the power of utility-branded marketplaces...• advanced power strips • water-saving products •...

The Power of Utility-Branded Marketplaces

WHITE PAPER

THE POWER OF UTILITY-BRANDED MARKETPLACES

2Copyright © 2019 Uplight, Inc. All rights reserved. uplight.com

Introduction

Utility marketplaces represent the convergence of several trends: rising customer expectations, demand for energy-efficient and smart home products, and an evolving business model.

When electricity was a new service, utilities stoked demand by selling items that used electricity. Lightbulbs were first out of the gate, followed later in the 20th century by household appliances. Gradually, the practice of utilities selling lighting and white goods died out as electricity use became ubiquitous.

However, the emergence of the internet as a platform for commerce in the 1990s has sparked a resurgence of both utility and consumer interest in online marketplaces. The recent Greentech Media report “The Emergence of Utility-Branded DER Marketplaces” states that 41% of residential utility customers currently have access to a utility-branded DER (distributed energy resource) marketplace. Motivations for utilities to pursue marketplace engagement include supporting demand-side management programs, improving the customer experience and developing new revenue streams.



What is a Utility Marketplace?

A utility marketplace is an e-commerce platform that connects utilities with consumers by offering energy-saving household products and services. The goal of a utility marketplace is to empower customers to make informed purchasing decisions, manage energy costs and provide a more satisfying customer experience.

The utility marketplace is not intended to compete directly with other online marketplaces such as Amazon and eBay; it is intended to provide utility customers with a highly customized and interactive resource for all of their home energy needs. Utility marketplaces can offer much more than the standard product transaction that customers might find when purchasing an energy product such as a smart thermostat online.

On a utility marketplace, customers can review and research products as well as see personal rebate and savings calculations. Furthermore, using a quick survey the site can recommend ways to streamline energy use, and customers can take part in community challenges and energy-saving contests. Additionally, utilities can implement their own reward program to encourage continued use of their marketplace.

This white paper will review what is driving the need for utility marketplaces and what to consider when implementing a marketplace platform. Escalent has partnered with Uplight to provide an in-depth and comprehensive overview of why launching a utility marketplace could mean the difference between surviving and thriving.

Escalent has conducted its syndicated Utility Trusted Brand & Customer EngagementTM: Residential (UTBCE) customer experience study for over five years. The study assesses the customer experience for 131 utilities based on 60,000 annual customer interviews and provides key insights into the benefits utilities can gain by launching online marketplace programs and how to best engage customers. Uplight also has over five years of experience designing and managing utility marketplaces. With data from over 100 million households, Uplight works to continuously streamline and improve the customer experience.

The utility marketplace is intended to provide utility customers with a highly customized and interactive resource for all of their home energy needs.



How Utilities Benefit from Marketplace Offerings

Customer satisfaction is no longer the sole aim of the utility industry. Utilities are now looking to engage customers with new product and service offerings, thus increasing the importance of brand and product experience. Findings from the UTBCE study show that implementing utility marketplace offerings can positively impact the customer experience.

Engaged Customer Relationship Index

Brand Trust Index

Product Experience Index

Service Satisfaction Index

13%

16%

15%

8%

*Based on respondents reporting having used a utility marketplace offering in the past six months

Findings from the UTBCE study show that implementing utility marketplace offerings can positively impact the customer experience.

SCORING AMONG MARKETPLACE USERS IS HIGHER



Escalent developed its proprietary Engaged Customer Relationship (ECR) model based on survey data from over 60,000 residential consumers. While the model calibration varies slightly based on regional and utility-type differences, the weights are similar enough to allow direct utility-to-utility benchmarking. ECR comprises three indices: Brand Trust, Product Experience and Service Satisfaction. Each index includes three to six factors that each comprise four to six attributes. The attributes are the actual questions respondents answer on a zero-to-ten agreement scale. This modeling approach allows for deep analysis of the causes behind scoring changes.

About the Engaged Customer Relationship Model

2

Engaged Customer

Relationship (ECR)

Service Satisfaction

39%

ProductExperience

31%

Brand Trust30%

Strategic Factors % Importance on Service SatisfactionStrategic Factors

% Importance on Brand Trust

Strategic Factors % Importance on Product Experience

42%

19%

17%

71%

Safety &Reliability

Customer Focus

Reliable Quality

DesignFeatures

Billing &Payment

Company Reputation & Advocacy

Community Support

Benefits Awareness

Customer &Field Service

Communications Effectiveness

Environmental Dedication

Usage Performance

35%

19%

14%

21%

23%

18%

13%

8%



According to the study, the utility-side benefits of implementing a marketplace are a 13% increase in overall customer engagement among the customers who use a marketplace, with even more significant gains in the areas of Brand Trust and Product Experience. Additionally, marketplace users are more engaged on all of the factors that drive Brand Trust and are much more likely than non-users to say that their utility provides tools and programs to help customers save energy.

