Is Prepay the Way in the Utility Sector?

Survey Points to Significant Bill Pay Opportunities Enabled by Smart Grid for Utility Consumers

Washington, DC … EcoAlign, a strategic marketing agency in the energy sector, released the findings today of a consumer survey examining customer perceptions and expectations of a voluntary prepay option offered to consumers by local utilities.

“Prepay could be the first customer-facing benefit from smart grid and have a large impact on the utility sector.”

Jamie Wimberly, CEO, DEFG

“The survey findings point a rapid ripening of prepay as a voluntary option, with a short-term addressable market of approximately 20 percent and another 25 percent or so that could enroll after education and targeted marketing,” stated Jamie Wimberly, CEO of EcoAlign.  “Prepay could be the first customer-facing benefit from smart grid and have a large impact on the utility sector.”

The top line findings from EcoPinion No. 9 include:

  • Prepaid products have gone mainstream with over one-half of all Americans having purchased or used a prepaid product, and even more Americans planning to do so over the next year.
  • 75 percent of all Americans are satisfied with their prepaid options and products, with almost one-half who have used prepaid products responding they were “highly satisfied.”
  • What are the drivers behind satisfaction? Consumers pointed to “ease” and “convenience.” This implies that prepaid is aligned to consumer preferences in regard to bill pay channels and lifestyle choices. When asked how prepaid products make them feel, many Americans simply responded “happy.”
  • Prepaid products may not suit all consumers. There is a generational divide, with younger people much more likely to be satisfied or highly satisfied with prepaid options. Women also tend to like and use prepaid products more than men. Finally, renters may be more apt to use prepaid products than homeowners.
  • A core group of consumers (17 percent) are “extremely interested” or “very interested” in a voluntary prepay option offered by their local utility. For most service industries, this level of interest would signal the need to support prepay products and channels. Another 25 percent of consumers indicated that they were “interested” or “somewhat interested,” signaling that there is ample room for growth, once utility prepay options enter the market. Our findings further show that when consumers use prepay, they like the option and are more interested in having the option available for other transactions such as paying utility bills.
  • It is important to note that 46 percent of respondents were “not interested at all” in a voluntary prepay option offered by the local utility.
  • Americans increasingly use prepay options and like them. Yet, there is a sizeable number of Americans who are not at all interested in a voluntary prepay option offered by their local utility. Why is that? Another way of asking the question may be: Is it prepay that they are not interested in, or the utility offering prepay? Some possible reasons for the gap may be:
    • Prepay is a new bill paying option for some Americans, so unfamiliarity leads to uncertainty.
    • Older Americans are much more likely to stick to traditional bill pay channels, e.g., writing a paper check.
    • Distrust and/or skepticism of the utility’s motives.
    • Uncertainty with regard to costs vs. benefits, especially if there are fees associated with a utility prepay option.
    • Concerns over service disruption and disconnection.
    • The utility has not met consumers’ current needs and preferences so they are less keen on trying a new option.
  • Given the above, what might make consumers more interested in a voluntary prepay option offered by the local utility? The short answer is discounts and lower bills. As our EcoPinion survey findings have pointed to time and again, consumers largely see their utility service as a commodity and so everything gets calculated as payback in dollars and cents.
  • Consumers cited the following top three benefits for using a voluntary prepay option: 1) paying for energy as you use it, 2) eliminating any surprises at the end of the month; and 3) control over costs. These responses highlight the consumer perspective of utility service as a commodity and thus something to be managed and controlled.

“Smart grid holds a lot of promise in the minds of Americans,” stated Jamie Wimberly.  “Yet for this promise to be realized, new products and services will need to be allowed into the utility sector. This EcoPinion clearly points to the fact that some customers will readily embrace new options if offered.”

EcoAlign surveyed 1,000 Americans nationwide in mid-November.  EcoAlign is making the survey report available to the public at no charge.

EcoAlign is the energy and environment marketing agency and a wholly-owned affiliate of DEFG LLC. We develop and execute marketing strategies for utilities, renewable energy providers and vendors operating in the energy and environment space. We are uniquely suited to help companies achieve their business objectives, from reaching efficiency program targets and improving customer satisfaction, to launching new products, increasing market share and repositioning for growth in the clean tech space.

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