(August 2011) Economic consultant Michael Rosenzweig challenges Constantine Gonatas’s proposal for ensuring FERC’s demand response rulemaking achieves its objectives. Also, Juliet Shavit...
Look to other industries for lessons on marketing services.
data, targeted offers, proactive reach and incentives for program enrollment. Would utility regulators have sanctioned utilities’ use of only their historical customer marketing strategies if they had appreciated their significance? The presumed answer is no, which begs the question: Is the extent to which this can make or break the smart-grid investment fully appreciated by all stakeholders?
It’s probably fair to say that U.S. utility industry managers know less about individual customers than do their retail or financial services counterparts. This lack of understanding exists because until now, it wasn’t necessary to know any more about the customer; universal obligations to serve each equally have ensured that customer-specific data has been, at least in some part, irrelevant. In the eyes of the energy company, one residential meter is essentially the same as another in terms of delivery of the energy commodity and engagement of the customer.
Also, if targets for existing programs generally have been determined on a small scale, why be aggressive trying to target the right customers? Only when targets and goals increase does the focus turn to those who not only have the propensity to participate, but the profile to deliver desired results. As noted, these targets are set to rise.
Some may argue that open markets will provide the solutions—that markets will create the competitive environments needed to deliver innovative approaches to energy efficiency and other products and services. This remains to be seen, as retailers in Texas have only recently begun introducing time-of-use pricing to their customers.
Historically, the distribution companies have driven the development of innovative smart-meter and smart-grid infrastructure, while for the most part the retailers sat on the sidelines. Why is this? Perhaps Texas retailers have been more interested in remote disconnect functionality as an enabler of collections, rather than developing innovative time-based rates to appeal to their customers. This focus might see pre-pay meter deployment leapfrog innovative demand-response strategies in terms of priority among retailers.
These observations aren’t meant as criticisms. The logic of the retailer is understandable given the market, but if these observations hold—in competitive and non-competitive markets alike—the same situation will play out across North America as technology gains more of a foothold. Utilities deploying smart-meter technologies must think about what they’re now selling. It’s not just kilowatt hours or even the ability to cool homes, but programs that benefit customers and the system at large. Obtaining customer consent and participation will require new marketing and customer-management techniques that are prevalent in other industries. In the very near future, there will be a shift to a relentless focus on having compelling offers and getting customers to buy into them.
Utilities might not have to persuade the customer to buy the commodity, but they will have to offer innovative products targeted at particular segments of their customers. Regulators will need to give the same attention to a utility’s plan for proactive outbound campaigns and one-to-one marketing as they gave to their decisions to select a fixed or mesh radio frequency network.
Programs and Products
The process of energetic and proactive customer