Smart customer engagement

With the clock ticking on the start to the smart meter rollout next year, it is essential that energy suppliers engage with consumers effectively and consistently to sell the benefits, says John Peters.

The move to smart meters in autumn 2015 will be one of the biggest changes in how energy is consumed in Britain in decades. To support the rollout, the Smart Meter Central Delivery Body (SMCDB), an independent body tasked with leading consumer engagement with smart meters in the UK, has been established.  
 
This year, the SMCDB is launching a major multi-channel communications campaign to educate energy customers about smart meters, which it hopes will have a similar impact to the campaign that supported the switchover to digital TV between 2008 and 2012. The government wants every home to have a smart meter by 2020 and, given the fact consumers will have a choice to opt out, customer engagement and support of smart meters will be essential.  
 
Several major goals are underpinning the campaign, including the desire to increase consumer confidence in the installation of smart meters by energy suppliers and to develop consumers’ understanding of how smart meters will be used. Another goal is to increase the willingness of people to use smart meters to change their behaviour and reduce consumption, as well as to assist more vulnerable consumers, such as those on low incomes or those who are on prepayment meters, to realise the benefits of smart meters, while continuing to meet their energy requirements.  
 
Smart meters promise some valuable consumer benefits such as detailed information about energy usage and accurate billing, which could lead to changes in behaviour and reduced bills. However, a big obstacle for is the fact that consumer knowledge and awareness of smart meters is low, and this needs to change.
 
A survey for the Department of Energy and Climate Change (Decc), which is responsible for rollout, showed that only around half of energy bill-payers had heard of smart meters. Interestingly, in the US, a much more mature market in terms of smart meter rollout, similar levels of consumer awareness are also common.  
 
If we look at successful smart metering rollouts around the world, they show that effective consumer engagement plays an important role, particularly in terms of allaying consumer fears and increasing take-up, especially in countries where consumers are not legally required to have them.  
 
Moreover, when engagement goes wrong, as it did in California (higher bills than expected, and a reaction against some communications technologies) and in the Netherlands (consumer privacy concerns), the impact can be severe. Australia faced problems as well in the state of Victoria, when new time-of-use tariffs, introduced alongside smart meters, were criticised for disproportionately penalising the elderly and disabled. The programme was revised after government intervention and those that were affected negatively have been given the option to stay on flat-rate tariffs for a set period.
 
In both the Californian and Victoria rollouts, customers had little or no choice regarding the adoption of the meters and tariffs. Customers did not change the way they used energy and they saw their bills increase. While the underlying cause of higher bills may have been the new tariffs, combined with old usage patterns, from a customer (and media) perspective the message became: “Get a smart meter installed and your bills go up.”
 
Since the benefits of smart meters are realised only if consumers understand and embrace the technology’s potential, the success of the smart meter project depends on effective consumer engagement.
 
Prior to embarking on the campaign, the SMCDB commissioned independent research that highlighted the fact that trust in energy suppliers is very low, and also that the customer experience in the sector is considered worse than any other service provider sector. Because the SMCDB is independent from the energy suppliers, it hopes it will be perceived as a neutral and trusted entity and consequently be able to allay consumer fears, as well as promote the many benefits of smart metering.  
 
Parallels have been drawn between the smart metering rollout and the digital TV switchover in 2008-12. Early scepticism about the digital TV rollout was overcome by effective customer engagement and good delivery. While lessons can be learned from the success of the TV switchover, there is one major difference. TV is perhaps considered more desirable and interesting than a commodity such as energy. Consumers may have been more interested in understanding the impact of the TV changeover than they will be in smart meters.
 
Some of the main communication goals of the campaign are:
 
•    to position smart meter as highly innovative and engage consumers by discussing future smart energy opportunities for consumers;
 
•    to reassure customers about issues such as the cost of smart meters, as well as data security and privacy issues;
 
•    to educate consumers about the technology and the benefits of smart meters;
 
•    to develop a clear brand proposition for smart meters that will engage people.  
 
The SMCDB has acknowledged that it will need to work closely with energy suppliers to ensure their communication activities complement and reinforce each other. It seems clear that the SMCDB cannot achieve its goals on its own without support from suppliers. Energy suppliers will need to ensure their messaging is consistent with the SMCDB so they do not confuse customers, and at the same time they also need to differentiate their individual product and service offerings.
 
The focus for all energy companies this year must be to build foundations that will underpin the rollout and put the consumer at the heart of what they do. To do this successfully, they may need to use the expertise of consultants to help establish their communications and business strategies and ensure they are properly prepared.
 
With the countdown until the rollout under way, there is no time like the present for smart consumer engagement.  
 
John Peters, managing director, Engage Consulting