Why should energy providers treat customers as unique individuals who change over time? So that those people stay customers, for life.
Last week we cruised through history to find out when and why the energy industry stopped using the term “rate payer” and started calling people “customers” instead. Today, we’re gazing into the future to figure out how energy providers can relate to those customers as individuals over time and space—so that they stay customers for life.
In order to do that, we need to talk about who the modern energy customer really is, so that we know:
- how to reach them,
- where to find them,
- what they need, and
- when they’ll need it.
That way, energy providers can serve them—as unique, individual humans—in the most effective, loyalty-generating ways.
So, then, who is this elusive modern energy customer?
Many in the industry might picture the modern energy customer as the tech-savvy Millennial with a good job who’s zooming up the adoption curve. But it’s far more complex than that.
Unless you live off-grid in some remote wilderness, the modern energy consumer is all of us.
We cross every age and income bracket, every cultural background and sociopolitical viewpoint. And we change over time.
That makes figuring out how to relate to us, through the most effective channels, at the right time and with the kinds of messaging, really difficult–but not impossible!–for energy providers to do.
The problem with pre-packaged segments
Some businesses fairly begin their attempts to engage with the modern energy customer by relying on pre-ordained customer segments to help them organize people into buckets. It’s one way to figure out who’s who among the people in your territory.
A quick Google search reveals that numerous pre-packaged customer segmentation services exist. Users report they do a decent job of slicing and dicing the population to pull out data points separating these people from those people.
But these set-ahead profiles use general samplings of people, not specific humans. And they have names that capture only the basic highlights, like Wine & Dine Urbanites to refer to childless, wealthy city dwellers, or Patriotic Grit for low-income singles in the countryside.
So they’re a decent starting place. But dig a little deeper and you’ll see why relying on predetermined customer segments becomes problematic. Especially for utility companies.
As BlastPoint’s CTO and Co-founder Tomer Borenstein explained at the Smart Energy Consumer Collaborative’s Fall Members’ Meeting in October:
“You can’t use a customer segmentation model from five years ago to figure out who you need to target today.”
Unfortunately, some prepackaged customer segments were captured long enough ago (even a few months make a difference) that they’re no longer relevant.
Frozen in time
Pre-packaged segments only take a snapshot of a person as they are when they’re stuck in one, static moment. Relying on them blocks the ability to develop a lifelong relationship.
Just think about how often your own whims and preferences shift. How circumstances change in the blink of an eye. Everyone evolves, so providers must learn to adapt their approach to meet these changing needs.
Locked into place
Putting all your stock into pre-decided customer segments is further limiting because, even within those neatly packaged profiles, people vary widely. In reality, people break down into even more nuanced sub-groups according to religion, employer, family makeup and more. This variation becomes more pronounced when you zoom into street level and look household by household across different geographic areas.
Location matters. What one jet-setting couple in downtown Phoenix might find appealing (news about a travel incentive program that rewards customers with air miles for every kilowatt consumed?) will be different from what the jet-setters in, say, Rutland, Vermont, find valuable (energy audits with thermal imaging to find out where their heat escapes?).
Pre-packaged customer segments don’t take these regional differences into account.
Human variability through time and space means utility providers must consider the outliers among their customers. Otherwise, they risk missing golden opportunities.
Here’s an example of an overlooked outlier: The newly-divorced dad who’s just closed on a fixer-upper in a rural-outskirts town. Relocating from his upper-middle-class home in the city, his income as a part-time handyman/artist is limited, which wasn’t a problem until now. He can no longer afford what he used to when living with his ex. She kept the house, is at the top of her career in tech/med, and had always been the primary breadwinner while he took care of the kids. He’s earning some but can’t afford to buy in the same neighborhood.
Divorced dad is ripe for some well-timed, precision-targeted, customer engagement.
Sure, some of his demographic information has shifted. But he has the same background, still values energy efficiency, still uses the same smart phone to check Facebook. While he’s making the best of his circumstances, he doesn’t come close to resembling the person he was five years or even five months ago. Which means his energy provider needs to adjust how they interact with him and send some timely messaging.
A customer ripe for the picking
Divorced dad needs utility service at his new place, stat. Now that he’s starting over on his own, he’s more budget-conscious. He doesn’t have to keep the kids toasty-warm this winter except on weekends, so he’ll dial down the thermostat. His fixer-upper needs weather proofing, too. He’s eco-conscious, like always, so he’ll enroll in e-billing. Budget billing would help too, so he doesn’t get into a financial jam.
You see where this is going…
Just think of all the other outliers who no longer fit neatly into one of those pre-segmented profiles.
- The tragic widow whose husband died suddenly at a young age.
- The senior who now spends all day at his spouse’s bedside in a nursing facility.
- The empty-nesters whose college grad just boomeranged back home.
With their household energy consumption and socioeconomic circumstances in flux, these unique people need individualized engagement. Fortunately, energy providers now have the power to tap into these realtime changes.
An inverted approach
If you want to discover the outliers in your territory more accurately and in real time, turn predetermination on its head.
The BlastPoint team has spent a lot of time discussing how we – and the people we know and love – don’t fit into predetermined boxes. In response, we wondered what would happen if we started thinking about customer segmentation with specific initiatives in mind, instead of pre-packaged segments.
Our results so far have been transformative, and so, we’ve decided not to start by categorizing people into buckets and then presenting those buckets to energy providers. We ask, first, what outcome energy providers are trying to achieve instead.
- Default billing prevention?
- Technology adoption?
- Paperless billing enrollment?
- (or any number of other customer-facing business challenges…)
Once we know that, then we start looking for the humans in their territory who will fulfill those goals fastest.
We use AI and machine learning to develop predictive models, generating specific answers to specific business problems. Energy providers quickly put those answers to good use, devising engagement campaigns that meet their customers right where they are, with the information they need most, right when they need it. And energy providers can revisit our platform anytime to get different answers to different problems, which ensures they aren’t using stale data to solve current problems.
With the ability to target their specific modern energy customers, companies have the power to establish meaningful engagement strategies that nail every customer touchpoint over the course of a lifetime.