Hammering the Chevy Volt and Nissan Leaf
The electric utility industry is embracing the re-emergence of electric vehicles (well at least in selected parts of the United States and abroad), which offer both opportunities and challenges for those attempting to serve the needs for these “early adopter” vehicle owners. But do utilities understand this customer segment well enough to offer attractive solutions to drive meaningful participation? All too often, the proverbial “if all you have is a hammer, everything looks like a nail” applies to the many approaches utilities are taking towards supporting electric vehicle (EV) adoption. The key to establishing successful policies is to understand who these Volt and Leaf buyers are and what motivates them.
For example, the average annual income of a Chevy Volt buyer is approximately $170,000, according to General Motors. “The Volt appeals to an affluent, progressive demographic,” says Bill Visnic, senior editor for Edmunds.com. According to the U.S. Census, the average income per person in the U.S. in 2010 was $40,584. Clearly this demographic is quite wealthy and not price-sensitive compared to the general populace. Everett Rogers, a scholar and luminary best known introducing the term early adopter, describes early adopters as having higher social status and advanced education, in addition to fiscal lucidity, compared to others. Does this sound like a group of customers especially interested in saving $15-20 a month on their electric bill through a marginally lower electric vehicle rate? Or spending valuable time coordinating permits and/or appointments with utilities, municipalities or electricians? Probably not, but that is how many utilities are treating them.
Utilities are correct in wanting to encourage off-peak charging for EVs. But due to the relatively slow adoption rates for such vehicles, many concerns regarding disruption to the distribution grid or overloaded transformers are unlikely to manifest themselves on any appreciable scale any time soon. Nevertheless, utilities across the country are concerned with on-peak charging and offering reduced electric rates to incentivize consumers to charge during off-peak hours (read: during the night and early morning). To be eligible for these reduced rates, customers typically must invest in a sub-meter and any applicable electrical work and obtain necessary permits or appointments. This can cost anywhere from $300-$3,000 and require 2-6 hours of the vehicle owner’s time. Another frequent option is to enroll in a whole-house time-of-use rate, which could increase their electric bill if the customer is incapable or unwilling to shift load to off-peak hours. Although this option is typically less time consuming, it still does not resonate particularly well with early adopters.
Volt and Leaf buyers would be better served by utilities through simple and convenient strategies that resonate with this customer segment. Ironically, many of these electric vehicle owners already charge during times that are less impactful to the utility. Why? Because this segment is better educated and more environmentally astute than typical customers. Their motivations are more individualistic or environmental than financial. So what could utilities offer these customers? How about car decals associated with a creative night-shift charging campaign or public recognition that they are doing the right thing through radio spots or a bill insert/newsletter? Or staggered flat rate options? Either way, nickel and diming them or creating a bureaucratic maze is not the best way to foster their support and cooperation.
Smart Computers and the Smart Grid
In Richard Rumelt’s Good Strategy/Bad Strategy, he discusses the transition of the personal computer industry from a vertically integrated structure to a more disaggregated horizontal structure. In the 1980’s computer manufacturers were vertically integrated. There were a handful of large companies such as IBM, Hewlett Packard, Packard Bell, and Compaq that had the resources to build a personal computer. Each manufacturer made their own processors, keyboards, memory, monitors, etc. In contrast, today’s computer manufacturers primarily assemble the components made by third parties. The industry transitioned from a handful of large vertically integrated companies to dozens of smaller companies who specialize in creating the computer components.
Rumelt wanted to know why the computer industry made this transition. The light came on when he interviewed a client who used to be a systems engineer at IBM. The client said he lost his job at IBM because computers no longer needed extensive system engineering because the individual components were all smart. In the old computer market the processor did all the work. System engineers figured out how to make the individual components work with the processor and the overall system. In contrast, the new computers had smart processors already built into each of the components. Now the keyboard had a “brain” that provided all of the necessary working instructions so there was no system to engineer. The value transitioned from the systems engineer to the software engineer.
