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Market research offers benefits to utilities

Chapter 2 in the Guidebook to Expanding the Role of Renewables in a Power Supply Portfolio shows how public participation can increase customer understanding and support for a utility’s policies and programs.

Public opinion polling, a favorite marketing tool of consumer-driven businesses, has a lot to offer the power industry, too, especially when it comes to getting consumers to accept new products and services.

Two recent seminars used nationally conducted studies to make the case for the value of market research to utilities and energy services providers. Primen, the market research division of EPRI Solutions presented “Communicating Electricity’s Service Value to Consumers” in October at the Electric Power Research Institute in Palo Alto, Calif. The briefing covered the results of Primen’s 2004 Customer Insights Market Survey.

On the first Monday in December, the Guidebook to Expanding the Role of Renewables in a Power Supply Portfolio webcast series focused on using public participation to build consumer support for renewables. Senior Policy Analyst Barbara Farhar of the National Renewable Energy Laboratory gave a presentation on public preferences on energy alternatives drawn from data she collected from surveys done between 1977 and 2002.

While Primen’s annual survey examined general consumer attitudes and behaviors toward utility service, the seminar included a section on green power marketing that echoed and complemented NREL’s broader work. Both events offered direction to power providers hoping to increase customer involvement in renewable energy programs.

Public opinion data aids communication
Why should utilities care about customer participation? All homes and businesses need power, and most have little or no choice in provider, so seeking customer opinion may seem like a mere courtesy, rather than a crucial factor in decision-making. After all, the public is not knowledgeable enough about energy to make expert decisions.

However, as Farhar pointed out, utility actions directly affect the community. Public acceptance or opposition—whether well-informed or not—determines the success of a product or program. Knowing what is important to consumers can help a utility communicate the product’s value or the reason behind the policy.

According to NREL’s findings, consumers consistently prefer renewable energy and energy efficiency to other energy alternatives. Over a 19-year span, NREL researchers analyzed data collected by national poll organizations such as Gallup, Harris and Roper, and from consumer- and investor-owned utilities. The extensiveness and duration of the study produced a comprehensive description of public opinion on renewable energy in the United States and attitudes toward utility use of renewable energy.

NREL found that the majority of respondents wanted their utility companies to generate more of their electricity using renewable sources. In fact, about 75 percent of respondents indicated they were willing to pay at least $5 a month more on their utility bill for electricity supplied from renewable sources such as solar and wind.

Basic electricity, renewable energy perceived differently
Those findings would appear to directly contradict the Primen annual survey, where most residential customers felt they were paying too much for gas and electric service. EPRI Solutions Vice President Brad Davids says, not at all. “No one ever says they are paying too little for a basic commodity, and that’s how people perceive electricity,” he observed. “They think of green power as a different kind of product. The decision to buy it appeals to a different part of the brain.”

Yet, initially low customer participation rates in voluntary green power programs—from one to two percent for start-up programs—seem to indicate that people aren’t willing to add on to their utility bills. “With any market survey, there is always a gap between what people say they would do and what they actually do when they have the chance,” Davids said.

Utilities should be aware of that gap when using market research to make decisions. Primen developed adjustment factors to apply to survey results to bring projections into line. “Marketing needs to be approached as a science. That is what it is,” he advised.

One of those factors for renewable energy programs is customer awareness, Davids added. “The action is predicated on having the information that the program is available. Utilities have to better promote their green power options.”

Green power needs right kind of marketing
NREL’s research bears out Davids’ statement. Green power subscription rates were shown to increase when utilities stepped up their efforts to involve consumers in key decisions about acquiring new generating resources.
Not just any marketing program will do the job, as another Primen study revealed. “We found that a lot of utilities market programs without bothering to look at what works,” said Davids.

To find out what did work, Primen collected collateral material from green power programs with two to five percent penetration—double the industry average. A panel of marketing and renewable energy experts analyzed the campaigns’ designs, shared strengths, common themes and targeting.

According to the panel, green power subscribers identified most strongly with the concept of helping their children, grandchildren and future generations. Other compelling reasons for participation included community and local economic development, energy independence and patriotism, green energy resource-based advertising and a desire to live in harmony with nature.

“The point is that purchasing green power is an emotional decision, and the marketing has to connect with those motives,” Davids said. “The traditional utility bland advertising approach isn’t going to work.”

Making that connection with the customer is what marketing research is all about. It may take the form of extensive studies that identify trends over time, or it may be an annual survey that reveals an opportunity in an emerging need. Either type of research can provide utilities with the tools to build stronger businesses through better customer service.