Understanding the Smart Energy Consumer 2013


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AGA-EEI presentation from April 2013 on IBM's work to help utilities successfully engage with the emerging "smart energy consumer"

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Understanding the Smart Energy Consumer 2013

  1. 1. © 2013 IBM CorporationLighting the Way: Understanding theSmart Energy ConsumerJohn Juliano, IBMEEI/AGA Conference and Exposition, Atlanta, GA, April 18, 2013
  2. 2. © 2013 IBM Corporation2AgendaIBM’s Global Utility Consumer SurveysStrategic directions in response to findingsCustomer Service and the Next Best ActionContacts
  3. 3. © 2013 IBM Corporation3IBM has surveyed over 17,000 people in 17 countries since 2007 tolearn more about tomorrow’s home energy consumer
  4. 4. © 2013 IBM Corporation4The context for the questions in the prior surveys was that of a dramaticallydifferent future for energy consumers– Better information– More control– Better reliability and power quality– More participation– GreenerSince early 2009, many other surveys have come out with a similar focus onwhat consumers will look for in the futureThe consensus among these had been that many consumers are eager for theenhanced reliability, control, and new programs and services that thesechanges will bringIn our first two Global Utility Consumer Surveys (2007 and 2009),we assessed the future wants and needs of residential customers
  5. 5. © 2013 IBM Corporation5We developed a profiling that showed about 40% had active interestin engaging - but one-third were likely to stick with the status quoTwo factors willdetermine the natureof the interfacebetween utilities andconsumers in thefuture:1. The degree to whichconsumers takeinitiative indecision-making intheir energy supplyand usage towardmeeting specificgoals2. The consumers’disposable incomeavailable for energychoices in supplyand conservationDisposable Income Available for Energy ChoicesLow HighDecision-MakingInitiativeTakenLowHighPassive Ratepayer (PR)Frugal Goal-Seeker (FG) Energy Stalwart (ES)Energy Epicure (EE)An energy consumer who is relativelyuninvolved with decisions related toenergy usage and uninterested intaking or unable to take addedresponsibility for these decisionsAn energy consumer who is willing totake modest action to address specificgoals or needs in energy usage, but isconstrained in what they are able to dobecause disposable income is limitedAn energy consumer who has specificgoals or needs in energy usage, andhas both the income and desire to acton those needsA very high-usage energy consumerrelatively unconstrained by budgetlimits, but with little or no desire forconservation or active involvement inenergy controlResidential and Small Commercial Energy Customers - 201122%(22% in 2009)33%(31% in 2009)20%(21% in 2009)24%(26% in 2009)Sources: Valocchi, M, A. Schurr, J. Juliano, and E. Nelson, Plugging in the consumer: Innovating utility business models for the future, IBM Institute for Business Value, 2007;IBM Global Utility Consumer Surveys 2009, 2011.
  6. 6. © 2013 IBM Corporation6By 2011, in some parts of the world, issues emerged on moreimmediate concerns that competed with those views of the futureExamples have been consumer confusion and uncertainty, negative press, andvalid yet troubling questions about privacy, cost, and distribution of benefits
  7. 7. © 2013 IBM Corporation7What are their most important influences on knowledgegained, opinions, and attitudes toward behavioralchange?How do perceptions of providers and technologicalchange shape consumers’ expectations?What levels of knowledge do they have on criticalelements that drive their perceptions and expectations?What expectations do consumers have for energyservice and providers in the future – and what sets theseexpectations?The most recent survey focused on energy consumers’ potentialsentiment drivers – positive and negative
  8. 8. © 2013 IBM Corporation8We found that, in aggregate, providers’ influence on messaging fortheir customers is now outweighed by other sourcesPercent of respondents that listed a particular information source as the one(s) to whichthey are most likely to go to get information about energy cost, environmental impact,alternative suppliers, or new programs and services (grouped)Source: IBM 2011 Global Utility Consumer Surveyinfluences45%55%38%62%0%10%20%30%40%50%60%70%Sources for which providers controlmessagesSources for which providers do notcontrol messagesNA/EU/ANZ/Japan, 2010Growth regions, 2010
  9. 9. © 2013 IBM Corporation9In 1979, a famous movie tagline noted “In space, no one can hearyou scream.”influencesIn the past, when someone had a bad experience with a company,only the individual would experience it.Now, the world can know about it in seconds.In 2013, pretty much everyonecan hear you scream.