Suddenly, the large manufactures and their factories, which used to be a barrier to entry, were now costly underutilized assets. With the smart components, the competitive advantage shifted from large companies with hard capital assets to smaller companies with low overhead and human capital. A new tech company just needed a small room, a few computers and few smart software engineers. The barriers to entry dissolved and the resulting structure helped to fuel computer innovation and Silicon Valley growth.
You see where I am headed? Yes, it is a big jump from the smart computer to the smart grid, but we are already seeing a movement away from centralization. Generation will continue to scale down and decentralize with solar, micro-turbines, and batteries. Microgrids will further empower consumers and their independence. The smart meter and home area networks will also allow consumers to organize and seek out those organizations that can provide them with the most value. Innovation will also continue to drive coordination, allowing solar, wind, electric vehicles, demand response and carbon generation to all work together seamlessly.
All of these disruptive trends will provide third parties with opportunities to grab a piece of the electric industry’s $300 billion dollar value chain. The vertical structure will continue to weaken as smaller more nimble companies find cracks in the supply chain and identify new consumer needs. Even though the transition has already started, it will take many years to complete. It took about 10 years for the computer industry to shake out and because of the electric utilities’ monopoly status, it will likely take at least that long.
So what can utilities do? Begin to scenario plan, aligning their value proposition to their value chain. What customers do they want to serve, what needs will they serve, and at what relative price? With the value proposition in place, the utility can begin to align the value chain. We will discuss this in the next post in more detail.
Post by Eric
jcpenney Testing Relevance
Being relevant is the key to connecting with consumers. Being irrelevant results in the current detached situation that most monopoly utilities currently enjoy, but for a competitive retailer, being irrelevant can be fatal. Wikipedia has a list of dozens of irrelevant department stores that have been acquired or have just faded away - Defunct Department Stores in U.S.
Recently jcpenney has embarked on a new path, hiring a new CEO with Apple and Target on his resume. The new CEO also brought along a few Target friends to assemble a very strong executive team. They created a new logo, redesigned stores, and implemented a bold new pricing strategy. A new logo and new stores are common for a new CEO, but the new pricing strategy is significant. Rather than motivate customers to shop at jcpenney with big discounts, they are going to shift to everyday low prices. This is an interesting example because it highlights the differences between intrinsic and situational relevance, and is counter to most in the industry.
Simply put, relevance means creating products, services, and information that are meaningful to customers’ lives. Digging a bit deeper, relevance can be split into intrinsic and situational relevance (Peter and Olsen, Consumer Behavior and Marketing Strategy, 9th ed). Intrinsic relevance occurs over a long period of time. It is the consumer’s experience with the organization over time. This includes using the product, talking about the product with friends, customer service, etc. In contrast, situational relevance is a short term action that encourages usage. It is typically a sale or discount, event advertising, or a link to a social cause. A good example is Subway. Most people are very familiar with their sandwiches, their locations, and their taste. This is intrinsic relevance and is built up over time. In contrast, the five dollar foot long campaign, which is hard to get out of your head, is situational relevance and motivates us to visit Subway during the five dollar sale.
jcpenney’s bold experiment is to move away from situational relevance and move toward a deeper intrinsic relevance. They are moving away from short term impulse stimulus, which is common in the industry, to more long lasting intrinsic connections. The question is will these deeper connection bring people into the store or is the pull of deep discounts a more powerful motivator. This new jcp strategy is in line with current consumer trends that suggest that consumers want a more open and transparent relationship with organizations. Shopping will be on the consumers timeline rather than waiting for the next sale. jcp stock is currently just under $40 a share and has been trending in line with the S&P. It will be interesting to see if the trends diverge.
So what does this mean for utilities? First, the key to connecting with customers is relevance and not engagement. If you have nothing meaningful for consumers, engagement is a moot point. Second, we are currently not very relevant so we can only improve. Intrinsic relevance will build the core brand but it includes a significant investment in time and money. This necessary shift includes a transition from a utility centered operation which is focused on delivering inexpensive and reliable power to a customer centered operation focused on providing customers with energy solutions. Without this intrinsic connection, it will be difficult for utilities to prosper in a more competitive environment. A bit like the old JCPenney’s.
