total energy and sustainability management

MEC: CUSTOMER ENGAGEMENT

October 2013

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Agenda

• Customer Engagement Platform• Pilot Project – Segmentation• Pilot Project - Conversion• Next Steps

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Direct Mail Mobile App Social Media EE Rewards Program Call Center

Ecova Utility Skinned Web Portal

Home Energy Reports

Home Energy Reports

Customer Engagement Platform Vision: info to action

Data/ AppsData/ Apps

In Home Audit(tablet data capture)

Customize & Order + Add-on Products

BUY Online /

Retailer Locator

Schedule

Contractor Referral / Ratings

(Angie’s List)

Request Info & Quote

Database/ Program Analytics

Track

Measure

Advance

Home Energy Reports

Home Energy Reports

Graduated Escalation of Customer Energy Efficiency Relationship

Financing Options

EE Kit

Retail Products

DI / DIY Products

DR/Energy Mgmt

Weatherization

Major Upgrades

EcovaHome Energy Improvement

Engine

(leveraging R&P work, Top 10, program

experience, propensity to participate data,

etc.)

AdvancedTargeting /

RecommendationAlgorithms

Retail In-field

Services

Rebate Processing

DI/Audit Field

Services

Trade Ally MgmtMob App / Portal

Utility Analytics - Reporting & Portal

Utility Customer Site-based Energy Profile

eHome Audit(online)

Targeted Mktg Outreach Mktg Analytics / Program CRM Platform

CUST Data FusionUsage, geographic,

demographic, participation

CUST Data FusionUsage, geographic,

demographic, participation

1. Segmentation & Scoring (Pilot)

2. Home Audit & Engagement (Pilot)

3. Program CRM /Workflow/Database Platform (Pilot)

5. Data Warehouse (defining)

4.b Ecommerce Add-on Marketplace/ Rebate Gift Card (Defining)

4.a Portal (Pilot)

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Customer Engagement – Segmentation and Scoring Pilot

Identify highest potential customers:1. High propensity customer segments2. Greatest savings potential customers

Segmentation& Scoring

Targeted Marketing Outreach

Home Audit & Engagement

Platform

Engage high potential customers:1. Targeted messaging to each segment2. Ongoing engagement3. Tracking response across each campaign

Simplify path to savings for customers and contractors:

Proprietary Ecova algorithm (powered by Trove)

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Customer Engagement – So What?

Benefits1.Increased customer satisfaction

2.Increased trade ally satisfaction & participation

3.Higher likelihood of participation in other utility offers

4.Increased Total Savings & Cost EffectivenessIncr. # of participants (improved conversion)

Incr. savings per participant

Lower admin & incentive spend per KW

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Pilot Project• Goal

• Target customers based on their likelihood to participate in an incentive program and their potential savings. Utilize targeting information to increase effectiveness of our marketing outreach.

• Approach• Utilize historical data to create a customer profile based on a subset of

specific common characteristics• Analyze and Score all utility customers using this profile• Optimize score based on program goals and marketing costs• Integrate scores into future marketing campaigns

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Pilot Project

Likelihood to Respond

(Responders)

Likelihood to Perform Recommendations

(Rebaters)

Potential Load Shift(Users)

Combined Scores(Combined_Score_Heating)(Combined_Score_Cooling)

Actionable Intelligence

Historical Customer Participation Data

Current Customer Participation Data

Customer Usage Data

(Monthly)

Demographic Data(Acxiom)

Proprietary Data Analysis

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Data Analysis & Results

Responders - individuals with

the highest likelihood to perform Audit /Assessment.

Rebaters - individuals with the highest likelihood to apply for a rebate.

Users- individuals with

highest potential kWh savings compared to

similar homes.

Likelihood to Respond

Likelihood to Perform

Potential Savings

Actionable IntelligenceOverall Combined Score

Combined Heating Score

Combined Cooling Score

Geo Cluster Scores

Measure-Specific Scores

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Responders

• 91% of Past Marketing Responders have scores > 7• Increased targeting towards higher scores should increase our response rate

Population Avg: 5.5

Marketing Avg: 6.7 Responder

Avg: 9.2

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Rebaters

• Higher Rebater Scores Correlate with Higher Responder to Rebater Conversion Rates

• 81% of past Rebaters have scores >7

Population Avg: 5.5

Marketing Avg: 6.9

Rebater Avg: 8.7

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Combined Score

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Combined Score

Target Customer BaseTarget

Population Size

Response Rate*

Responder to Rebater

Conversion Rate**

Avg. Annual

Reduction/ Responder

(kWh)**

Avg. Annual

Reduction/Rebater (kWh)**

Available MWh

Current Marketing (Doorhangers, Direct Mail)

26,667 2.5% 47.5% 642 1,386 663

Combined Score Heating = 10 14,800 5.7% 61.9% 692 2,331 1,448

Combined Score Heating>= 9 66,504 5.5% 57.9% 666 2,113 5,498

Combined Score Heating>= 8 141,659 4.4% 57.1% 652 1,946 8,753

• * Response rates learned from current marketing campaign. • ** Rebater Conversion Rates, and expected kWh were learned from all historical and ongoing programs (8,098

program participants)

Take Aways:Combined Scores optimize the relationship between response rates, rebater conversion rates, potential load reductions in order to maximize marketing performance.

The MWh goal can be reached by targeting customers with Combined Scores >=8

Take Aways:Combined Scores optimize the relationship between response rates, rebater conversion rates, potential load reductions in order to maximize marketing performance.

