Six tips for outstanding small commercial programs
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Six tips for outstanding small commercial programs
- 1. 0 PulseEnergy.com Six Tips for Outstanding Small Commercial Behavioral Programs January 23rd, 2013
- 2. 1 Our background and approach Six tips: challenges and solutions • Split incentives • Diversity of the customer base • Busy customers • Energy costs not being a priority • Franchising dynamics • Measuring and verifying savings Q&A Today’s agenda
- 3. 2 Taking your questions Minimize control panel Type in questions
- 6. 5 SME market: 93% of commercial accounts Source: EIA CBECS Database. 7% Large Commercial (> 500 MWh/yr) Small-Medium Business (< 500 MWh/yr) 93%
- 7. 6 Goal: Achieve efficiency targets and increase customer satisfaction • Give SMEs valuable insight into their consumption • Cover a wide audience through personalized, low cost engagement • Use multiple channels to break through the noise • Apply our deep knowledge of the commercial sector Our approach
- 8. 7 Owen Rogers Product Lead – Pulse Check • owen.rogers@pulseenergy.com Today’s speaker
- 9. 8 SME Challenges What works for large commercial doesn’t work for SME
- 10. 9 Diversity: Challenge One engagement strategy does not fit all
- 11. 10 Diversity: Solution • Segmentation by more than 150 4-digit NAICS categories • Additional sub-categorization by size and type • Targeted messaging that aligns with organization’s operating goals Segment and sub-categorize for targeted communications
- 12. 11 Busy customers: Challenge • 63% work more than 40 hours per week • 10% work more than 70 hours per week Source: 2011 Small Business Review, Manta.com Small business owners work long hours
- 13. 12 • Push-based communication • Focus on low effort, high value steps • Respect seasonal trends • Focus on measures that do not impact core business (e.g. out-of-hours consumption) Busy customers: Solution Reduce barriers to engagement
- 14. 13 Energy costs not a priority: Challenge Source: Characterization and Analysis of Small Business Energy Costs, sba.gov, 2008. Business Category Energy Costs as % of Revenue 441 - Motor Vehicle & Parts Dealers 0.3% 443 - Electronics & Appliance Stores 0.6% 445 - Food & Beverage Stores 2.1% 451 - Sporting Goods, Hobby, Book, & Music Stores 0.8% 541 - Professional, Scientific, & Technical Services 0.1% Energy costs are perceived as a cost of doing business
- 15. 14 • Connect energy costs to profit margin • Frame issue in terms of “energy waste” • Apply behavioral psychology and behavioral economic models • Leverage normative comparisons, peer recognition and competition Energy costs not a priority: Solution Motivate by framing the issue
- 16. 15 Split incentives: Challenge Source: Quantifying the Effects of Market Failures in the End-Use of Energy, OECD/IEA, 2006. Can Choose Technology Cannot Choose Technology Direct energy payment No problem Efficiency problem (net lease) Indirect energy payment Usage and efficiency problem (gross lease) Usage problem (gross lease) Up to 90% of commercial leased spaces face split incentive barriers
- 17. 16 • Encourage communication between groups • Focus on mutual benefit Split incentives: Solution Engage both landlords and tenants
- 18. 17 Franchising: Challenge • Corporate policies may restrict operating procedures and types of retrofits that can be performed Over 900,000 US businesses are franchises Source: International Franchise Association
- 19. 18 Franchising: Solution • Focus on non-customer facing areas • Recognize common corporate policies • Opportunity as owners want to benchmark their businesses against similar franchises • Support for multi-site accounts Recognize where the opportunities lie
- 20. 19 Large behavioral programs rule out common M&V methods Measurement and verification: Challenge • Costs of conducting energy audits for the entire segment is prohibitive • Individual business baselines are too variable
- 21. 20 Measurement and verification: Solution • Apply experimental design to large SME population • Use an opt-out program • Cluster accounts with similar temporal variance Employ statistical M&V approach to track savings
- 22. 21 • Segment and sub-categorize for targeted communications • Reduce barriers to engagement • Motivate by framing the issue • Engage both landlords and tenants • Recognize where the opportunities lie in franchises • Employ statistical M&V approach to track savings Key takeaways
- 23. 22 For further questions or to arrange a demo, please contact us at: Pulse Energy • Phone: (877) 331-0530 • Email: info@pulseenergy.com Thank you! Meet up with us at… AESP National Conference, Orlando, Jan 28-31 EUEC, Phoenix, Jan 28-30 DistribuTECH, San Diego, Jan 29-31 Tech Advantage, New Orleans, Feb 19-20
Notas do Editor
- This is roughly the same split for if you look at buildings that use 500,000kW annual consumption.
- Owen is our product lead for Pulse Check, and has overseen We just sent an invitation out to 2500 of utility SMB customers in BC. (It was all of their small commercial with email) – they will receive Pulse Check. Will deploy to California 15,000, with a similar size control group. Ladies he’s taken. First deployment was last July. Customers on system for seven months.