For situational relevance the opportunities center on bill payment because this one of the few instances where utility customers are actually thinking about their energy usage. The old marketing adage is the right message at the right time. When they are paying the bill is the right time. The bill stuffer is a tried and true channel but should be focused, integrated with external campaigns, and personalized. Most bill stuffers are a random, irrelevant series of messages that utilities have trained many customers to ignore.
The other interesting communication channel is online bill pay. The act of paying the bill online should be converted into a personalized web portal. For these fleeting few minutes, consumers are more likely to be interested in learning about electricity usage and their bill. Give them a reason to stop and explore. Moreover, this learning can also help to build intrinsic relevance. Over the next few years this channel will be the utilities most valuable, and should be leveraged to the fullest.
Post by Eric
Con Edison’s Awesome Employee Videos
A few of my posts have discussed the need for utilities to open up and be more genuine. We are perceived by many customers to be large impersonal institutions. To build relationships with customers, utilities must show some humanity and put a face on the organization.
That is exactly what Con Ed is attempting to do with their employee videos. The first link below shows the story behind these videos.
http://bit.ly/ConEdBehindTheScenes
All together they created 32 two minute videos on energy saving tips in 2009. The videos are unscripted, have white backgrounds with simple animation, and allow the employee to describe their experiences as they relate to the various energy tips. They are not always polished, they don’t always use perfect grammar, but they are genuine, approachable, and use the language of their customers. Moreover, they are very educational and entertaining and will help customers make better energy decisions. Finally, this is great content for social networks and the utility’s website. For those utilities who want to be a trusted information source, this is a great first step.
You will also notice that these videos don't have thousands of views, which might lead some to conclude that these videos are not successful. Although the views are limited, I would suggest that these are quality views and were much more likely to influence behavior compared to a radio or newspaper ad. I would also argue that utility customers are not used to getting their information online. As we transition more of our information to the digital space and become more relevant online (see last post), we will see higher levels of engagement. But it will take time for consumers to change how they interact with their utility.
Below are some of my favorites and if you want to see more, type "Con Edison Video Channel" into the YouTube search box.
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Online Account
Cut Refrigerator Costs
Get a Smart Thermostat
Go for Green Lights
Green your AC
Add up Your Savings
Get Answers on Your Electric Vehicle
Peeking Under the Engagement Hood
Over the last couple of years, engagement may be the most used and least understood words, and I am one of the confused. The word has become a conceptual catchall that includes all that utilities must do to forge a relationship with customers. Unfortunately, this broad application is often disconnected from the concepts and actions needed to create engagement. Also, I would posit that engagement is an outcome and success is a function of careful upstream planning and thought.
The engagement model is derived primarily from a very good book, "Consumer Behavior and Marketing Strategy" by Peter and Olson. Let’s start with a few definitions and a discussion of how they are related.
Product Knowledge is what we know and feel about a product. It is based on all of our experiences using the product, talking about it with friends, advertising, etc. If consumers are not aware, uneducated, or confused by the product offering, it will be difficult to be relevant.
Relevance is the value we attribute to a product or service. It includes both the benefits and risks we associate with the product. These feelings and knowledge often determine many of our purchase decisions. We are bombarded by hundreds of communications a day and relevance help us filter through the noise.
Involvement is the perception of personal relevance for the product. The higher the personal relevance, the more a consumer is involved or connected with the brand. The level of involvement often defines where we focus our time, resources, and attention.
My definition of engagement is the conversation and relationship between a consumer and an organization. At a basic level it is the channel(s) where conversations take place. At a more fundamental level, it is the need to relate or connect with an organization.
A good example of this process is the iPhone. Product knowledge is widespread and most of us have used one or know someone with an iPhone. iPhones and Smartphones in general are one of the most relevant products in our lives. It is a phone, music player, GPS device, gaming device, etc. Moreover, it not only has functional value but it also has emotional value. It is used by cool people, has cool commercials, and is a badge for many creative and tech types. We feel good about ourselves because we own and are seen with the phone.