• Make it easier for customers to do

business with the utility

• Help customers lower their utility costs

• Benefit the environment

• Make customers more conscious

energy consumers

• Encourage the use of technology to

manage energy use and costs

• Make information about the offerings

easily accessible

• Use of utility demand-side management

offerings climbs from 9% to nearly 24%.

• Use of home energy services such as

backup power and home warranties

climbs from 9% to 26%.

• Adoption rate of utility offerings in

lighting, online and in-home energy audits,

online tools to manage energy use and

critical peak rebate programs is 40%

higher versus the general public.

In the Product Experience domain, marketplace drives gains in perceptions of offerings, enabling utilities to:

Customers who use utility marketplace offerings are significantly more likely to use other utility offerings, for example:

Marketplace users are much more likely than non-users to say that their utility provides tools and programs to help customers save energy.



The Market Opportunity

Across the country, only 5% of customers say they’ve used a utility marketplace program. However, 80% of customers say they’d be interested in using one.

Utility marketplace offerings have broad customer appeal. The segment with the second-lowest interest, at 63%, but one of the highest current adoption rates is Young Urban, which comprises customers under 44 years of age who live in an urban area. The Out of Touch segment, which comprises customers who have not received any customer service contacts or communication, has the highest level of interest, at 88%. The segment’s level of interest indicates that marketplaces may be an avenue to connect with typically hard-to-reach customer segments.

While marketplaces have broad consumer appeal, some key demographic factors distinguish the consumers who are most likely to convert into users. The statistical “likely user” is a female over the age of 44 with lower than average household income. This user says that getting a good deal is important when shopping, a realistic deliverable for marketplaces.

80%

of customers say they’d be interested in using a utility marketplace.

UTILITY MARKETPLACE PROGRAM USE AND INTEREST BY SEGMENT

OVERALL

Out of Touch

Low Income

Established Suburbs

Traditionalists

Newcomers

African American

Urbanites

Hispanic

Digital Types

Environmentally Focused

Young Urban

Consumption Managers

5%

1%

5%

3%

6%

5%

7%

7%

8%

13%

12%

11%

30%

80%

88%

83%

82%

80%

79%

77%

75%

71%

68%

66%

63%

48%



ComEd: An Example of Marketplace SuccessMost utility-branded marketplaces offer energy-related home products and services. One example, the ComEd Marketplace, launched in the fall of 2016, has delivered stellar results in transactions and customer satisfaction.

• Smart thermostats

• Connected home products

• Lighting

• Advanced power strips

• Water-saving products

• Outdoor living

• Targeted, multichannel marketing (email, digital

ads, mailings)

• Instant rebate validation and fulfillment

• Promotional calendar with seasonal and limited-

time offers

• Educational buying guides

• Customer support via phone, email and chat

• Detailed reporting to track site use, success of

marketing messages and customer engagement

Case Study

600K WORLDCLASS

$4Mvisitors

Had over Achieved a Issued over

net promoter score

in rebates to customers

Within the first year, the ComEd Marketplace:

The ComEd Marketplace currently includes these product categories:

Features of the ComEd Marketplace include:



Overcoming Key BarriersThe greatest barriers to widespread adoption of utility marketplace offerings are awareness and availability. Fewer than half of interested customers are aware that their utility offers a marketplace program and, indeed, many utilities do not. Interested consumers prefer to get communication from their utility via email, direct mail and bill inserts/newsletters. Messaging to drive awareness should be via these channels, echo the “getting a good deal” value proposition, show how the marketplace helps customers save money by providing a great value versus other ways of buying, and be customer-focused.

As the industry’s leading provider of utility-branded marketplaces, Uplight shares five key lessons garnered over years of experience designing and operating marketplace solutions.

Five Best Practices for Utility-Branded Marketplaces



The Harvard Business Review 2012 study “To Keep Your Customers, Keep It Simple” makes a strong case for simplicity. Researchers assessed drivers of stickiness, defined as consumer likelihood to complete a purchase, transact again and recommend a brand to others. The biggest driver of stickiness is the ease with which consumers can gather trustworthy information about a product and efficiently weigh purchase options. For utilities, the inherent complexity of rates, programs and energy-efficient products makes a ruthless focus on decision simplicity paramount.

In order to maximize retail transactions and conversion rates, customers need their utility to narrow the universe of possible choices to a limited set of options encapsulating the best choices. This approach is known as a curated product selection strategy. This strategy creates the sense that the utility has done the work for customers and can be trusted to present solid choices.