  10. 10. © 2013 IBM Corporation10Where consumers’ perceive a shortfall in attention, this presents apotentially huge problemSource: IBM 2011 Global Utility Consumer Survey8%16%13%18%21%27%37%44%46%50%0% 10% 20% 30% 40% 50% 60%Adopts new technologiesand ways of doing businessInvests in advancedtechnologiesHelps me manage energyuseSupplies cleaner energyTreats me as a valuedcustomerThis describes my current provider My provider should focus on thisperceptions29 point gap28 point gap31 point gap21 point gap19 point gapPercent of respondents who believe that their current provider does/shouldfocus on specified activities or attributes
  11. 11. © 2013 IBM Corporation11Source: IBM 2011 Global Utility Consumer SurveyConsumer perceptions are a strong driver of opinions on newinitiatives like smart grid and meter deploymentPercent of respondents who approve of plans to deploy smart meters foreach of five levels of privacy concern0%10%20%30%40%50%60%70%80%StronglydisagreeDisagree Neutral/Unsure Agree Strongly agreeReaction to statement "These technologies will put my privacy at risk."Percent approving of SG/SM deployment(NA/EU/ANZ/Japan)Percent approving of SG/SM deployment (Growth)perceptions
  12. 12. © 2013 IBM Corporation12Source: IBM 2011 Global Utility Consumer SurveyThe counter to these challenges is better engagement – bettercommunication and information to each consumer43% 42%52%48%52%58%67% 69%75%0%10%20%30%40%50%60%70%80%Willing to shareinformation on energyusageLikely to change energyusage patterns to achievegoalsLikely to actively leveragenew information aboutconsumptionNo or MinimalKnowledgeModerateKnowledgeStrong KnowledgePercent of respondents expressing their likelihood of taking on specificbehaviors or behavioral changesknowledge
  13. 13. © 2013 IBM Corporation13Data source: IBM 2011 Global Utility Consumer Survey; Quote source: Quantitative Research into Public Awareness, Attitudes, and Experience ofSmart Meters (Wave 2), UK Dept. of Energy and Climate Change, February 21, 2013.Higher levels of knowledge strongly correlated with increased beliefthat new technologies and programs will bring benefits35% 35%43%47%40% 41%50%55%50%52%61%71%0%10%20%30%40%50%60%70%80%Believe they will have apositive impact environmentallyBelieve they will have apositive impact on energycostsApprove of the deploymentsunderway or proposedBelieve they will bring benefitsto their familyNo or Minimal Knowledge Moderate Knowledge Strong KnowledgePercent of respondents holding positive opinions of smart meters and smartgrid deployment plans locally (underway, proposed, or hypothesized)knowledgeTwo years after we released this data, the UK Government’sDept. of Environment and Climate Change (DECC) also notedthat “higher levels of perceived knowledge of smart meters werecorrelated with increased support and interest.”
  14. 14. © 2013 IBM Corporation14Consumers’ expectations for smarter energy products and serviceswill be further shaped by their experiences with other industries…Source: Valocchi, M, A. Schurr, J. Juliano, and E. Nelson, Plugging in the consumer: Innovating utility business models for the future, IBM Institute for Business Value, 2007.expectations
  15. 15. © 2013 IBM Corporation15… which are often viewed as offering more personalization andinnovation around consumers’ specific needs7%9%13%14%16%16%26%UtilityProvidersPay TVProvidersOnlineRetailersInsuranceProvidersTelecomProvidersGroceryRetailersBanksUnderstands me and offersproducts / services that are alignedwith my needsApproaches me with innovativeproducts or servicesTreats me like an individual anddelivers a personalizedexperienceexpectations6%9%10%16%17%20%21%UtilityProvidersPayTVProvidersInsuranceProvidersTelecomProvidersOnlineRetailersGroceryRetailersBanks6%9%12%14%16%21%23%UtilityProvidersInsuranceProvidersPay TVProvidersGroceryRetailersBanksOnlineRetailersTelecomProviders
  16. 16. © 2013 IBM Corporation16How consumers feel about the evolution of their providers todayspeaks to a need to refine, personalize, and target communicationsTheir influences are still skewed toward the traditional – butincreasingly these are sources that are from places where utilitieshave no control over the tone or accuracy of the messagesConsumers have mixed perceptions of their current providers andwhat they will be able to do in the future – and where there arenegative perceptions, more negative reactions are likelyFor customer buy-in to smart grid and smart meter plans, providingknowledge is an absolute necessity – the more consumers learnabout what is occurring, the more favorable they are toward itThey have been promised – explicitly or implicitly – great benefitsfrom the smart grid revolution, and their expectations are thatthose promises will be fulfilledWhat can be done to keep perceptions (positive and negative) alignedwith reality? How can expectations be shaped by providing more andbetter knowledge in the context of the most effective influences?