As a result of the product knowledge and relevance, many iPhone consumers are very involved with Apple. They are very likely to interact with friends, family, and digital strangers when it comes to the iPhone. They are also very likely to engage with Apple, and recently many customers have been voicing their opinion on working conditions in China. These customers feel like they are part of the company. They have a vested interest and they want the relationship to continue and flourish.
For utilities, we have an uphill battle. We have minimal history connecting with customers. Customers were happy if the lights were on, and we were happy if they paid the bill. No customer interaction meant the lights were on and we were doing our job. In addition, we have complex terms and concepts that most of our customers do not understand and have not had to understand over the last 100 years. If we cannot help customers understand peak load, TOU rates, and demand response, we will have a difficult time being relevant. These concepts are very important to everyone's long-term success and are fundamental to the utility’s long term goals. Consequently, if we hope to shave peak load, sell renewable energy, improve energy efficiency, etc. we must start by educating consumers and building the proper knowledge structures so we can begin to have a conversation.
In parallel with our education efforts, we can implement methods and processes that will helps us listen and understand our customers’ needs. With this knowledge and understanding, we can begin creating products and services that make us more relevant in the new smart grid market. We can create products and services that create personal value and allow our customers to improve their lives by saving them time and money, making their lives easier, and helping them feel more secure about the future.
As we become more relevant, we will begin to elevate our consumers’ level of involvement. Our relevance will provide us with a platform to improve our conversations with customers. We can begin to play a more meaningful role in their lives, and they will play a more meaningful role in the evolution of the utility. They will learn from us and we will learn from them. This in turn will help us refine our offerings while improving our relevance and customer involvement. It is a process that takes time. Apple did not come out of the gate with the iPhone. It has been improving and refining itself for almost 40 years.
With knowledge structures, relevance, and involvement, we can begin to effectively engage. As we become part of our customers lives, we can begin to engage through the various digital and traditional channels, the community, and the good old contact center.
Internally, for this process to unfold, utilities must become more transparent and become more customer-centric. Without a customer-centered approach we will be too disconnected to relate. We must also let the customer into our business which will be painful but necessary. We must expose the good and the bad. By opening up and forging this relationship we will improve our understanding of the customer, they will improve their understanding of the utility, and we will build trust.
Muni’s and coop’s should take advantage of this timely opportunity. It will be difficult for IOUs to move down this path because they have shareholders and regulators to please. The only way an IOU can open up and let the customer in is if the shareholders and regulators all share the same vision. I think the three entities will eventually see the light but it is many years down the road. This is the perfect time for Muni’s and Coop’s to solidify their customer relations, prepare for the uncertainty ahead, and thrive.
Many are concerned, including myself, about what lays ahead. I am also excited about what could be.
Eric
Is Paula Dean Cooked?
Paula Dean is a food celebrity and has a popular TV show on the Food Network. She is known for comfort food that is often fried and or has liberal amounts of butter. The show also regularly includes family and friends in a very warm and inviting setting. The comfort food and the family setting connects with consumers in a very meaningful way. Recently, however, she made it public that she was diagnosed with type II diabetes, which is influenced by diet and lifestyle. Moreover, she has had it for a couple of years, but continued to create a cooking show that likely contributed to her and possibly other people's diabetes. This makes for a good branding case study and an opportunity to relate it to utilities. I know that it sounds like a stretch, but it connects. I promise.
First, lets start with a few concepts. Brand knowledge is the full set of brand associations linked to the brand (Keller, 1993). Within the consumer’s mind these associations are often referred to as knowledge structures. Each consumer holds a series of brand specific elements that are connected and help us classify, recall, and guide behaviors. Below is a hypothetical knowledge structure or mental map for Paula Dean before it was made public she had diabetes.
The circles and their size represent the strength and association of various ideas, concepts, and elements that comprise “Paula Dean” in the consumer mind. This combination of strong, favorable, and unique associations helped create a very successful cooking show and elevated Paula to celebrity status in the food world. So how does the new information impact this mental map. Many of the old core associations – family, comfort, and warm – have been significantly weakened and possibly destroyed for many.
