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How to sell energy efficiency to domestic customers (with or without the Green Deal)

Posted by Cathy Debenham on 18 July 2012 at 9:23 am

Cost savings are not the most effective way of selling energy efficiency measures  according to new research. In What's in it for me? Consumer Focus has analysed 15 projects that set out to increase energy efficiency behaviour in householders. It concludes that "saving money on bills is a useful, but problematic, benefit to use when promoting energy efficiency measures."

So what is the best approach for companies that are promoting energy efficiency to take? Based on its research Consumer Focus found two other benefits that are more effective.

1. Avoiding loss

There are two reasons why this may be more powerful than talking about future savings. By talking about the 'energy you are wasting' you will tap into people's aversion to loss, which tends to be stronger than their desire for gain. In addition, you are bringing the benefit from the future into the present. "As humans, we often value what is immediate over what may happen in the future," says Consumer Focus.

The research also found that being protected from future losses and future energy price rises can also be an important motivator for some people.

2. Increased comfort and warmth

Many of the projects in the study found that increased warmth and comfort were benefits that people often commented on after energy efficiency measures had been installed in their home. The ones that used them as explicit benefits in their marketing and communications also found it improved take-up.

Comfort and warmth are likely to be particularly useful as a benefit in marketing targeted at elderly people, those with young families and people living in properties that are likely to be draughty. Using a strong visual depiction of these benefits, as insulation project Cosy Devon did, is likely to be more successful than just using words.

Why not use lower energy bills as a benefit

There are a number of reasons that saving money is problematic as a benefit, especially for those who are not struggling to pay their bills.

1. Measures do not automatically equal savings
For example, people who were under-heating their home before may take the benefit in extra warmth and energy prices are rising all the time. This may undermine trust.

2. People prefer certainty
Not surprisingly, people view things that will 'probably' happen very differently from things that will 'definitely' happen, and for the reasons given above, you cannot guarantee bill savings.

3. People may not know how much they spend on energy, or check their bills regularly enough to notice a change.

4. Energy bills are a blunt instrument for demonstrating the effect of energy efficiency, as it is difficult for people to relate their actions to the change in a quarterly bill.

Barriers to energy efficiency retrofit, and how to overcome them

1. Energy efficiency isn't at the top of most people's priority list - in many cases it may not even be on their horizon. The research found that tailoring information, so that it was relevant to their particular type of property, was one way to gain people's attention. Making use of thermal imaging (to show the lost heat) also helped some of the projects to gain traction.

2. Paying back the loan
Green Deal research found that a third of people prefer to pay the cost up front, and only a fifth were keen on the spread of payments over time (which begs the question of why the Green Deal has been designed as it has - but this isn't the topic for today's discussion!). These findings were mirrored in Consumer Focus's research, with householders more interested in whether they could afford monthly repayments, than they were by the idea of making it cost neutral (as the green deal's golden rule aims to do).

3. Use previous customers as advocates
The research found that "people trust the experience of others who have acted more than almost any other source". One way of doing this would be to ask customers to recommend you on YouGen.

4. Reduce the inconvenience
Ideas such as helping people to clear their loft, or adding a loft hatch, are examples of ways to make the process as smooth and easy as possible for people.

What all this means for your marketing

It's clear from the research that one size does not fit all. As the research says: "Different people will be attracted to different measures, seek different benefits and face different barriers". As a result it makes sense (as with all marketing) to segment your market, and to be very clear about which segments you are targeting, which benefits are relevant to them and which barriers they face.

Too general a message, or one that gives too many benefits in the hope that one will hit home, are more likely to be ignored.

Here are some of Consumer Focus's recommendations:
- Take the customer's perspective. Make sure you understand the audience you are targeting.
- Segment the audience - don't assume that one size fits all.
- Ensure the benefits outweigh the barriers.
- Consider non-financial benefits and barriers
- Bring the issue into the present.
- Make it personal. Energy is invisible, so make it about their house, their family.
- Provide opportunities to touch and feel - this might be seeing the measures in a neighbours home, or a showroom.
- Encourage word of mouth (and word of mouth on YouGen - if you're not already a member, you can sign up here).

Photo by Jacek.NL

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If you have a question about anything in the above blog, please ask it in the comments section below.

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Comments

3 comments - read them below or add one

NorthGlosEPC

NorthGlosEPCComment left on: 8 August 2012 at 12:38 pm

I don't quite agree with everything in the above blog.

