carbon emissions. Utilities could help these customers even further by offering other energy saving schemes such as demand-side management or smart meter priority.
Utilities could also implement mobile workforce management technologies to ensure their customer service representatives, dispatchers, and technicians are all in sync with one another in real time, at all times and hence that the correct service is being delivered to customers. This would undoubtedly help utilities in their quest to achieve improved customer satisfaction.
Bastian Fischer, vice president and general manager EMEA, Oracle Utilities
Reputation make or break
The Green Deal is an exciting opportunity for energy companies. From a business point of view, it opens up new markets, allowing them to sell and instal energy saving household products as well as supply gas and electricity.
There should be reputational benefits too. Utilities could become job creators, which will play well with shareholders and the public against the backdrop of a stagnant economy. Selling new products and managing people’s loans should open up new channels of communication between customers and companies. This could lead to the rebuilding of consumer trust in the industry and help forge a new, stronger relationship between the two parties.
The Energy Company Obligation (Eco), which will cost the industry around £1.3 billion a year, will be higher profile than previous social obligations and part of a broader energy efficiency narrative. That should allow utilities to garner credit from the resulting feel-good public relations story.
There is a flip-side to this optimistic view of the Green Deal. In fact, the possibilities for reputational damage are many, making the initiative a potential minefield for utilities.
One important hurdle to overcome is the feeling within some communities and local authorities that the Green Deal will not be best delivered by utilities. Rather it should be the province of local tradespeople and companies, creating local jobs and supply chains. In addition, mismanagement of the money part of the Green Deal – debt collection, for example – could result in ugly media coverage and damaging reputational fallout, so this element of the utilities’ role must be handled carefully.
Other potentially negative factors are out of utilities’ control. The “helping the fuel poor” PR story, for example, could backfire on energy companies through no real fault of their own if Eco proves less helpful to the fuel poor than existing schemes.
By the time the Green Deal is launched, utilities must ensure they are in a position to maximise any opportunities for reputational enhancement, and minimise any negatives that jump out along the way. The prize is the chance to recalibrate their relationship with customers, showing them that they can be trusted to manage their loans, complete works on time and deliver estimated efficiency savings – in addition to supplying them with energy.
Alastair Pickering, research and operations director, Alva
This article first appeared in Utility Week’s print edition of 27 January 2012.
Get Utility Week’s expert news and comment – unique and indispensible –
direct to your desk. Sign up for a trial subscription here:
http://bit.ly/zzxQxx