JD Power Smart Energy Consumer Behavior Research Series Details

Posted on July 12th, 2011 by

Peter Shaw, of J.D. Power, discusses the launch of the Smart Energy Consumer Behavior Research Series and what consumer behavior findings have been discovered in the utility sector.

Full Transcription:

Justin Segall: This is Justin Segall for the Daily Energy Report with Peter Shaw of the J.D. Power & Associates. Peter thanks for joining us.
Peter Shaw: Sure.
Justin Segall: J.D. Power has just come out with the first release of the Smart Energy Consumer Behavior Research Series. Tell us a little bit about and you guys decide to go down this route.
Peter Shaw: J.D. Power has been performing consumer research in the utilities industry for twelve years, and its clients are among the largest utilities in the U.S. About 75 companies currently subscribed to their customer satisfaction research. Those companies came to J.D. Power asking for help with understanding consumer requirements, consumer preferences, and strategies for engaging consumers in this whole new arena called the smart energy arena, sometimes called “smart grid”. Smart meters are part of that. J.D. Power has created a new team called the Smart Energy Team. The Smart Energy Team will be dedicated to producing research and providing advisory services to utilities and to other stakeholders in the industry around the area of smart energy consumer engagement. The first step that we just announced on Monday of this week will be a nation-wide customer segmentation study looking at consumer behavior. That will be the first salvo in the series of research efforts that the company will undertake on behalf of the industry to understand consumers, to test strategies for engaging consumers, different types of messaging platforms for educating and motivating consumers to take action as relates to the new kinds of smart energy programs that utilities and other companies will be bringing to the market.
Justin Segall: J.D. Power is known to work across a number of industries. You guys are just embarking on this behavioral component for the utility industry. How would you say the utility industry stacks up to others in terms of customer segmentation, customer outreach?
Peter Shaw: Utilities have not really had a business model that lends itself to needing a lot of customer segmentation intelligence. In the past, utilities have primarily conducted research on around customer satisfaction, and have done a fair amount of research looking at customer needs as relates to energy efficiency and renewables. But the industry does not have very sophisticated tools and capabilities for understanding the deeper methods around customer segmentation, especially when it comes to attitudinal, bevahioral segmentation. It’s pretty new stuff for most utilities. What you see around the industry, the utilities begin to bone up, getting their own internal resources, expanding their tool sets for doing much deeper consumer research in segmentation. What we’re providing in a way of this initial study is going to tie in with a lot of the utilities beginning to try to parse what the customers would want, how do we communicate to them, what messages do we use to which customers, through which channels, and when. That kind of surgical market and communications general belief now in the industry will be critical to the success of the smart energy programs.
Justin Segall : You started about the concerns from the utilities, the challenges they were facing that prompted this as a new offering. Could you tell us a little bit more about those challenges that they were describing and why they were saying they needed this information?
Peter Shaw: Utilities recognize that growing out a grid modernization program, like they are currently undertaking now, will create a lot of opportunities to provide very interesting customer service plans for utility customers. They also realize that it’s going to cost a lot of money. It’s going to generate both positive and negative interest among the media and among consumers. Understanding how to connect with people and get their attention is the first challenge. And that is something that utilities have not been very practiced at, to begin with. They also look around some of the early AMI or advanced meter implementations around the country, many of which have gone very well. Some of which have really had train wreck with negative media attention. You can point to cases in California and Maine, where due to a confluence of factors, there is a pretty strong blow back by consumers and other stakeholders in those markets against smart meters. Utilities are looking around and seeing there is opportunity in the smart energy area, but there is also a risk. We need to manage that risk. One way to manage that risk is to get real crisp in understanding what drives consumer behavior, what drives consumer understanding, where does this large transformation of the grid that’s not being undertaken, and how do we communicate to the consumer what we’re doing so that they trust us, so that we build platforms of communication that we can engage over a period of time. As one of my clients in the industry likes to say when it comes to engaging customers on this whole smart energy program that utilities are undertaking, it’s not an ad campaign– it’s a conversation. The conversation will take many years; it’s not going to be done overnight.
Justin Segall: Thank you very much for your time. I appreciate it.

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