October 2010


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Peter HonebeinEMAIL INTERVIEW - Peter Honebein & Ken Sinclair

Peter C. Honebein, Ph.D., is co-founder of the Customer Performance Group, a management and marketing strategy consulting firm and a leading expert on smart grid customer experience. He is the author of Strategies for Effective Customer Education and the award winning Creating Do-it-Yourself Customers, as well numerous articles in The Electricity Journal, Metering International, Marketing Management, and Association for Computer Machinery’s journal Interactions. Dr. Honebein is also an adjunct professor at Indiana University and the University of Nevada, Reno.

Bringing about “Customer Performance”

Where do you see the interaction between the smart grid and customer engagement headed?

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Sinclair:  What is customer engagement?

Honebein:  Customer engagement occurs when a customer takes some kind of observable action toward a goal, preferably an action that is valuable both to the customer, the utility, and society. For example, a customer who signs up for My Account services, for automated bill payment or viewing their usage information, is engaged. Logging in at least once a month indicates stronger engagement. Engagement can continue to other valuable actions, such as shifting usage on a peak day, investing in energy efficient appliances, or telling family friends, and neighbors about useful products, services, and programs.

Sinclair:  How do you get customers engaged?

Honebein:  We have a model for this. It’s called the Coproduction Experience Model and its focus is on bringing about “customer performance.” The first element of the model is Vision. We must help customers develop a goal, and then provide them feedback on their progress toward that goal. For example, a monthly electricity budget is a goal, and your spending each day related to that goal is the feedback. The second element is Access. This is the environment you create for customers to help them achieve the goal. This could involve favorable policies or online tools that enable to customer to set goals and receive feedback. The third element is Incentive. This can be either a reward or a punishment. For example, to encourage customers to sign up for My Account services, we could offer a reward of $15 – banks used this tactic to get people to use online banking. To encourage customers to reduce usage on a peak day, we could implement a critical peak price, raising the cost of electricity from 15¢ to $1.70 – which is essentially a punishment. The fourth and final element is Expertise. Here we provide customers education on the things they can do to achieve the goal. Orchestrating these four elements creates a customer experience that focuses on customer performance and engagement.

Sinclair:  Where do you see the interaction between the smart grid and customer engagement headed?

Honebein:  The direction is really dependent upon the utility’s business case and the regulatory attitudes. Some utilities are focused on demand response – customer experiences would be designed to achieve that type of engagement. Other utilities are more focused on operational efficiency and cost reductions – customer experiences would be designed to make self-service attractive enough to increase engagement through that channel. But there is something bigger going on, and that involves the qualities of the utility-customers relationship. One quality is to be proactive in the relationship, where the utility can anticipate needs and provide appropriate services. For example, when a person buys a new house or rents a new apartment, they should get an e-mail from the utility to set up service connection – which can be done automatically, at a time and date specified by the customer, using the smart meter remote connect feature. A second quality is mutually beneficial, where the customer, utility, and society all get something out of the relationship. The customer might want convenience, the utility might want reduced costs, and society might want reduced energy waste. The third quality is collaborative, which means that the customer has a coproduction role. What’s coproduction? It is where the customer is involved in the design of products, services, and programs. It is where customers use their knowledge and skills to reduce or shift usage. In short, coproduction means the customer has a role in value creation.

Reliable Controls Sinclair:  In some regions, there appears to be customer backlash against the smart grid and smart meters. Any insights on what’s going on?

Honebein:  Funny you should ask that. I got a new digital meter at my home with the time-of-use rate and my usage went up 123% and my bill up 65%. When I contacted my utility, the service experience was less than desirable. And it took two hours of my time to get it all sorted out (turned out my old mechanical meter was slow). My experience seems to correlate with the experiences in California and Texas, where customer service and effective education and communication appear to be root causes. Both of these factors connect back to what I was talking about earlier regarding customer experiences. Every customer touchpoint associated with the smart grid needs to be orchestrated to deliver customer confidence: that the system is accurate, it's secure, and that it is private. These foundational elements are critical stepping-stones that have to be achieved before all the sexy stuff – in-home displays, smart appliances, and so on – becomes available to customers.

Sinclair:  What’s the best smart grid customer experience story you’ve come across in your work?

Honebein:  We were conducting codesign panels with a group of customers. Codesign is an online customer requirements/prototyping process that helps us establish the direction of customer experiences. Anyway, one of our participants was an older woman who lived alone in a home. We had given her (and other participants) an in-home display to try – along with a goal: see how much you can reduce. In her online postings of her experiences, she described all the things she did to reduce her energy consumption – to the point of drinking cold coffee. All the other participants started calling her the “Cold Coffee Lady”. But what is interesting here is that with a goal and clear feedback, she was able to invent her own tactics for reducing usage that were acceptable to her. She ended up being the winner of our informal competition, reducing her usage 29%. As Winston Churchill said, “We shall not fail or falter; we shall not weaken or tire…Give us the tools and we will finish the job.” The smart grid provides the tools. If we provide the right experience that wraps around those tools, customers will find the way to become engaged and co-create value.


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