1Simplify the decision process to drive customer action

The next step is helping customers navigate the decision process. What criteria are most important and how do the options compare? As an example for smart thermostats, the ComEd Marketplace buyer’s guide clearly lays out the four simple things customers should be thinking about—energy, ease of use, safety and installation—and maps them to a table showing how six major models stack up across the pertinent criteria. Receiving this level of information helps customers feel informed and confident about their choices and prevents them from getting overwhelmed. Customer support, accessible by phone, email and chat, is available to answer questions and help those who need additional assistance in reaching a decision.

For utilities, the inherent complexity of rates, programs and energy-efficient products makes a ruthless focus on decision simplicity paramount.



Utilities have a proud legacy of delivering safe, reliable energy to power customers’ lives. This translates into a high degree of trust. Customers generally view their utility as an experienced authority on matters related to energy.

When Uplight pioneered utility-branded marketplaces, it wasn’t clear whether customers would eagerly transition from purchasing a commodity via their bill to purchasing energy-efficient and energy-related products via an online marketplace. Experience has proven that utilities’ brand equity is indeed transferrable—customers are highly inclined to buy other energy- related products and services from their utility. Within five weeks of launch, one major investor-owned utility drove over 10,000 product transactions, delighting customers while delivering exceptional program results.

2Position the utility as a trusted advisor

Mintel, a leading market intelligence agency, has identified trust as one of four major consumer trends. It reports that trust has become one of the strongest drivers in how consumers choose products, services, and organizations and politicians to support. Customers expect their utility to help them understand and navigate a full range of energy options. The underlying trust makes customers more likely to transact since they view their utility as an energy advisor with an online marketplace. As Escalent’s research also proves, interacting with a marketplace drives a virtuous circle of greater customer trust. Customers who have used a marketplace are 50% more likely than those who have not to say their utility has positioned itself as a trusted advisor on energy topics.



Historically, getting an energy efficiency rebate from a utility has required learning about the program, finding a place to buy a qualifying product, downloading and printing a form, copying the proof of purchase, mailing in a request and then waiting weeks for a check to arrive in the mail. This approach often led to low awareness, high program costs and limited energy savings for customers, all creating an unsatisfying customer experience. Customer effort is a key driver of satisfaction, which indicates this is an area where utilities can improve and drive higher satisfaction levels, according to the UTBCE study. The less effort customers have to put forth in their utility interactions, the more satisfied customers are.

Uplight has found that instant rebates are a powerful tool for driving energy-efficient product purchases. In this model, customers choose from a curated set of qualifying products and then validate eligibility by entering their name, address, phone and email with no account number needed. In a process that usually takes under a minute, customers can obtain an instant discount at the point of sale. The full transaction occurs within a consistent utility-branded experience designed to optimize conversion and delight customers.

3Streamline transactions for better participation

A streamlined experience can also go beyond product sales. Uplight has worked with leading DERMS (distributed energy resource management system) providers and demand response-compatible device manufacturers to bundle enabling technology sales with program enrollments, thus streamlining the process of enrolling in utility programs. In one example, customers were able to purchase a smart thermostat and enroll in a demand response program simultaneously, with the program incentive provided as an instant discount. The smart thermostats were pre-provisioned so that as soon as they were installed, they were part of the program with no customer effort required.



Savvy marketers know that customers are skilled at tuning out generic content. On the other hand, customers appreciate and respond to customized offers. This is especially true for millennials, now the largest generation in the United States. Millennials are accustomed to their data being utilized to offer them personalized experiences. According to the Forbes article “May We Have Your Attention: Marketing to Millennials,” millennials don’t care if content is branded; they care about whether it speaks to them. Given the wealth of proprietary and public data utilities have access to, the opportunity for personalization is great.

Customers also respond to relevant and limited-time offers. When the 2017 solar eclipse became a cultural phenomenon, several utilities launched eclipse- themed flash sales on their marketplaces. Uplights’s data showed that this created a sales lift of over 30% because the utilities effectively harnessed customers’ excitement.

For major purchases such as rooftop solar, home energy storage and electric vehicles, personalization is even more important. Effectively curating content to a customer’s home and energy use profile as well as individual motivations can move the needle on product adoption and customer acquisition costs.

4Delight customers with personalized, relevant content

Savvy marketers know that customers appreciate and respond to customized offers.

Tips Logic Campaign

In a 2017 “Tips Logic Campaign,” Uplight sent energy-saving tips to customers. The tips were personalized based on prior customer interactions with the platform. The resulting email achieved an open rate of over 50% and a click-to-open rate of 60%, vastly exceeding industry benchmarks.