What new elements will be added or what negative elements will become elevated? Unhealthy, which is the little black circle, played a minor role before the diabetes. It was trumped by the larger, more powerful elements such as warm, comfort, and family. Now unhealthy plays a more prominent role. Family is weakened because most cooks don’t want family members to get diabetes. Moreover, the other elements such as southern, flavorful, butter, and fried turn from positive to negative associations. Finally, because she waited a couple of years to release the information, she may have reduced trust and affinity because many will perceive this delay as self serving.
When people watch her show today, and have their new knowledge structure in place, perceptions will be different. If she continues to cook the same or the Food Network continues to play her older shows, the negative elements could outweigh the positive for a proportion of her audience. In a crowded, highly competitive market for consumers' attention, this could be devastating.
So what does Paula have to do with a utility? First branding is branding and knowledge structures are knowledge structures. Our actions do impact how people perceive us. Each consumer has a mental map of their utility. Is it full of positive feelings for a utility that serves the consumer's interest, or is it full of frustration and mistrust because of perceived poor customer service and high bills? The goal is to build and manage our brand to align with our long term goals and objectives.
The bigger story is the lack of transparency. If Paula would have come out with the information immediately, and changed her cooking show to include more healthy ingredients, it may have had little impact on her celebrity. Rather than unhealthy playing a prominent role in the new map, she could replace it with healthy. The significance of fried and butter may have fallen, but she could have built upon other positive elements such as family and warmth. Moving forward, consumers will increasingly demand transparency from their institutions, and they will punish those that violate this trust.
Moving forward it will be interesting to see if the Food Network continues to play the older shows. There is lots of money in her reruns and the network has a difficult financial decision to make. That charming smile and jokes about using an entire stick of butter will no longer sit on the amusing side of the fence. It will instead be perceived as unhealthy and turn many people off. Perhaps the FCC will force Food TV to place a disclaimer at the beginning of show, "the following 30 minutes may cause obesity and diabetes, so please view with caution."
Branding is a lot like a diet. It is very difficult to lose weight but very easy to gain weight. It is also very difficult to build brand equity but very easy to lose it. Please proceed with intelligence.
Open the Kimono or the Pizza Box
Dominos Pizza made a dramatic comeback in the last couple of years. Their pizza was known for a cardboard crust, “ketchupy” sauce, and fake cheese. Not a recipe for success. Their stock price bottomed out at $3.05 in November 2008. To pile on, in April 2009, two Dominos employees posted YouTube videos showing them doing very unappetizing things to people’s pizzas.
Things were looking pretty bleak for Dominos, so what did they do? They opened the Kimono, admitted their mistakes, and addressed the problems. They made commercials and posted videos that showed people criticizing their pizza, told us how they were going to fix it, and then fixed it. It was bold at the time, but when you look at their current stock price, it was genius. Below is Domino’s stock price (black line) compared to the S&P 500 (red line). The S&P has almost doubled since 2008 but Dominos is up almost 10x. Dominos stock price has climbed from its low of $3.05 in November 2008 to $33.54 on January 10th 2012.
The links below show some of the commercials that contributed to the turnaround. The videos are honest, humble, and convincing because they did not try to gloss over their flaws. These type of communications build trust, increase trial, and build loyalty. Earnings have been up for 9 quarters in a row.
http://www.youtube.com/watch?v=AH5R56jILag
http://www.youtube.com/watch?v=Wg0FApYXKr4
http://www.youtube.com/watch?v=GY_CTkaFpEM
http://www.youtube.com/watch?v=A-lphVQkM1s
Today it is simply inefficient and counter-productive not to be open and honest, particularly in the digital space. Today’s consumer is more cynical, more informed, and much more sensitive to corporate communications. Consumers feel they have been on the short end of the stick for many years. The financial crises, congressional nonsense, years of poor customer service, and misleading advertising have created a skeptical and even guarded consumer.
