July 12, 2019
Research, Survey, Consumers, Segmentation
Recent years have brought considerable change to the utility-customer relationship. Within the energy industry, these changes have included the expansion of smart meters to over 60 percent of customers and the doubling of renewable electricity generation since 2008, led primarily by increases in solar and wind.
In addition, broader societal changes are impacting the industry directly. These include the rapid growth of smart home technologies (both those directly and indirectly related to energy consumption), the greater role that technology now plays in Americans’ daily lives and the increased importance of climate change in the national discourse.
Together, these shifts have induced electricity providers to offer a host of new products and services, including mobile apps, smart home services and digital engagement tools, and make considerable investments in renewable energy generation, community solar projects and energy storage.
To assess U.S. residential customers’ energy-related behaviors, interests and motivations in this new energy landscape, the Smart Energy Consumer Collaborative (SECC) conducted a survey of nearly 2,500 consumers aligned with U.S. Census demographics. The survey asked respondents about their motivations for participating in energy-related programs and services, their relationships with their current electricity providers, their concerns about the environment, their interests in new energy technologies and more.
The resulting study, “Consumer Pulse and Market Segmentation – Wave 7”, updated SECC’s consumer segmentation framework and paints a fresh picture on who U.S. energy consumers are from the last time SECC updated its segmentation in 2015. In general, consumers today are more concerned about the environment (rather than one niche group of environmental champions) and are more receptive to the smart home and other energy-related technologies. However, these characteristics vary by consumer segment, and these variances are crucial for designing communications and programs that engage.
Here are the four new segments of U.S. residential energy consumers detailed in the latest wave of the “Consumer Pulse and Market Segmentation” report and what drives them to participate:
The Green Innovators
The first segment, the Green Innovators, strongly value sustainability as one of the core values in their lives and lead the way with saving energy, comfortably using technology do to so. This segment most highly values the environmental benefits of saving energy at home, in addition to the financial benefits, which are common to every segment. This segment is also more likely to own smart home devices, with 21 percent owning a smart thermostat and nearly one-third owning a smart speaker.
The Green Innovators are the most knowledgeable segment on energy efficiency and environmental policies, including utility incentives for energy-efficient upgrades and government rebates on electric vehicles, and have taken the most energy-saving steps around their homes, with one-third having installed energy-efficient lighting and one-quarter having enrolled in monthly home energy reports.
Given their core values around the environment, their aptitude for technology and their overall positive relationships with their energy providers, the Green Innovators are well-placed for the next steps in home energy management. To further engage this segment, electricity providers should consider inviting them to participate in pilot programs. Because this group is typically looking for what’s next, these consumers will be valuable partners to help test new programs. In addition, this segment can provide valuable feedback on their customer experiences, and providers should consider inviting these consumers to focus groups, consumer councils or other opportunities.
The Tech-savvy Protégés
The Tech-savvy Protégés highly value energy efficiency (but not quite to the extent of the Green Innovators) and are overall receptive to changing their energy habits, as long as it doesn’t affect their comfort too much. This segment also has the highest monthly energy bill of any of the four segments, possibly due to the pivotal role that technology plays in their lives.
This is the only segment that regularly expresses more interest in energy-related technologies than the Green Innovators, and they already own more smartphones and smart speakers than the Green Innovators, with nearly identical levels of ownership of smart thermostats and home monitoring systems.
Although the Tech-savvy Protégés are receptive to becoming more energy efficient, this segment does report several main barriers to participation. Compared to the average, the Tech-savvy Protégés are more likely to state that the energy-saving programs offered to them do not fit their needs, that they’re unable to make changes as a renter and that saving energy makes their home uncomfortable or that it’s inconvenient.
Addressing these barriers is a great starting place for furthering engagement with this segment, and education can play a central role with several of them. In addition, technology can be an excellent route for building engagement. Although these consumers have lots of devices, such as smart speakers and tablets, they’re not routinely using this technology for energy-related purposes.
The Movable Middle
At 29 percent of the population, the Movable Middle are the largest consumer segment (all others are roughly 25 percent each) and have relatively moderate values and interests related to energy and technology when compared to the other segments. This segment is not tuned out to energy savings opportunities nor are they highly engaged; similarly, they neither reject technology nor are they tech-savvy early adopters.
Like all of the other segments, the Movable Middle are highly motivated by the financial benefits of saving energy, but they also have the lowest monthly power bills. Generally speaking, the Movable Middle consumers value simplicity, and most of the actions they’ve already taken are relatively simple, e.g., installing energy-efficient lighting and enrolling in billing and/or outage alerts. Notably, the Movable Middle reports relatively few substantial barriers for participating in energy-saving programs and services; their lack of engagement is in large part due to energy not being top of mind.
Since the Movable Middle lacks strong relationships with their energy providers, unlike the Tech-savvy Protégés and Green Innovators, providers should consider building relationships with these consumers step-by-step over time. Strategies can include emphasizing simplicity and control in messaging and suggesting logical next steps based on the actions these consumers have already taken. Finally, any and all messaging targeting this segment should be brief, straightforward and easy to act on.
The Energy Indifferent
On the other end of the spectrum from the Green Innovators is the final segment, the Energy Indifferent. These consumers are traditionalists at heart and have the lowest rates of technology ownership of any of the new segments. Furthermore, this segment downplays the environmental benefits of energy efficiency, and roughly half believe that concerns around climate change are overblown.
These values, combined with relatively low energy bills, lead to a general apathy toward energy efficiency and other energy-saving products, services and technologies. The Energy Indifferent are unlikely to engage in offers and prefer to be left alone, and energy providers should not expect great results targeting this quarter of the population.
That said, there are three areas where their interest meets (or comes close to meeting) the average: energy-efficient lighting, outage alerts and bill credits for reducing electricity usage during peak demand times. If these offerings are communicated simply with an easy enrollment process, the Energy Indifferent may engage.
The Importance of Understanding Consumer Needs
The energy industry has undergone significant change over the past few years, and this shift is unlikely to stop any time soon, as technology and consumer expectations both continue to evolve. The customer relationship is more important today than ever before, and segmentation provides a valuable foundation for improving customer experience and satisfaction. By understanding exactly what consumers need and want, providers can deliver products, services and technologies that meet consumers’ lifestyles, while building more meaningful, long-term relationships.
To learn more about SECC’s updated consumer segmentation, download the “Consumer Pulse and Market Segmentation – Wave 7” report and/or executive summary here or watch the Research Brief Webinar here.
About the President
Smart Energy Consumer Collaborative President & CEO
I am the President & CEO of the Smart Energy Consumer Collaborative. Before coming to SECC, I worked for Georgia Tech, where I focused on smart grid research projects and helped to submit almost $10 million in grants to ARPA-E and DOE. Before that, I served as the Executive Director for the Georgia Chapter of the Sierra Club where I focused on energy policy and programs. I also served for two years on the Board of the Smart Grid Society for the Technology Association of Georgia.