Before becoming an energy assessor I spent 30 years in enineering sales (my experience was in B2B) so I think I have a valid perspective on the subject.

The above advice on selling energy efficiency looks to me like a modification of the standard sales training handbook. It looks like advice on how to get around to closing a sale when the obvious and main selling feature, savings, is not available to you.

You offer added value to make the overall deal look more attractive and close the deal that way. If you can.

But I would suggest energy efficiency is different. the product is different to almost any other because you are promoting as much a concept as an actual product. You need to either win people over to the idea or, if that cannot be achieved you have to work on aspects which are important to them. And that for the vast majority of people will be the financial benefit, and I think this regardless of however many small sample studies have been made suggesting otherwise.

Whatever type of potential customer you find yourself talking to the key to a successful outcome, primarily in this case for the customer I might add, is inertia. This along with credibility, and by that I mean getting through the now inborn public belief that there is bound to be a catch in what's being offered, because of all the cold callers, door step sales and mis-selling scandals we've seen.

Inertia might be overcome by making the process as easy, quick and painless as possible, and to be fair that is mentioned in the above blog.

But credibility is the big factor. It seems the standard sales approach nowadays is to tell half truths or leave out important factors. An example being the way PV sales always refer to return on investment. Potential customers compare this figure with savings account interest, but the two numbers are very different. Now bottom line over a 20 year FiT deal comparing PV installation and leaving the money on deposite would be credible. Likewise advising that the budget should include allowance for a new inverter sometime in the 20 year term would be credible.

Now if the truth does not leave the customer still wanting to go forward, and again to be fair the blog does admit that "measures do not automatically equal savings" where do we go from there?

Well, if as a nation we accept we must reduce carbon output and the way to do this is through efficiency and renewables going this way has to be financially viable for people or most won't do it. The only way in many if not most cases to make this so is through incentive.

Lower council tax for efficient homes, reduced stamp duty, subsidied installation costs etc.etc. And if we're really all in it together the associated cost has to come from somewhere, not through a levy on energy bills however small, but through general taxation. My preference being based on ability to pay through income tax.

In summary. Some sales might result from promoting energy efficiency through features other than financial viability but nothing like as many as if financial viability in the form of customer cost savings can be truthfully achieved.

Well, from talking to many many normal people in the course of providing EPC's that's what I conclude.

 

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Linn Rafferty

Linn Rafferty from JTec Energy PerformanceComment left on: 19 July 2012 at 1:44 pm

" People may not know how much they spend on energy, or check their bills regularly enough to notice a change."  I think this is a key fact, and true for most of the better-off, although not true for those on pre-payment meters.  However, the number of people noticing the rise in their fuel bills is increasing, due to the big price rises over the last couple of years.

Unfortunately, although you may find this hard to credit, many of them don't realise that their bills are a result of their own choices.  They prefer to blame faulty utility meters, or greedy energy suppliers, or the government putting up prices by building wind turbines, etc etc.... We generally don't have any difficulty finding someone else to blame!

Choices you can make include not renting or buying a home you can't afford to heat; not dressing for the beach in the middle of winter; not turning down an offer of 'free insulation' because you don't believe anything is really free; and lots more. 

One really important aspect of energy advice is to help customers gain an understanding of how their own choices impact their pockets, and I wouldn't want that message to be lost when applying these new ideas.

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Tim Pullen

Tim Pullen from Weather WorksComment left on: 18 July 2012 at 3:02 pm

Cathy's very clear analysis of this report shows the depth of confusion still around in the industry. Many of my clients want "energy efficiency" without any clear idea of what that really means. It is an idea or concept of efficiency for its own sake that seems to be attractive. It relates directly to Cathy's first point about avoiding loss. 

The second issue - largely undiscussed - is that of motive. This report reflects financial attitudes but seems to ignore those with an ethical motive. For some minimising energy consumption is reward enough in itself.  That is not to say that one motive is better than the other as they both lead to the same conclusion. 

We might also think about "future-proofing". Possibly 30% to 40% of the people I work with are at, or approaching, retirement age and thinking about living on a fixed income. They want the comfort of knowing that they can afford to live in their house in 10 years time.

Renewable energy, and by extension energy efficiency, ticks a lot of boxes for a lot of people. But to put the right system in place we must first find out what the client wants to buy, be it a financial return, physical comfort or emotional comfort. 

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