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CONSUMER ENGAGEMENT WILL SMART METERS CHANGE CONSUMER BEHAVIOUR? By Neil Avery, ANEC Briefly put: By 2020 nearly 250 million smart meters should be installed in EU countries, but reducing peak energy usage also requires behavioural change. Consumer behaviour in other smart markets provides insight into the expectations of energy customers during the installation process and how barriers to consumer engagement can be addressed. Speakers at the recent European Utility Week Conference stressed, again and again, the importance of a customer focused approach for smart metering. In an industry with a poor reputation for customer service this recognition is welcome, but is it sufficient to change consumer behaviour? For consumers to be actively engaged in managing their consumption, energy companies need to go further than merely focusing on customers. They must view smart metering from the consumer’s perspective. Consumer experience – only one chance to make a first impression Research by EY showed that 75% of consumers across 12 countries they surveyed believed the relationship with their energy company was negative. 1 Smart meter implementation is an opportunity to build trust if consumers have an excellent experience throughout the installation process. This starts with clear communications explaining the benefits of smart metering, followed by a successful installation visit. Reads from smart meters must be utilised to produce accurate bills, with data quality issues resolved promptly. Consumers will also need information and support after the meter is installed. industry and its customers. It identified that in the UK only 43% of energy consumers were actively engaged, meaning they would put in some level of effort to achieve a saving. 2 The deployment experience is critical to increasing consumer engagement, but unfortunately too many consumers have already had poor experiences of smart meters. Common problems include missed installation appointments, difficulties connecting meters to the server and unresolved issues with meters in basements or mixed dwelling units. If the service is poor or the technology is unreliable, repairing consumer trust will be difficult and an opportunity to encourage consumer participation in the energy market will be lost. What can be learnt from consumer behaviour in the more mature smart phone market? Major developments in smart phones over the last 40 years have changed the way we live, with many new features including email, internet, cameras, GPS and connectivity with other devices. Increased complexity complicates purchasing decisions but it is easier for consumers who have experience of using a product to make New technology is changing consumer behaviour and expectations, but even consumers with similar characteristics behave differently, so a ‘one size fits all’ approach to smart meters is not appropriate Accurate billing should reduce customer contacts, but experience from California suggests that initially contacts will increase due to questions about the new information provided. Energy companies must have sufficient trained staff to deal with this temporary spike in workload, especially when the rate of new installations is at its peak. Changing consumer behaviour New technology is changing consumer behaviour and expectations, but even consumers with similar characteristics behave differently, so a ‘one size fits all’ approach to smart meters is not appropriate. Since behaviour is heavily influenced by outcomes, most consumers will only be motivated to reduce energy usage if savings are sufficient to outweigh the consequent costs, inconvenience, or loss of comfort. Onzo’s extensive customer segmentation research shows the challenge of transforming the relationship between an Evidence of active consumer engagement and smart behaviour in other markets is mixed. Many UK consumers are switching 1 The rise of smart customers, EY, August 2011 2 Empower Demand 2 (ESMIG), VaasaETT, 2012 36 from the big supermarket brands to the discounters to get better value or are saving money by finding better deals and special offers, such as fixed price contracts and cashback schemes. On the other hand, some decisions are being made on the basis of ‘lowest price’ without understanding the contract terms. This is a particular problem with insurance where important issues such as excess, cover levels and exclusions may be overlooked. Furthermore, some consumers may be too reliant on information shown on unreliable peer review sites. better choices, although they may still be overly influenced by less important features such as the number of free texts or free minutes. Smart phones also reinforce the need to protect consumers from unfair contract terms for cloud storage, excessive roaming charges and data privacy. The European Commission’s 2014 Scoreboard shows that banking, telecoms and energy markets continue to fail consumers, so there are still many problems in these sectors. Consumer information To cut energy costs consumers must be able to evaluate their needs and use available METERING INTERNATIONAL ISSUE – 6 | 2014