The smart home market is booming, reaching 40 percent of all U.S. households. By 2025, that number is expected to grow to nearly 60 percent. For energy utilities, this sought-after technology is an opportunity to reach customers in new ways, increase engagement and improve J.D. Power scores.
Unfortunately, in today’s digital age, energy utilities aren’t the only ones competing for customers’ time and attention.
Eyeing the competition
The reality is Amazon, Google and other tech companies aren’t solely smart home device manufacturers – they are now direct competitors of energy utilities.
Beyond selling smart home devices, tech companies are using home energy automation as an opportunity to collect customer data, which they are using to build digital relationships. In fact, many of your utility’s customers are receiving energy-related emails directly from these tech giants.
Google sends out a monthly email newsletter to Nest customers featuring colorful reports on each customer’s energy usage and local energy trends. The eNewsletter includes infographics and videos that provide energy efficiency advice and other engaging content.
For energy utilities, efforts like this have the potential to negatively impact their own customer relationships and undermine long-term satisfaction. As relationships with these tech companies grow, customers will begin to look to Amazon or Google as a resource for their energy needs – not their local utility.
The smart home market is projected to reach $29 billion in sales in 2021 and nearly $47 billion by 2025. With financial gain at stake, tech companies have a strong incentive to continue building relationships with customers around energy efficiency.
According to a recent survey, 80 percent of energy utility executives agreed that utilities fail to match the level of personalization and convenience that customers receive from Amazon and Google. That’s why it behooves your energy utility to take control of the smart home conversation and reestablish its role as an energy expert.
Building relationships with content
To start the smart home conversation, energy utilities need to take advantage of content marketing to educate and engage customers. Research finds that 70 percent of internet users want to learn about products through content versus traditional advertisements. Content marketing builds long-term engagement and fosters a digital relationship that brings value to customers.
With the right content, energy utilities can educate customers, help them make decisions and show them how this technology is an essential part of a smart energy lifestyle.
A smart home strategy might include a personalized eNewsletter targeted to customers who have shown interest in this technology or purchased a product through the energy marketplace. Energy utilities should also promote the energy efficiency benefits of smart home technology in their education and outreach efforts.
It’s also essential to create a cohesive, companywide message to ensure all customers receive a similar experience, whether they receive a promotion about purchasing a smart thermostat or contact your call center to inquire about smart home resources.
As more energy utilities roll out time-of-use rate options and demand response programs, it will be critical to encourage adoption of smart energy technologies to both residential and business audiences.
The cost of doing nothing
The risk of forfeiting customer relationships to the tech giants could lead to lower program participation, higher operational costs and reduced revenue from lost marketplace sales. Another potential threat is big tech selling electricity in the future.
According to a Wall Street Journal article, “In 10 or 20 years, the dominant retail electric provider in the United States is going to be Amazon or Google.” Currently, tech companies are teaming up with energy industry partners – a market that could grow as much as 500 percent in the next few years.
For example, Amazon Web Services has an oil and gas division with BP and Shell as clients, while Microsoft currently has a partnership with ExxonMobil and Chevron. Google has a partnership with Schlumberger for its oil and gas petrotechnical software.
According to UCRC's State of the Customer report, approximately 25 percent of consumers would choose a different energy provider if given the option, and another 50 percent did not have a strong feeling either way.
That’s why it’s critical to build strong customer relationships around smart home technology before tech companies make further inroads.
A competitive advantage
While it’s no easy task to compete with these tech giants, energy utilities have one major competitive advantage: Customers trust their energy utility.
According to research from the Smart Energy Consumer Collaborative (SECC), 42 percent of consumers said the involvement or endorsement of their utility would influence their adoption of smart home technology.
In contrast, customers have concerns about big tech and data privacy, as cybersecurity breaches continue to make headlines.
The bottom line is customers are looking for smart home advice from a reliable source like their energy utility. They need advice and information – and that’s the perfect opportunity for energy utilities to take control of the conversation.
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July 12, 2021 at 04:09PM
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Energy utilities: Staying competitive in the smart home market - Utility Dive
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