Striking a balance between customer wants and what they need Hitting just the right note when it comes to product offerings is always a difficult proposition. When asked what they want, customers often stick to a narrow range that fits in with their current knowledge of what’s available. That said products are constantly evolving and consumers may not be aware options that will make their lives easier or save them money already exist or are just around the corner.
When consumers are made aware of the existence of a product or service, their interest often rises. This was clearly demonstrated by the Engagement Opportunity survey which showed almost 60% of respondents were interested in a Home Assistance service despite a low level of awareness about it initially.
Building on the relationships they already have with their customers, Utilities can position themselves as both providers of existing smart devices and sources of information about upcoming innovations and additional service opportunities. For example, McKinsey’s Connected Home Market survey shows a high level of consumer interest for thermostat and energy monitoring but a lack of understanding and a low willingness to pay for them. Utilities are in a good position to educate their customers about the benefits of these products opening up a door to a lucrative market that’s been largely ignored by big tech giants.
Focusing on motivations underlying consumer interest
Understanding what drives customers’ interest in smart home devices and services could help Utilities strike the right balance between product range and services opportunities. For example, consumers have neither the interest nor the time to actually understand how their homes get powered or how their boiler works. So, it’s not surprising to find out that 60% would be interested in technology that could completely automate the management of their electricity.
By focusing on drivers rather than products, utility providers could even reach consumers who are non-users of smart technology. McKinsey identified several common behaviours in non-users, such as leaving the lights on (51%), leaving the TV or an appliance on (41%) or leaving the AC running (35%), that could create sales opportunities. Underlying motivations in every slice of the Smart home drivers’ wheel (below) is a yearning for peace of mind. In fact, the Engagement Opportunity survey found that almost 70% of homeowners list peace of mind as their top reason for being interested in Home Assistance cover.
How can Utilities capitalize on this knowledge? Rather than use their product range as a starting point for segmenting and positioning, providers should reverse their thinking and use motivations as a more efficient way to understand their customers.
Partnerships are the way of the future
Traditional energy providers have “a window of opportunity in the connected home to partner, test and learn,” says Accenture. “This window will rapidly close as competitors take advantage of early adopters and rapidly evolving technology to establish strong value based offerings.” Currently, the market is being driven by device and appliance manufacturers. Tech giants like Amazon, Google and Apple are flooding homes with smart ecosystems. Amazon alone sold more than 20 million Echo devices in 2017.
Home specialists are focusing on task specific devices like Tado and Climote while traditional appliance and electronic companies like Bosch or Phillips are enhancing their products with smart capabilities such as refrigerators with screens and Internet connectivity. Some energy providers have already joined the fray. Enel was the first company in the world to introduce smart meters and by 2019 they should have installed 21 million units.
Data-driven services on the cards
But in the near future, there should be a shift away from a device-driven smart home market towards data-enhanced services, according to Accenture. This is good news for Utilities who can leverage their billing relationship and connection with long-time customers to offer added-value services. That said it will be critical that any development in smart home offerings allows for integration with the technology mentioned above. British Gas for example, has partnered with Amazon and its Echo system. Partnership opportunities also exist with smart home specialists and home services providers – installation and maintenance being a market gap. “Providers of ongoing products and services have domain-specific knowledge and credentials which they must use to build out services and secure their presence in the connected home,” argues Accenture.
Service providers at the forefront of customer education
Delta-ee’s customer panel indicates that installers and service providers can play a key role in educating customers and triggering their interest for innovative products. When a boiler breaks down for example, “the engineer – who is usually the first on site – has the initial opportunity to make the sale” because they can bring propositions to the customer in the most relevant and timely way. Energy supply, installation, maintenance and repairs all provide relevant meaningful moments for connection that come with the potential for education about smart products and services that could benefit both the customer and the provider.
Here again, partnerships with those who have their finger on the pulse will play a role as they allow Utilities to cover more ground, remain their customers’ main provider and push back against device-centric tech disruptors.
One-time fees or monthly subscriptions?
Pricing also plays a crucial role in the success of smart home offerings. Stand-alone one-off payments, bundles of core products and services, rentals and subscription services are all possible options for Utilities allowing them to build and maintain a sustained connection with their customers. The key is to ensure the perceived value of the ongoing service remains high while bundling it with broader home services offerings, including smart devices. Monthly services also offer the potential to collect data about customer preferences, which in turn allows providers to fine-tune their offerings in a way that meets customer expectations even more. And if the price of devices is a barrier for consumers, why not give it for free?
Giving it for free?
Utilities could learn a thing or two from the home entertainment and telecom sectors when it comes to creating the conditions for long-lasting relationships with customers in this new environment. Satellite suppliers Sky for example, focused on free hardware in order to gain penetration for subscription services. In a similar way, phones are distributed at a great discount when customers sign up for longer contracts. Some Utilities are already on the right track. Spanish energy provider Iberdrola for example, is giving their Netatmo smart thermostat for free (a value of nearly €200) with any boiler replacement. Smart products that require monitoring provide a great opportunity to stay in a customer’s home long after the boiler has been repaired or replaced.
Smart thermostats, connected appliances, AI assistants… It’s difficult to imagine how the average consumer can keep up with all the innovations and understand the pitfalls of buying non-compatible technology let alone have the knowledge to connect it all together. In that context, providers who can help customers make sense of it all or can take on the burden of making it all work together could endear themselves to consumers and gain their trust.
Right from the beginning, providers need to communicate the benefits of their products in a way that’s easy to understand. Stripping away the complexity and jargon from the moment of purchase through the installation process, and continuing by supporting the customer post set-up to ensure they are getting the most from their system, could lead to lasting customer relationships.
Leveraging success factors
Relevant products, at flexible prices, supported by a readiness to inform and support at the right time and place are all key factors of success for Utilities interested in taking advantage of the bounty that is the smart home market, which is expected to reach $150 billion by 2023. Partnerships such as home services can help maintain an ongoing relationship with the customer, increase communication and touch point opportunities, and allow Utilities to leverage connected technology and data in a pro-active and meaningful way.
LONDON – 14 February 2019 – HomeServe plc (“HomeServe”), the international home repairs and improvements business, has signed an agreement with Mitsubishi Corporation (“MC”) to establish a joint venture (“JV”) in Japan.
We believe in the power of partnerships as an accelerator. This article explores how Utilities such as #eon and Eneco have profited from collaboration, as well as the lift in engagement home service programmes have brought to the likes of Veolia and First Energy.
Home Services offerings can become successful strategies for Utilities wanting to strengthen and lengthen relationships with their customers.