  17. 17. © 2013 IBM Corporation17AgendaThe 2011 IBM Global Utility Consumer SurveyStrategic directions in response to findingsCustomer Service and the Next Best ActionContacts
  18. 18. © 2013 IBM Corporation18Today’s consumers demand that we know them as more than ademographic, a zip code, or a transaction history.At the same time, they areexhibiting a digital bodylanguage that gives us a lookinto their passions, opinions,and sentiments – but itcomes in the form ofmillions of pieces of datafrom hundreds of sources.We must be able todetermine what new insightsthat data offers.
  19. 19. © 2013 IBM Corporation19TransactionsOrdersPaymenthistoryUsagehistoryPurchasestageE-mail /ChatCallcenternotesWebclick-streamsIn-persondialogsOpinionsPreferencesDesiresNeedsCharacteristicsDemo-graphicsAttributesDemographicdataTransactiondataThey demand we know more, in part, because they are telling usso much more in so many more waysInteractiondataBehavioraldata
  20. 20. © 2013 IBM Corporation20GeographyIncomeAgeMost segmentation approaches focus on two or three dimensionsTransactionsSales20Anticipating consumer needs has relied on segmentationapproaches that are too limited to give views of individualsThese are typically not actionable because customers are more complexthan 2 or 3 dimensions – leaving them unable to truly seize theopportunities that customer uniqueness presents
  21. 21. © 2013 IBM Corporation21DemographicdataTransactiondataInteractiondataBehavioraldataDescriptive analyticsPredictive analyticsPrescriptive analyticsTransactionsOrdersPaymenthistoryUsagehistoryEmail /ChatCallcenternotesWebclick-streamsIn-persondialogsOpinionsPrefer-encesDesiresNeedsCharacter-isticsDemo-graphicsAttributesPurchasestageTo do this, we need to makeuse of:New analytics to makesense of this complexand intricate dataMulti-dimensionalmodels developed toexplain or predictcustomerWe can move from simply reacting to a customer contact topredicting the next best action that meets the consumer’s need
  22. 22. © 2013 IBM Corporation22A useful approach uses Feature Vectors to give customerspersonalized profiles that can be meaningfully clusteredA Feature Vector is a model of the customer’s response (historical or predicted) to onespecific aspect of the value propositionEach Feature Vector is like a gene strand in DNA, describing a facet of customerbehaviorTheses building blocks that can be assembled into larger models of customer behaviorAction Clusters are aggregates of customers into groups that illustrate similarbehavioral propensities across many Feature VectorsAge +Age +Age +Age +Income +Income +Income +Income +GeographyGeographyGeographyGeographyPreferredPreferredPreferredPreferredChannel(sChannel(sChannel(sChannel(s))))Length ofLength ofLength ofLength ofTime asTime asTime asTime asCustomerCustomerCustomerCustomerAnnualAnnualAnnualAnnualEnergyEnergyEnergyEnergyUsageUsageUsageUsageZipZipZipZipCodeCodeCodeCodeNeeds andNeeds andNeeds andNeeds andOpinionsOpinionsOpinionsOpinionsExpressed viaExpressed viaExpressed viaExpressed viaSocial MediaSocial MediaSocial MediaSocial MediaPredictedPredictedPredictedPredictedRetention RiskRetention RiskRetention RiskRetention RiskHistory ofHistory ofHistory ofHistory ofOnOnOnOn----TimeTimeTimeTimeBillBillBillBillPaymentPaymentPaymentPaymentPredictedPredictedPredictedPredictedCustomerCustomerCustomerCustomerLifetime ValueLifetime ValueLifetime ValueLifetime ValueProbabilityProbabilityProbabilityProbabilityOf New Product orOf New Product orOf New Product orOf New Product orService PurchaseService PurchaseService PurchaseService PurchaseEngagementEngagementEngagementEngagementPreferencesPreferencesPreferencesPreferenceswith Energywith Energywith Energywith EnergyProvidersProvidersProvidersProviders
  23. 23. © 2013 IBM Corporation23Source: IBM Institute for Business Value survey data 2010, n=21,740AttitudeClusterSecurity-orientedindividualistDemandingsupport-seekerLoyalquality-seekerPrice-orientedminimalistSupport-seekingskepticInformedoptimizer% oftotal13% 12% 19% 18% 21% 17%Key theme "I know what Iwant andorganizemyself""I need personaladvice""I trust myEnergyProvider andremain a loyalcustomer""I do not likeEnergyProviders –make it cheapand stayaway""I need advicebut prefer tokeep distancefrom myEnergyProvider""I take time toresearch tofind the best"23But “attitude” is only one of what could be several key “feature vectors” thataffect Energy customer behavior. For example, some Loyal Quality Seekersmight prefer to use the Web while others might not, and thus “attitude” and“preferred channel” are feature vectors that might need to be estimatedseparately (depending on correlation between the two vectors).An Engagement Preferences Feature Vector helps define howcustomers want to engage with providers