To keep our little secrets within the organization, we layer on redundant bureaucratic approvals to check and double check communications. Today’s consumer knows no organization is perfect. If consumers only hear polished positive stories, they will recognize the spin. As a result, they digest the company’s communications at arm’s length and will not engage the organization because there is no basis for trust. We don't trust them with information and they don't trust our information. If we steal a page from the Dominos playbook and be straight with customers, admit our mistakes, and then actually fix them, we will be rewarded with trust and an opportunity to build a meaningful relationship.
The culture of the internet has also played an important role. With the explosion of social networks, consumers have begun to flex their collective muscle over the last five years. The internet was originally developed by people who understood how important this information channel would be for “the people.” Many of the tools that make the web work - Apache, MySQL, Linux - were created, developed, and are maintained by the web community for little or no financial gain. Moreover, the most visited websites Google, Facebook, Twitter, and Wikipedia are free for users. The web is the people’s turf and many view online interactions through this populist filter.
Organizations can play in this sandbox but they must be sensitive to the rules and the culture, which center on being open, honest, and transparent. Consumers use the internet to connect with others, to research information, to perform time saving tasks such as paying the bills, and to be entertained. It is the domain of the consumer.
So for 2012 don't be afraid of letting customers know you are not perfect. Be human, humble, and responsive to your consumers' needs and you will be rewarded. Be afraid of the outdated, inefficient, and ineffectual bureaucracy that stymies creativity, reduces trust, and adds time and effort to everything you do.
Eric
Creative Consumer
In a recent NPR story, Heather Peters, a dissatisfied Honda hybrid owner is taking Honda to small claims court. She is suing Honda for $10k to recover the costs associated with lower than expected fuel efficiency. She said Honda advertised the car would get 50 miles to the gallon, but her car was only getting 30 miles to the gallon.
On the face of it, this story is not very noteworthy. Reading a bit further, it says she opted out of a class action suit to pursue the matter in small claims court which does not allow parties to retain lawyers. Moreover, she created a website urging other Civic hybrid owners to opt out of the class action suit and take Honda to small claims court. If this does take off, Honda could be spending a lot of time in small claims courts across the U.S.
The internet empowers individuals who will find creative ways to stick it to organizations that misrepresent themselves. Each individual consumer does not have much power when they stand alone, but lie to them, anger them, and give them a reason to unite and they can cause significant disruptions.
Makes one wonder if disgruntled smart meter recipients might employ a similar small claims court tactic.
Eric
The Foundation of the Customer Relationship
Trust is an essential element of all healthy relationships. Think of your personal interactions with friends, family, and coworkers. The relationships with little trust are not very productive or rewarding. Since we question this person’s integrity, when we interact we question their motives, we hold information close to the vest, and we are not motivated to act on their information because we don't know if it is true or if we are being manipulated. Interaction is often frustrating, guarded, and full of negative associations.
Stepping into the utility customer’s shoes, does anyone think their customers might view their utility in this light? All utilities have some customers who feel this way. The more relevant question is what proportion of your customer’s feel this way. The mistrust cannot be placed entirely at the door of the utility. Regulators, investors, and politicians have also played a role. Unfortunately, the utility is the one who absorbs the brunt of the mistrust because we are the organization who interacts directly with the customer and the bill has our name on it.
In 2009, the CPUC, working with Interbrand, asked 349 California consumers if their utility is trustworthy. Specifically, they asked, “ [insert utility] is a brand that is trustworthy?” Their answer was on a 7 point “agreement” scale and the scores below represent the top 3 boxes. For example, 58% of respondents gave PG&E an 5, 6, or 7. Averaging across all the California utilities below, about 57% agreed that their utility is an 5, 6 or 7. This is not terrible and it beats Congress, but almost half of utility customers don’t feel strongly about the “trustworthyness” of their utility.
