Focusing the Lens On Energy Users

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Photos of kids peering at a computer screen. A picture of a young boy gabbing on a cordless phone. Others of dishwashers and remote control devices. Random shots taken to finish up a roll of film? Not exactly. Pictures like these, including those with this story, were all taken last year by participants in an "observational research session" for Houston Lighting & Power in Texas. The group's assignment: take photographs that reflect what energy means in their lives. Houston L&P initiated the project, known as "Getting Closer," when the utility realized that its market research lacked voices of real customers. "You can't give consumers a blank piece of paper and ask them to write an essay about what electricity means to them," says Frank Wanderski, market research manager for Houston Industries, parent company of Houston L&P. "We wanted to get inside their heads-and their homes."

Listening to consumers-sounds like a marketing no-brainer, right? But for most electric utility companies, getting touchy-feely with customers hasn't historically been one of their top priorities. It didn't need to be, since losing accounts to a rival power supplier wasn't a real threat. However, with deregulation gradually opening the $250 billion industry to competition, existing energy companies that have enjoyed monopolistic franchise rights within communities are now searching for ways to court and retain customers. Some providers even hope to position themselves as one-stop shopping sources for the future "wired" home, providing Internet access, cable services, and additional products. They'll have plenty of competition, particularly from telecommunications and cable industries.

Right now, the price of power is definitely an issue: According to Claritas' Convergence Audit Survey this year, more than half of the respondents in the 33,000 households surveyed said they would switch energy providers if offered the right discount. Indeed, 21 percent said they would change companies for less than a 10 percent discount. Young, well-educated customers with higher incomes are among the first to jump at a lower price, experts say, while consumers 55 and older, with little interest in new technology, are often reluctant to switch.

If prices are fairly comparable across competitors, though, what else drives consumer choice of a provider? Understanding customers' attitudes and preferences, analysts say, can help suppliers pinpoint services that add value to their central product: power. "Electricity is the bull's-eye," says vice president Richard Kitaeff of Arlington Heights, Illinois-based Market Facts. "Now companies are trying to figure out how far afield they can go from that center."

Houston L&P asked their customers to literally show them how far they could go. The roots of "Getting Closer," a trademark of Houston Industries and EPRI, lie in anthropology. First, Houston L&P gathered 30 residential customers, representing the demographic mix of the market, and handed out free 35mm cameras to the group. Then they asked participants to go home and shoot pictures about energy. The instructions were intentionally open-ended and somewhat ambiguous, says Gary Blackton, CEO of Portland, Oregon-based Brand New Corporation, which conducted the study for Houston L&P, as well as for other energy providers. Brand New has also handled similar sessions for companies like Nike. "You let your respondents lead you," he says. "Themes start to emerge that you may not have known existed."

Several images dominated the first round of photos: children, appliances, tangled electrical cords. Each person described what they photographed and why it represented what energy meant in their lives. Frequent associations included conservation, technology, privacy, and safety. The participants weren't finished yet, though: They were given another roll of film and asked to illustrate specific ideas that developed during the session. Some people were assigned to focus on the connection between kids and energy; others looked at products that saved time. A few weeks later, they met again and discussed their pictures.

Among the many insights that emerged from the study involved Houston L&P's relationship with families and children. "From their point of view, our customers told us that it's okay for an energy company to hold seminars for parents to help them use computers with their kids," says Houston Industries' Wanderski. Another powerful message was that people believe deregulation will prompt better customer service and a greater variety of services. "One guy flatly said, 'Let me like you,'" Wanderski adds. "They told us that we could expand our core services. Why couldn't we help them fix their VCRs?"

Indeed, power suppliers are already transforming into Mr. Fix-Its in some markets. Residential customers of Public Service Company of Colorado, an operating company of New Century Energies, can pay a monthly fee that covers repair service for various electrical appliances in their homes. The two-year-old service has attracted about 8,000 customers. Starting early next year, Public Service will also offer green power-generated on a Colorado wind farm-to environmentally-conscious consumers. Services like these, says Andy Sulkko, marketing product manager at Public Service, were consistently favored by customers in focus groups and surveys.

Another potential add-on product is security protection. According to the Claritas study, 82 percent of consumers do not have a home security system, yet 65 percent say they leave their lights on when they're away from home. The Southern Company, an Atlanta-based utility company serving the southeast region, recently introduced "PowerCall Security," a safety system for residential or commercial use that includes options such as closed-circuit cameras, motion sensors and alarms. It can even notify the fire department when it detects a fire. Indeed, energy providers may soon connect consumers to the Internet, issue credit cards, even prune trees in a customer's yard.

But before they start landscaping, electric companies are first working on their advertising strategies. According to Competitive Media Reporting in New York City, advertising expenditures for the utility industry, which includes gas, fuel, power, and water companies, reached $171 million in 1997. The largest chunk was spent on spot TV and local newspaper ads, totaling nearly $118 million. For the first half of 1998, spending reached $78.2 million, up from $68.9 million during the same period last year. While most energy suppliers stick to local markets for advertising, experts say others that hope to become national providers, like Enron Corp. and Southern Company, are widening their strategies to national media outlets.

Meanwhile, a Midwest utility just completed its first "Getting Closer" session with a group of residential customers. Besides taking energy-related photographs, participants were given the option to bring samples of music that characterized their attitudes about energy. No word yet on their Top-40 selections, but let's hope "Pump Up the Volume" beat "You Light Up My Life."

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