The MWh goal can be reached by targeting customers with Combined Scores >=8

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Current Marketing vs Expected Results

8,753

5,498

1,448

663

Area of Circle = Total Energy Reduction Available (MWh)

Current MarketingExpected Results

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Customer Engagement - Conversion

8,753

5,498

1,448

663

Massmarket

outreach

Massmarket

outreachSchedule visits Schedule visits

Provide auditProvide auditCustomer

implementsCustomer

implements

Streamline & simplify

scheduling

Streamline & simplify

scheduling

Segment & target most promising

customers

Segment & target most promising

customers Help customer implement &

follow-up

Help customer implement &

follow-up

Provide audits, actionable info &

easy ways to take next steps

Provide audits, actionable info &

easy ways to take next steps

CURRENT PROGRAM

CUSTOMER ENGAGEMENT PLATFORM

Its all about Conversion

(C%)

C%

c%

c%

c%

C%

Deeper EE savings

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Customer Engagement - Conversion AnalysisParticipant Conversion Model

Nu

mb

er

of

Part

icip

an

ts

Program EE Savings

CEP HIGH IMPACT: +23%

CEP LOW IMPACT: +14%

(inversely 14-23% less “leads” areneeded to achieve equivalent savings)

BASELINE CONVERSION

CEP LOW IMPACT CONVERSION

CEP HIGH IMPACT CONVERSION

Small incremental conversion +slight increased savings/participant

= significant program EE savings

+ efficient incentive budget use

BASELINE: Historical conversion

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Summer Marketing Campaign

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Marketing Plan

• Implement a targeted campaign using the analyzed data, promoting the program with customized messages to utility customers who have been identified Responders, Rebaters and Users

• Campaign will be seasonal and encourage customers to take measures to cool their homes

• Campaign will launch early May and run through August

Overview

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Marketing Plan

• Implement targeted outreach to the identified customers as well as broad community outreach

• Offer bundled measures that have been suggested in the 2013 measure mix

• The targeted customers will be split into two groups:• Group #1: Have not participated in the program at all• Group #2: Have done an audit/assessment and/or upgrade measure

Strategy

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Marketing Plan

• Creative will be seasonal and focus on the summer need to cool homes

• Feature bundled measures that focus on cooling the home and bring the most energy savings

• Messaging will be slightly different for each group• Group #1: Focus on comfort and home improvement – first with the

assessment/audit, then even more with upgrades and rebates.• Group #2: Focus on the monetary and energy savings of rebates and

doing a bundle of measures

Messaging

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Marketing Plan

• Stagger the following tactics• Week 1 – Eblast• Week 2 – Direct mailer• Week 3 – Door Hangers• Various times - Billboards

• Energy kit insert – begin inserting in May• Contractor handout – distribute beforehand

Tactics

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Next Steps

• Results of summer campaign due end of October

• Test results against expected benefits

• Make adjustments and apply to next campaign

• Build out audit/trade ally market in first half of 2014

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Questions

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Technology Reshapes the Energy Value Chain Who are the Winners and Losers?

Biomass New Gas Turbines Wind/Solar Farms SMR IGCC Storage

• HVDC• Superconductivity• Smart Grid• Cyber Security

• Smart meters• TOU• DG• Small

Storage

• EE• DR• Reliability• Power Quality

• Rooftop Solar• Micro CHP• PHEV• Storage• Home

Automation• Smart

Buildings

Where is the value created?What is the role of the regulator?

New competitors include:•NRG•Direct Energy•Schneider Electric•SolarCity•Google•Private Equity

New competitors include:•NRG•Direct Energy•Schneider Electric•SolarCity•Google•Private Equity

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Key Beliefs and Assumptions must be challenged: What is our view of the world?

Belief/Assumption Alternative View1. Maintaining regulated business model is key to realizing

attractive returnsCompany should consider business development options as technology disruption requires marketing skills, partners, and a new business model

2. Flat load growth over the 5-year planning horizon US economic expansion driven by industrial sector (on shoring)

3. Increasing infrastructure requirements (coal retirements, DG, reliability, cybersecurity, etc.) leads to rate pressure and planning complexity

Regulated assets become stranded as a result of uneven regulation, financing limitations and microgrids, future value is managing the customer and the grid

4. Idling coal is the most economic option for meeting current and future environmental standards

Future environmental standards will not be stringent enough to warrant replacing coal capacity with other sources of generation

5. Natural gas generation is important to fill in the gaps until nuclear is back in favor

Sustained low natural gas prices, increasing environmental standards and nuclear safety issues support more aggressive natural gas additions

6. Renewables driven by economics and RPS requirements are at least 7- 10 years away

Solar attains grid parity over the next 3 years

7. Customers want low price and reliability Customers want simple optimization and empowerment

8. Technology is ahead of regulatory policy and current structures do not provide the right incentives

New competitors take advantage of grid enhancements to partially disconnect without debating net metering

9. Top quartile costs are a competitive advantage DER integration, customer enablement, better reliability and innovative solutions are strategic advantages

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Questions

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Creating long-term value for customers, shareholders and

employees

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Future State

• A leading provider of low-cost power

• Greater reliance on clean generation resources, including energy efficiency

• Optimized fleet material condition

• Customer-driven

• Strategic and agile

• Collaborative teamwork

• Proactive and consistent

• Strategy-driven planning and budgeting

• Modeled values

• High employee engagement and organizational health

• Develop top talent

Current State

• Rates higher than regional average

• Heavy reliance on coal generation

• Poor asset material condition

• Financially-focused

• Tactical and indecisive

• Operational silos

• Reactive and inconsistent

• Budget-driven planning and strategy

• Stated values

• Low employee engagement and organizational health

• Hire top talent Keys to Success: •Strategic Alignment•Customer Excellence•Strong Organizational Health•Capital Efficiency

Enterprise Strategic Plan