Razorfish’s Liminal study found “the most important things to everyone are to feel valued by the companies they do business with, to get their needs addressed quickly, and to feel the companies they engage with can be trusted.” Regarding trust, Razorfish comments that a customer must feel confident in the credibility of the company. The organization must engage honestly, sincerely, and transparently. One interviewee was quoted as saying, “I need to believe that they stand by what they are giving me. If something goes wrong, they will correct [it]. I’ll take chances with [trusting a company] so long as I’m sure they are there for me to correct any problems.” Razorfish also connected Trust to communication channels and found the company website, email, face-to-face, word of mouth, phone, and review websites were the best at building trust. Finally, they also found that consumers who trust the brand less also require more control. This is particularly important as utilities attempt to control consumer’s thermostats and the timing of EV charging.
Maz Iqbal's The Customer Blog defined the three pillars of trust as credible, honest, and benevolent. He goes on to say, “the service provider can be relied upon to deliver on its promise, to care for customer needs, and demonstrate competence.” He continues by stating the service provider can build trust through the corporate reputation, front line employees, communications, and self service tools such as the website and IVR.
I think it is safe to say that utilities’ residential consumers were historically the weakest stakeholder at the table. Regulators, shareholders, and large consumers were the major players while residential and small commercial customers often played a bit part. This was not particularly an issue because neither the utility nor the consumers were particularly interested in interacting with the other. This is all changing as utilities attempt to influence peak usage, energy efficiency decisions, renewable purchases, and TOU opt-in rates. If utilities want to influence, there must be trust.
Technology and media trends are also strengthening the power of the consumer. Solar panels and generation technology are making it increasingly cost effective to self generate. Information networks are connecting customers to aggregate load for demand response and are expected to aggregate electric vehicle loads in the near future. Social networks will also make it easier for consumers to rally around a perceived cause or problem, and the internet makes it easier for consumers to access utility information –good and bad.
In the brave new world, trust can be transitioned into becoming a trusted source of information. This is a sustainable competitive advantage that local, community based utilities can leverage against larger national brands. Being a trusted information source will help increase utility awareness, recall, and help us become part of the valuable consideration set. It is how utilities can get their foot into the consumers’ mental door. It is a platform that if executed properly can make the utility relevant and stand out in a more competitive world. When people think of solar, energy services, energy efficiency options, etc. they should think of their utility first and follow up with a trip to a content rich, easy to navigate utility website.
Those who can establish themselves as this trusted source will have a platform to communicate, educate, and market programs and services. Those that fail to engender trust, fail to build relevant content, or fail to build a best in class website will find it difficult to compete in an increasingly competitive market.
Eric
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The Customer Blog - http://thecustomerblog.co.uk/
Razorfish Study - http://liminal.razorfish.com/
CPUC Study - http://www.cpuc.ca.gov/NR/rdonlyres/93CB5008-7AED-4BB3-A940-138B84824FA9/0/SWMEO_Brand_Assessment_Report.pdf
A Strategic Application
In the last post we discussed Razorfish’s customer engagement framework. The framework started by surveying over 5,000 people to define what channels customer's prefer and how these channels meet their needs when engaging with companies. The framework included six themes that included Value, Efficiency, Trust, Consistency, Relevance, and Control. A definition of each theme is at the bottom of the post.
There are many ways to apply this framework. One, you can hire Razorfish, which does great work, or for those with less resources, you can use it to help guide decision making for customer engagement options. The process might look something like…
- Define the utility’s brand vision and values. Where is the utility headed and what does it value. For our example our hypothetical vision is "Strengthen our competitive position by developing new revenue streams that leverage smart grid infrastructure, and deepen customer relationships by educating, building trust, and delivering a superior customer experience."
- Create a two-by-two matrix to help determine the utility’s ability to deliver across channels versus how customers value each channel. The first dimension in the matrix is a self evaluation. Most marketers know how well they deliver based on past results. Cost is also a factor because it is part of delivery. Some utilities might have the internal expertise to deliver in a particular channel, but cannot deliver because they are too costly. In home visits or television are common examples. Each channel should be given a score of 1 through 10. The ratings from the second dimension come from Razorfish’s study. Below are two Razorfish charts. The first chart ranks the value of the channels and the second highlights how the channels deliver on each engagement element. The second chart is also important because we will connect our vision and values with how each channel delivers on the engagement elements.
