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A JOLT for Energy Efficiency

A McKinsey Consulting publication urges utilities to take new tactics to engage U.S. consumers and save energy

Awareness of energy efficiency has risen - nearly 80% of U.S. consumers recognize the benefits according to the researchers - but actions taken by homeowners to tap into the savings opportunities remain tepid. To tackle the disconnect, the authors urge utilities to change the way they approach their customers.   
"In short, we believe utilities need to follow the lead of their consumer-facing peers to improve their understanding of how consumers behave and adopt better ways of engaging them. Only then will utilities make inroads into convincing consumers to play their part in capturing the sizable energy savings that could be available."


Look to consumer attitudes rather than demographics
The article urges utilities to engage with consumers based on their distinct attitudes about energy efficiency. McKinsey researchers identified five distinct segments that show significantly different levels of concern about energy-saving behavior.


Increase the use of rebates & incentives
The article further suggested communicating in a way that includes an emotional appear to the priorities of the five segments. One particularly effective tool - rebates & incentives.
"Our research indicates that utilities have an opportunity to promote adoption of rebates and incentives that encourage energy efficiency on a much broader scale by using this segmentation approach. For example, segment-specific marketing efforts could include details of rebate mechanisms, and approaches to streamline rebates and incentive mechanisms might also be considered. The utility would communicate with segments in different ways and offer each segment different options, be they rebates and incentives or products such as smart thermostats."


Invest to capture high-stakes savings
Adopting a consumer-facing approach will require utilities to invest in marketing and sales capabilities and work with technology partners. But, the potential impact is real. Modest behavioral changes (with little to no impact on consumers lifestyle) could lead to savings as much as an additional 20 percent of residential-power demand.  


Our Takeaway

We see tremendous promise in combining programs like INSTANT REBATES with approaches that segment and target consumers differently.