- There is an emerging interest in behavioural EE programs This is where a lot of innovation is occurring in the field. We believe they have outstanding potential but they need to be correctly engaged. Going through some of the challenges we’ve identified Key learning: what works for large commercial does not work for small
- One main obstacle is the diversity of different types of businesses Key: Not just different in end use, but also the underlying barriers to adopting different measures – what resonates with different businesses and organizations within the sector. Study after study has shown that appropriately targeted messaging will increase success. Unlike large commercial where someone has responsibility for energy management, in SMEs each business typically takes care of itself, so you’re engaging with a customer who does not have a detailed understanding of energy consumption, but we still want to engage them in conservation. In large commercial you can engage with a common language of energy use. For SME, it’s communicating relative to their business goals. Industry surveys have generally lumped customers together by end use Image sources: Wikimedia commons, purchased iStock
- From our experience what’s used is classification schemes such as NAICS or SIC. It’s a good place to start. We’ve found from engaging SMEs is that for some cases, you need more granularity to get at the true patterns of consumption and adoption and thus appropriate messages. So we do additional subcategorization by size – we use a scheme built on top of NAICS that allows for additional flexibility. Some utilities use a six-digit version of the NAICS code, but this doesn’t always conform with NAICS. We try to correlate the data with other data sources. Nice: NAICS offers a hierarchical approach to categorization. It can be helpful to roll up customers based on patterns of consumption, not just an industry categorization scheme. NAICS is a great starting point but don’t tie yourself to NAICS. To target within the restaurant vertical, there are 2 primary and 4
- Challenge here is around engaging this segment in terms of trying to respect their extremely busy schedules and energy consumption is not top of mind or highest priority. So, We need to ensure engagement around conservation is as easy as possible. So it needs to be clear to them what the benefits are. We know that engaged customers are more satisfied with their utilities, but you have only a limited amount of time to engage with that. Image source: wikimedia commons
- Key idea: Reach customers where they are without imposing additional burdens on them to engage. So push based is the way to go. Convenience We recommend a multi-channel approach. Lead with an easy to adopt approach with paper based, email is an option, and engage within amobile platform. The platforms need to be engaged appropriately. Consistent messaging is important. Provide simple things for customers to do in order to start engaging in conservation. e.g. Point them at a rebate that you know is relevant to their business.
- Energy costs are not a significant cost business operations. So a focus on cost savings may not be sufficient to get their interest. So, in this table we see 5 different 3-digit NAICS categories and % of revenue that is consumed by energy costs. So even a 2% reduction in consumption of 1% is a small number for an individual business, though in aggregate it’s valuable for the utility.
- Key idea is to leverage other mechanisms that may supplement or enhance the cost savings associated with conservation measures. So, equate the savings in terms of bottom line savings for a business by applying the impact on gross margin (part of estimated business expenses). As well, we focus on other motivators beyond cost savings such as competitiveness and social pressure – normative comparisons to efficiency businesses. Providing competition based motivators such as leaderboards or ranking boards relative to similar businesses. Another technique is to frame consumption in terms of waste and loss. Behavioural psych research talks about this as more motivating. Helps them visualize money evaporating from their account. Waste is value neutral, liberal or conservatives don’t like it. Describe these books – NEEA also has a good study guide on messaging.
- One of the most significant barriers to improved energy efficiency Significant chunk face split incentive barriers. An account has little control over their consumption or cannot choose the technology they’re using at their site because they don’t own the space. This table helps us categorize these types of barriers. So customers who pay directly and can choose tech can take action with no barriers. Describe the quadrants…
- Visual? For any given system, installation, or piece of equipment, responsibility for capital expense and benefit of savings should reside with the same entity. To the extent feasible, both consumption and demand for resources throughout the Building should be measurable and transparent to both Landlord and Tenant. We try where possible to target both the landlord and the tenant, on what they can both impact. Focus on fostering communication and mutual benefit. Problem: Utility has contact info for one. We identify this when the billing and premise address are different. So we can provide targeting to each type of address. That’s with a focus on print reports. So that customer would receive a different message if they are the bill payer of occupier of the premise. Occupier would get more behavioural recommendation, bill payer would generally get more retrofit related measures (assuming we can identify they are the landlord). Report also encourages communication. Landlords really only do retrofits as part of initial lease negotiation to attract the tenant who has certain space requirements. After that the landlords rarely act, so to target both we are focusing on providing info around the lease negotiation process so that EE is taken into account. So landlord considers EE as value to prospective tennant; tenant will ask about EE. This is the core idea with green leasing. Image source: Wikimedia commons.
- Targeting verticals with large chains, corporate policies may restrict what technologies can be installed, or using certain approved suppliers who don’t have the range of technologies that will help with EE. So effectively these businesses have less flexibility to take action.
- There are savings opportunities here if you recognize them. Target ECMs appropriately – focus on non-customer facing areas – storerooms, back office, kitchen, etc. Owners typically have more flexibility to design those areas as appropriate. In some ways these scenarios are attractive when an owner owns multiple sites and has greater incentive, visibility to more opportunities for savings. So we recognize this within our solutions.
- Finally, M&V for savings for EE programs being rolled out. The cost of auditing all these individual sites is prohibitive -- Deemed or measure by measure retrofits are too expensive. We the leaders in whole building M&V but we recognize this is not suitable for programs of this scale. Building accurate baselines across such a large and heterogeneous customer base is expensive and labor intensive. And we see much greater variability in patterns of consumption which make it difficult to build whole building baselines. Seasonal variations correlate with economic variability, but you don’t see these seasonal effects
- A control and delivery group. A lot depends on the temporal variance within the SME customer base. You can stratify such that this variance is This way you can see 1-2% across the population as a whole – the signal is distinguishable from the noise.
- Know your customer through detailed market segmentation (segmentation by end use is insufficient) Use push-based communication to reach customers Foster engagement through behavioural science – Apply behavioural science to motivate engagement Understand their barriers to energy conservation – Provide tools to overcome barriers to adoption Select appropriate behaviours and measures Employ statistical M&V approaches to track savings Use targeted and appropriate messaging (respect, waste) Recognize and reward engagment
- If you’d like to discuss further or a demo please contact us at. A number of different ways this can be configured to meet regulated EE reqts like TRC, or others using to reduce customer churn.