Zuckerberg's law has made it to the energy industry.
In 2008, Facebook CEO Mark Zuckerberg told the Web 2.0 Summit, “I would expect that next year, people will share twice as much information as they share this year, and the next year, they will be sharing twice as much as they did the year before.”
Coming from the 24-year-old founder of a nascent startup, this claim might have seemed ridiculous. But it had a ring to it. The media declared it "Zuckerberg’s law" based on its similarity to Moore’s law -- Intel co-founder Gordon Moore’s theory of the predictable doubling of processing power over time.
Zuckerberg’s law is nearly 10 years old, and a generation of millennial consumers has grown up with information-sharing as a cultural norm. Step counts and heart rates flow from Fitbits to social exercise apps. Vacations are no longer private getaways, but instead opportunities to gain Instagram followers. Even sensitive data like financial transactions are on public display through apps like Venmo.
The generational shift toward data-sharing is a trend the energy industry can’t ignore, especially as more states adopt utility data-sharing protocols like Green Button. So how can utilities and energy providers adapt to meet millennials’ expectations?
What millennials want
Earlier this year, the Smart Energy Consumer Collaborative posed the same question in its Spotlight on Millennials report. The study was cleverly designed to tease out differences between millennial and non-millennial respondents to SECC’s energy consumer surveys. The findings are striking.
Millennials are not only twice as likely to use digital channels to interact with utilities as non-millennials are, but they also believe that access to real-time energy usage information is more important and more valuable than do older generations. SECC found that more than half the millennial respondents were willing to pay for energy usage information, while less than one-third of non-millennials are. Millennials rightly believe their energy data is valuable, thus they want better online access to it and are even willing to pay for it. It is imperative that utilities and energy providers capitalize on this opportunity.
While SECC’s surveys focused on residential consumers, these trends aren’t necessarily limited to millennials at home. Millennials already make up more than half of the U.S. workforce and are on track to eclipse 75 percent by 2030 according to Bureau of Labor Statistics estimates. It won’t be long before millennial executives are running most companies, from mom-and-pops to the Fortune 500. The expectations of a smarter, data-driven energy supply at home will carry over to the workplace, where digital data analytics tools are commonplace -- on track to becoming a $200 billion industry by 2020.
Share more, trust more
The U.S.’ 70-millionth smart meter was installed at the end of 2016, an order of magnitude increase in less than a decade. While discussions of utility data-sharing typically focus on managing this influx of meter data, it is only a fraction of the information that customers entrust to their energy providers each day.
Utility customers share data through online surveys or “self-audit” tools to guide energy efficiency recommendations. They offer opinions on utility products and services and fill out questionnaires about their homes or workplaces to better understand their energy options. While the non-millennial might find all this data exchange tiresome or unwanted, digital natives won’t think twice. Indeed, savvy energy providers will find ways to use this data to build customer trust and loyalty.
That starts with digital engagement. As noted, SECC’s report reveals that millennials are more than twice as likely to interact digitally with their energy provider as non-millennials. Separately, Accenture’s New Energy Consumer research has shown that digitally engaged consumers have a 10 percentage point advantage as compared to non-digital users when it comes to trust of energy providers. Furthermore, 73 percent of digitally engaged consumers stated that they would trust their energy provider to share their information with other parties.
In effect, the more consumers engage with their energy providers online, the more likely they are to trust them with their information. That increased trust creates a positive feedback loop, where data-sharing among customers, energy providers and third parties can be highly constructive for all.
Data isn’t the challenge -- personalization is
Gaining millennials’ trust is, of course, the first step to becoming a “trusted energy adviser.” The next is providing advice by making disparate data points relevant and useful. When customers offer information to their energy providers, they expect something in return -- often in the form of a more personalized experience. This is especially true among millennial consumers. Indeed, SECC’s first takeaway in Spotlight on Millennials is that personalization is key.
Source: Spotlight on Millennials
How can energy providers personalize the experience? Learn from other industries. Consumers are now accustomed to receiving “next best offers” from the likes of Amazon and Netflix. They expect similarly tailored service when it comes to their utility. For example, a small business that leases its space may not respond to incentives for energy-efficient windows or large appliances, since they won’t reap the benefits of those investments over time if they relocate. They might instead prefer low- or no-cost recommendations to reduce their bills in the short term, like making sure their automatic lighting and HVAC setbacks kick in overnight.
For business customers, the challenge of personalization can be particularly difficult. No two businesses are alike, and often a wide range of people have a say in energy management, from accounts payable, to building management, to owner-operators. As I argued in a previous post, the key to reaching these customers is a deeper segmentation of business customers so that the right message reaches the right person at the right time. That requires better data upfront and deeper analysis to create tailored messaging.
Where does information-sharing fit in with personalization? Feedback. Every time a customer clicks, calls, signs up (or doesn’t), they are sharing valuable information with their utility. There is no “set it and forget it” strategy. Energy providers must listen to their customers’ responses to their offers and campaigns, and adjust accordingly.
Illinois: A playbook for data-sharing
The more integrated information-sharing becomes to the utility customer experience, the more energy providers will want clear policies and protocols to guide the process. One example is Illinois’ Open Data Access Framework, which was developed collaboratively between the Citizens Utility Board, the Environmental Defense Fund and Illinois’ electric power utilities, among other stakeholders.
In addition to setting the “rules of engagement” around data-sharing, the framework defines many of the key terms and expectations for sharing utility data, including types of data, data file format, method of delivery, timeliness, data security, customer authorization and whether utilities may charge customers or third parties for data access. The framework was recently finalized by the Illinois Commerce Commission, which ordered that it be considered by Illinois utilities in the development of any new services related to customers’ smart meter data.
While Illinois’ framework may not translate to every regulatory environment, it is a very useful starting point for energy providers that prefer a more structured approach to authorizing data access and sharing. Customers will expect this level of consistency and clarity as they embark on a deeper data exchange with their energy provider.
In the end, utilities would do well to heed Zuckerberg’s law. Good-quality energy data is now available, and a generation trained on Facebook’s “share more” ethos is going to want to utilize it, both at home and at work. By leaning into this shift and creating clear road maps and guidelines for data-sharing, rather than ignoring the trend, utilities have the opportunity to improve their digital experience and create positive long-term customer relationships.
Brian Bowen is regulatory affairs manager at FirstFuel Software.