EIS: What Do Customers Really Want?
The biggest challenge in offering energy information services is increasing awareness of product benefits.
Energy information services (EIS) are a fast-growing component of offerings from energy service providers (ESPs). The products range from services based on monthly billing data, such as bill payment, bill verification, and utility accounting, to more detailed meter-based services such as load profiling and analysis, rate comparison, remote monitoring and control, and even responses to market pricing.
For a recent market research study, Research Data International's sister company, E SOURCE, conducted nearly 800 interviews with energy managers across the United States and Canada in the institutional, industrial, and commercial sectors to assess market potential for these products. The research uncovered real potential for such offerings, but challenges exist. The biggest barrier to market entry is lack of awareness of the products and their benefits.
Some managers think that EIS-type analysis could be or already is being done internally from data their utility provides for free. Accounts payable may indeed pay the bills, but a full-fledged utility accounting service would pay the bills "just in time," eliminating costly late fees or early payments, and verify that bills are correct. A surprising number of billing errors turn up under proper scrutiny, and many companies with hundreds of facilities are routinely sent - and pay - bills for facilities they no longer occupy.
The E SOURCE study investigated willingness to pay, preferred suppliers, and preferred delivery and billing methods. Once value is established, most companies are willing to pay for these services, but price points vary, depending on company size, market sector, number of locations, and the size of the energy bill.
Customers want to buy from incumbent providers that have "other clients like them" using the services; they are less likely to buy from unknown and unproven firms with unproven products. No one wants to get stuck with the "demo" version of a technology or software-based product. Many corporate energy managers have been down that road before and aren't interested in taking another bumpy ride. Not surprisingly, most companies would prefer to be billed separately for these products or have a separate line item on their bill to track costs, rather than have the fees rolled into their energy charges.
Although the number of companies offering EIS either as stand-alone products or as a lead-in to commodity sales has increased several-fold in the past few years, some of the early entrants are already out of the market. Utilities and other would-be providers will need clearly defined strategies to overcome the very real market barriers and flexibility to survive the ups and downs of a typical startup enterprise.
Articles found on this page are available to Internet subscribers only. For more information about obtaining a username and password, please call our Customer Service Department at 1-800-368-5001.