Customers in some markets are demanding the right to opt out of smart meter deployments. Their concerns involve radio frequency (RF) emissions and potential privacy breaches. Whether these...
Crossing the Threshold
Technology opens customers’ homes to utility services.
of mature in-home services. For example, the largest investor-owned utility is PG&E with 5 million electric customers and 4.3 million gas customers. AT&T had 95.5 million wireless subscribers in 2010. Utilities ultimately will need to greatly enhance their marketing capabilities as they are among the most important drivers and costs of customer acquisition.
With the exception of the 16 U.S. markets with retail competition, most utilities are true monopoly incumbents that typically don’t employ multi-channel customer acquisition strategies. Moving beyond the meter into a competitive in-home energy product and service market requires greatly expanding the breadth of the sales strategy. To compete effectively, utilities need to consider a varied set of sales channels including direct, online, retail, and resellers, each of which brings a unique set of economics, reach and advantages.
Determining the correct sales strategy and channel mix for utility entry into the in-home energy products and services market will largely depend on the goals of the services and the receptivity of the various consumer segments comprising each utility footprint. If goals for market penetration are modest and consumers within a given market are highly receptive to the product or service, then augmenting the call-center direct sales channel might be all that’s required. As goals become more aggressive, reach might need to be extended using retail channels and resellers. However, in all cases utilities will need to build capabilities and organizations to support their sales efforts.
For example, if a utility decides to go direct to the consumer, clear changes need to occur to existing call centers. Right now a utility’s call center receives calls for four main reasons—new service sign-ups, disconnects, billing questions and outage reporting. In a beyond-the-meter world, time and money is required to convert customer-service reps into sales consultants so they know how to engage with customers to identify the correct products and services for a given customer and to help up-sell them if the call was inbound. This is a completely different cost model in terms of training, support and sales incentives.
However, if we think that a direct sales strategy won’t yield the desired customer participation, leveraging big box retailers, such as home improvement stores or electronics stores, is another viable option. In retail environments, customers are expecting to learn about and potentially purchase new products and services, making them much more receptive than when they’re calling in for a billing or care concern, or being pulled from some other activity to receive a sales call. And resale channels—while expensive because a commission is paid for each new customer—are also viable for high-value target customers. For example, targeting the top 7 to 18 percent of electricity consuming homes (see Figure 5, three columns on right) could be ideal for reseller channels that have existing access to those segments.
For both retail and reseller channels, the utility doesn’t need to build a customer-facing sales organization. However, account management and product marketing capabilities and organizations are needed to ensure these channels present correct messaging, properly educate new customers, set realistic expectations and provide cost-effective yields.