A Smarter Customer Segmentation Approach for Utilities

Using Customer Segmentation to Improve Energy Efficiency, Water Conservation, and Program Participation

Robert Brnilovich, Black & Veatch & Harman Sandhu, SUS

| @Black_Veatch| www.bv.com

About the Speakers

Harman Sandhu• 15 years in analytics and technology• Experienced executive helping utilities with management

strategy, Smart Grid, and technology roadmaps

Robert Brnilovich• 31 years in enterprise management & technology consulting• Focused on helping E&U companies become more customer

focused and solve environmental issues with technology.


Utility Customer is changing• Continued focus on energy efficiency and water

conservation requires engaged customers and demand side management.

• Customer side technologies (DER, EV, Home Automation) will require specific interactions for different customers.

• Utility customer is rapidly changing from a homogenous group to a multi cohort population with unique aspirations!

Multi-channel EngagementEnergy Efficiency &

Water Conservation

Distributed Energy Resources

Home Automation

Electric Vehicles

| www.bv.com | @Black_Veatch

Translating Consumer Awareness Into Action:

58% customers want efficiency

recommendations, only 7% access

rebates

60% dishwashers purchased are

eligible for rebates, only 29%

are claimed

80% of consumers are broadly aware of energy efficiency, but limited

action (Source: McKinsey & Company, 2015 & Accenture, 2013)

A 2013 EPA survey of households revealed that incremental improvements

in consumer and awareness about energy efficiency are small and take time

While progress is being made in moving customers from greater awareness to

taking action, much work remains.


Utility Expectations & Experiences

(Picture Source: https://www3.epa.gov/region9/greenbuilding/codes/standards.html#labeling )

Electric & water utilities face many hurdles to improving energy

efficiency and water conservation adoption rates among their

customers: Greater levels of differentiation among customer segments:

Household demographics (age, family size, family structures)

Differences by income level(s) and/or educational attainment

Variations in lifestyles, including constraints on time

Limited utility resources available for marketing programs and customer

outreach

Greater regulatory scrutiny to verify operational effectiveness & results

Efficiency programs vary widely: A “one-size-fits-all’ approach to

marketing and customer outreach is no-longer an effective strategy.

Standardized labeling of energy and bill savings obtainable through energy efficiency is an important first step.


https://www3.epa.gov/region9/greenbuilding/codes/standards.html#labeling



Tracking Utility Program Performance & Results is Key

MEASURABLE & VERIFIABLE ENERGY AND WATER SAVINGSMeasured energy savings of 8-9% in the 1st year Measured water conservation savings of 5-6%

CUSTOMER ADOPTION RATE(s)Energy Efficiency Technology Penetration Rate of Somewhere between 4% and 18% per year

MARKETING & OUTREACH$3-$5 per customer on energy efficiency marketing = A Utility budget of between $180k - $300k/year

Performance Tracking Must Be Done for Each Major Market Segment Targeted By the Utility.| @Black_Veatch| www.bv.com

Measurements to Drive Change

“You can’t manage what you can’t measure.”- Peter Drucker

…we can measure, therefore we can change!


A Look at SegmentationSegmentation is the process of dividing the customer base into groups of individuals that are similar in particular ways such as demographics, usage habits, interests, attitudes, etc.

Traditionally Utilities have used segments based on customer class or the type of program offered.


However the Energy Use Profiles vary… PG&E ACEEE Summer Study (2012)

15-minute residential electric usage data

8,337 households, 43 days

Aggregated data to 6 peak load shapes

We believe that you can solve the problem by getting in front of

the right person with the right message, than we can grow

participation.


Multi-factor Segmentation Data on customers easily accessible

today – More sources, better

resolution

Micro segmentation of customers

based on past behavior, demographic

data, and energy/water end use How

much they use? When do

they use?Who are

they?

Why they use?


Cloud Technologies Make it EasyThe cloud-based analytics requires little effort to setup and can create detailed signature energy and water use profiles for each customer along with an Efficient Use Baseline for each segment.

• Real-time analysis using continuous data processing

• Data from third party sources for property, weather, and customer demographics

• Social Norm based messaging through multi-channel customer engagement showing customer comparisons and call to action

Property Attributes Weather Profile

Energy Usage Customer History

Smart iQ Energy Platform(Continuous Data Processing, Multifactor Correlation Modeling,

Machine Learning, Delivery Services)

Customer Energy/Water Signature Profile +Efficient Use Baseline

(Property, Use, and Weather Normalized)

Social Norm Based Messaging


Reduce Cost

Improve Participatio

n

Achieve Targets

New Data Sourc

es

Energy /

Water Analy

tics

Access To Informatio

n

Energy /

Water Manageme

nt

INFORMED

AND

ENGA

GED

CUSTOMER

• Real-time, two-way Communication

• Usage Analysis• Efficiency Ranking• Consumption Projection

Portal / IOS / Android +

Social Media Integration

Smart MetersSmart Thermostats

(Green Button Data)

Coupling Analytics with Engagement

Utilities can increase the response rates, reduce the outreach costs, and improve the program impact by using the right combination of segmentation analytics and engagement techniques.

Bringing it Together

Key Success Factors

Customer

Segmentation

Relevant

Messaging

Multi Channe

l Engagement

Real-time

Information

Two-way

Communicatio

n


Black & Veatch StudySUS commissioned Black & Veatch to conduct a statistical analysis of the Smart Customer Mobile Portal (SCM) portal service to determine if customers w/ SCM modify electricity and water use compared to non-SCM customers:

Multivariate Statistical Model Control for other factors influencing Usage:

o Weathero Seasonal variations in usageo Trend changes that occur over time

Include customers that do not have SCM (i.e. a control group )


Black & Veatch FindingsA robust statistical revealed that customer use of the Smart Customer Mobile Portal (SCM) contributed to:

Lower electricity use among regular residential customers (without PV-solar), following registration in SCM

Lower electricity usage among customers that did have solar panels, following registration in SCM

Water usage was also measurably lower among both residential customers w/ and w/o solar panels that registered for SCM

Innovative Technology DeliversMeasurable and Verifiable

Customer Value!


Group Discussion

Further Questions, Contact Us!


Engineering

A Smarter Customer Segmentation Approach for Utilities