- Connect the utility’s vision and values with the different channels. Identify the channels that will best deliver on the vision, and determine which channels must be shored up to deliver. For example, if building trust is part of the vision, then focus on those channels that help build upon trust. We will discuss this in greater detail below.
(If the charts are too small, you can double click on them to enlarge. Hit the back button to return to the post)
The hypothetical two-by-two matrix is below. It ranks each channel on both dimensions – ability of the utility to deliver and the channel’s value to the customer. For the horizontal axis, I estimated the utility channel delivery scores based on my experiences and I think they are fairly common across many utilities. For the vertical axis, these values are based on the first Razorfish chart which ranks the value of each of the channels.
Based on the chart, our strongest channels are email and phone. They are valued by consumers and we do a good job of delivering in these areas. For the company website, face-to-face, and word of mouth are highly valued by consumers, but we don't do a great job in these areas. For instant message, direct mail, and the bill insert we do a good job of delivering but these channels are less valued by consumers. Finally, social media and mobile apps are not particularly valued nor do we do a good job of delivering.
Referencing the two-by-two, the Razorfish charts, and our strategic vision and values, we can begin to make strategic channel decisions. Starting with our vision, we want to deliver new revenue streams, build trust and improve the customer experience. Referencing the Razorfish chart, which channels deliver on these areas? For the engagement element Trust, it is the company website, email, phone and face to face. The Consistency element also plays a role in trust, and again the website, email, and face to face are important. The Efficiency element is a primary driver of the customer experience. A positive customer experience, as cited in a recent HBR article, is driven by getting customers the information they seek quickly. The Efficiency channels include the company website and email. The Value and Relevance elements contribute to revenue streams. These channels include face-to-face, word of mouth, email, and phone.
Based on this analysis, we can begin to align our strategy with the channels and identify our strengths and weaknesses. The company website delivers on multiple engagement elements and is fundamental in building trust and improving the customer experience, but we are under performing in this area. This would suggest we increase our website resources and focus on improving this channel. Also, this analysis suggests that good ole email and face-to-face are still meaningful channels, while social media and mobile apps are not quite ready for prime time. Ideally, we would like to deliver on the valued channels that will help us deliver our vision. In other words, we want to move the important channels into the upper right hand quadrant.
Of course this was just a simplified example and no animals were harmed during this production. The Razorfish study provides us with an important piece of the strategic framework. It allows us to align our strategy with our channels and helps us evaluate our media channel decisions. Tailor it for your utility and see where it takes you.
Eric
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- Valued is when a company or organization will go out of its way to support the customer’s needs. One interviewee stated, “[It’s] something as simple as calling a person, having them listen and talking to them. Just feeling as though they are out there, working on your behalf, that your situation has not been discarded, you are not just another passenger.”
- Efficiency is respecting a customer’s time and energy. This is about streamlining the customer experience so they can get in and out as fast as possible and providing them with the channels that they prefer.
- Trust is about consumers feeling the company is credible. Interactions are honest, sincere and transparent. The Razorfish interviewee stated, “I need to believe that they’ll stand by what they are giving me. If something goes wrong, they will correct [it]. I’ll take chances with [trusting the company] so long as I’m sure they are there for me to correct any problems.”
- Consistency is about delivering a consistent policy, attitude, message, and product quality. Consumers are sensitive to gaps between a company’s words and actions. As such consistency is related to trust, which can be undermined by inconsistency.
- Relevance is delivering messages that align with the consumer’s needs. One interviewee said, “Everybody has a Facebook page. Blah, blah, blah. I’m not going to a company’s page unless you give me a reason to go there. And I don’t want to hear about new products there. I want to go there if I want to become part of the [brand’s] culture or there is some important information there.”
- Control is allowing the customer to determine when and how a company communicates with him or her. They want to ability to opt-in and opt-out as needed. They also would rather have a relationship rather than a one way push of information. Control is also connected to trust. Control is less important when a consumer trusts the organization.