Energy Service Tip

Swap Out Your Lights

100 POINTS

COMPLETE TIP

Lighting technology has advanced significantly in the last five years. Replace old incandescent bulbs with

CFLs or LEDs for longer-lasting bulb s that will help lower your electric bill.

DIFFICULTY COST IMPACT



Because customer attention is a scarce resource, utilities need to maximize every interaction. Customers should feel that they’re interfacing with the same company whether paying their bill, viewing their energy use online or looking for energy- saving products and services in a utility marketplace. As Escalent’s research suggests, customers who use a utility marketplace are more likely to take advantage of other utility offerings, so the experience must be designed to capitalize on this demand.

One way to create a more unified customer experience is implementing single sign-on (SSO) so that customers can seamlessly navigate between their utility account and the marketplace. Customers who don’t know their log-in information can still purchase rebated products on the marketplace, but those who do know can be served a more seamless, personalized experience.

5Unify the utility customer experience

Utilities are increasingly seeking to make the marketplace a one-stop-shop for all energy-related products, services, programs and rates. For example, Xcel Energy has been highly successful in driving enrollments in its Home Energy Squad service and AC Rewards demand response program through the Xcel Energy Store in partnership with Uplight.

Customers who use a utility marketplace are more likely to take advantage of other utility offerings, so the experience must be designed to capitalize on this demand.



What’s Next for Utility Marketplaces?Omnichannel Marketplace Beyond Energy Efficiency

Customer choice is important. While utilities should develop their own channels, they must also meet customers in their preferred places to buy. As one example, instant utility rebates can be offered by other online as well as brick and mortar retail channels. This can improve rebate use significantly, as experienced by ComEd. ComEd met 5% of its smart thermostat sales target for 2017 in just a couple of months through the Nest.com online store alone.

This is also a valuable method of engaging customers who were not previously digitally connected to their utility. Uplight has consistently seen that 60% to 70% of email addresses captured through other channels are new to the utility, a clear win-win because email is the communication channel customers overwhelmingly prefer from their utility. Having a positive experience with the utility in another channel primes customers to be more receptive to direct engagement.

The omnichannel marketplace honors customer choice while positioning the utility as a trusted advisor and lays the groundwork for a more engaged customer base going forward.

What if customers could buy an electric vehicle charger, receive a rebate, schedule installation and sign up for a time-of-use rate with one click? By creating smart bundles of products, services, programs and rates, utilities can deliver a stronger value proposition to customers. For example, a smart thermostat is an easier purchase if incentives for energy efficiency and demand response are both available at the point of purchase. Bundling and stacking offers reduces utilities’ customer acquisition costs and improves the customer experience.

By creating smart bundles of products, services, programs and rates, utilities can deliver a stronger value proposition to customers.



A High-Return Investment

Forward-thinking utilities see online marketplaces as the transactional hub for the utility of the future, offering customers a superior resource for energy-related products and services as well as a deeper connection to the environmental health of their community.

Strong customer demand for utility marketplace offerings, greatly improved customer experience and potential new revenue streams mean that an investment in a marketplace can offer returns well beyond those of traditional demand-side management program offerings.

uplight.com

2580 55th St #100, Boulder, CO 80301

Interested in learning more about how Uplight can help you accelerate the clean energy ecosystem? Send us a note [email protected] or visit www.uplight.com

Born from the merger of Tendril and Simple Energy, and the acquisitions of FirstFuel, EEme, EnergySavvy and Ecotagious, Uplight is the leading provider of end-to-end customer-centric technology solutions dedicated solely to serving the energy ecosystem. Uplight provides software and services to more than 75 of the world’s leading electric and gas utilities, with the mission of motivating and enabling energy users and providers to accelerate the clean energy ecosystem.

Uplight is the leader in Demand Side Management, Energy Analytics, Utility Marketplaces, Utility Personalization, and Home Energy Management. Together, these solutions form a unified, end-to-end customer energy experience system that’s proven at enterprise scale, yet nimble enough to deliver innovative solutions quickly. Utility leaders at all levels rely on Uplight and its customer-focused digital energy experiences to improve customer satisfaction, deliver energy and capacity outcomes, reduce service costs, increase revenue, and reduce carbon emissions.

Escalent is a top human behavior and analytics firm specializing in industries facing disruption and business transformation. As catalysts of progress for more than 40 years, we tell stories that transform data and insight into a profound understanding of what drives human beings. And we help businesses turn those drivers into actions that build brands, enhance customer experiences and inspire product innovation. Visit escalent.co to see how we are helping shape the brands that are reshaping the world.

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