  24. 24. © 2013 IBM Corporation24Predicted Retention Risk, used in the airline industry, could be a valuableFeature Vector where competition is emerging in energyService recovery & loyalty architectureEmotionalSignalMighty EagleAirlinesPlatinum FF#941827614Emotional SignalDate∑experiencesTransactionsfrom DataWarehouseObservationsDemographicDemographicDescriptionsDescriptionsExternal DataExternalExternalFactorsFactors(Weather)(Weather)VariablesServiceServiceRecoveryRecoveryTreatmentsAnalyticInformationStore(Emotional Index)Consolidated DataInformation Formation• Pre-Processed Decisioning Scores• Financial Performance• Profile & Attribute Analysis• Goal Priorities & Constraints• Risk Adjusted Lifetime Value• Forecasted Treatment ResponseFeature VectorDevelopment24
  25. 25. © 2013 IBM Corporation25Personal Attributes• Identifiers: name, address, age,gender, occupation…• Interests: sports, pets, cuisine…• Life Cycle Status: marital, parentalPersonal Attributes• Identifiers: name, address, age,gender, occupation…• Interests: sports, pets, cuisine…• Life Cycle Status: marital, parentalRelationships• Personal relationships: family, friendsand roommates…• Business relationships: co-workersand work/interest network…Relationships• Personal relationships: family, friendsand roommates…• Business relationships: co-workersand work/interest network…Products and Interests• Personal preferences of products• Product Purchase historyProducts and Interests• Personal preferences of products• Product Purchase historySocial Media based360-degreeConsumer ProfilesLife Events• Life-changing events: relocation,having a baby, getting married, gettingdivorced, buying a house…Life Events• Life-changing events: relocation,having a baby, getting married, gettingdivorced, buying a house…Revealed intent to buy Life eventsLocation announcementsIntent to move into/out of areaIm thinking about buying a home in Buckingham Estates per arecommendation. Anyone have advice on that area? #atx#austinrealestate #austinIm thinking about buying a home in Buckingham Estates per arecommendation. Anyone have advice on that area? #atx#austinrealestate #austinLooks like well be moving to New Orleans sooner than I thought.Looks like well be moving to New Orleans sooner than I thought.College: Off to Stanford for my MBA! Bbye chicago!College: Off to Stanford for my MBA! Bbye chicago!Im at Starbucks Parque Tezontle http://4sq.com/fYReSjIm at Starbucks Parque Tezontle http://4sq.com/fYReSjI need a new digital camera for my food pictures, anyrecommendations around 300?I need a new digital camera for my food pictures, anyrecommendations around 300?What should I buy?? A mini laptop with Windows 7 OR aApple MacBook!??!What should I buy?? A mini laptop with Windows 7 OR aApple MacBook!??!Timely Insights• Intent to buy various products• Current LocationTimely Insights• Intent to buy various products• Current Location25Further intelligence based on social media analysis leads to “360oConsumer Profiles”, which add depth and richness to the analysis
  26. 26. © 2013 IBM Corporation26Build thecapability to dothis at massivescale5Generate insightsin real time thatare predictive, notjust historical4Interconnectsocial media data,other forms ofdigital data andtransaction datato paint a morevivid picture ofeach customer2Instrument all thekey touchpoints togather the rightdata on eachcustomer1Run the rightanalytics, at theright time, on theright customerto generate newideas on whomto serve and howto best serve thatindividual3ValuecreatedCapabilities over timeUnderstanding each customer as an individual does not happenimmediately, but follows a progression path over time
  27. 27. © 2013 IBM Corporation27AgendaThe 2011 IBM Global Utility Consumer SurveyStrategic directions in response to findingsCustomer Service and the Next Best ActionContacts
  28. 28. © 2013 IBM Corporation28Demonstration: Next Best Action in Utility Customer ServiceInformationAnalyticsSpeakingwith thecustomerBuildingpredictivemodelsDefining theNext BestActionCreatingmarketingoffersEstablishes theInformationSupply ChainOperations
  29. 29. © 2013 IBM Corporation29Demonstration: Next Best Action in Utility Customer Service
  30. 30. © 2013 IBM Corporation30AgendaThe 2011 IBM Global Utility Consumer SurveyStrategic directions in response to findingsCustomer Service and the Next Best ActionContacts
  31. 31. © 2013 IBM Corporation31For questions and additional information, please contact:John Julianojuliano@us.ibm.com (240) 361-8157Cheryl Lindercheryl.d.linder@us.ibm.com (503) 533-2117Vickie Dorrisvdorris@us.ibm.com (423) 622-1498http://www-935.ibm.com/services/us/gbs/thoughtleadership/ibv-knowledge-is-power.htmlConsumers have beenpromised a lot with respect tothe “new world of the smartgrid”. And they want what’sbeen promised to them.