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December 7, 2016

Becoming the Airbnb of the Energy Services Industry

Bill LeBlanc

Technological breakthroughs, innovative thinking, and a customer-friendly platform allowed Airbnb to disrupt the hotel industry in a big way. But how did this company discover the winning formula? Why didn’t Hilton think of it first? Maybe Hilton did, but the company’s culture stopped it from creating its own competitor. How will this scenario play out in the utility sector as upstarts nibble at the edges of our traditional model?

Utility customers get new energy options every day—solar, electric vehicles, connected home devices, battery storage—and utilities are struggling to keep up. They’re wondering not only about the appropriate role to play, but also how to create products, services, and experiences for the customer of the future. Enter design thinking, an approach pioneered nearly 25 years ago by David Kelley, his internationally acclaimed firm IDEO, and Stanford University. First used to create technologies with exceptional user experiences (think Apple), design thinking has since been expanded to services such as the patient-centric process at the Mayo Clinic and customer experiences like those provided by Airbnb.

The utility brand is largely created by the experiences customers have and the products and services they use, but most utilities prioritize load shape over customer desires. How else can we explain the prevalence of programs that turn down customers’ air conditioners on the hottest days of the year?

Design thinking starts with empathy—that is, putting yourself into your customers’ shoes to understand their unmet needs. Market research takes an ethnographic approach to studying customer habits, activities, and work-arounds. Design thinking considers the fringe customers—from very efficient customers to energy wasters, early adopters to technophobes—which leads to divergent solutions that change the trajectory of product and service design.

For example, in its early days, Airbnb didn’t get much traction. So instead of talking to its satisfied customers, the company interviewed people who visited the website and left without booking a rental. Airbnb discovered that the shoddy photos of potential rentals were turning people off. So the company prioritized the need for professional photos and made that feature prominent on its site. This seemingly simple discovery, point of view, and change made all the difference.

Consumers Energy used design thinking to radically revamp its low-income customer billing process. One key change was increasing the frequency of communications, including offering daily texts about energy use and twice-per-month billing. What were the results?

  • Customers in the Clear Control pilot program accumulated no new debt, whereas customers in the control group owed the utility an average of $300.
  • Pilot participants used 20 percent less electricity than their control-group counterparts, reducing their bills by $200 per year.
  • Around 95 percent of participants paid their bills in full and on time; only 35 percent of the control group did so.

In short, Consumers Energy was able to make a huge decrease in arrearages, late-payment fees, and shutoffs—a win for customers and the utility.

Not all ideas are game-changers, nor do they need to be. Sometimes small improvements or iterations can make a big difference. Read more case studies in articles by Design for Founders and Quora.

How can you start using design thinking to create the customer portfolio of the future? Make plans to attend E Design 2020: Accelerating Utility Innovation for the New Energy Consumer. This first-ever gathering of its type, exclusively for utility professionals, will be held in downtown San Francisco, May 10–11, 2017. This unique conference will feature a day of learning followed by a day of workshops to immediately create a tangible framework for your utility.

About the Author

Bill LeBlanc

Bill LeBlanc

CHIEF INSTIGATION AGENT

Bill has more than 20 years of experience in strategic marketing, new product development, pricing, market research, demand-side management, and social marketing. He focuses on helping utilities understand the intersection between the customer and the utility’ products and services, and he specializes in maximizing marketing effectiveness. Before joining E Source, Bill worked for six years as a director at Barakat & Chamberlin, a national consulting firm. He also founded and served for several years as president of the Association of Energy Services Professionals. Bill served as a project manager at EPRI from 1988 to 1991, overseeing projects focused on demand management, rates, marketing, and customer behavior; developing promotional programs for EPRI products and services; and conducting conferences and workshops. Bill previously served E Source as vice president of Marketing, Consulting, and Research. He’s also president of the Boulder Energy Group. He holds a BS and an MS in mechanical engineering from Stanford University and a BA in management economics from Claremont McKenna College.

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Contributing Authors

Chief Instigation Agent

Bill LeBlanc previously served the business as vice president for Marketing, vice president for Consulting, and vice president for Research. He’s...