Not So Fast: Prepay Energy and Seniors (55+) in the Utility Sector

DEFG’s EcoPinion Consumer Survey Points to Growing Generational Divide for Customer Service in the Utility Sector

Washington, DC … DEFG, a management consulting firm specializing in consumers and consumer-facing offerings in the utility sector (http://defg.local/) released today EcoPinion No. 22, “Not So Fast: Prepay Energy and Seniors (55+) in the Utility Sector.” DEFG worked with the members of the Prepay Energy Working Group in Fall 2015 to survey approximately 600 seniors ranging from 55 years and older across the United States.

DEFG’s previous research has shown consumer interest to be highly segmented. In other words, prepay energy is enthusiastically adopted by some utility customers but not others. This national survey was focused on understanding the preferences, needs and requirements of older Americans as it relates to utility customer service, and more specifically, to their interest in a voluntary prepaid energy option offered by their utility. The headline points to the overall survey finding that interest in prepay energy is fairly low among older Americans in comparison to the Millennial generation, immigrants, property managers, and other segments with very high interest in prepay.

“As all our research shows, a voluntary prepay energy option is not for everyone,” stated Jamie Wimberly, the CEO of DEFG LLC. “This seems to be particularly true for older Americans (55+) since many of them are really not that concerned about paying their utility bills and have very established ways of interacting with their utility.”

The primary findings from the consumer survey are:

  • Older Americans are much less likely to have ever used any form of prepay than the generations after them. This survey recorded that 54 percent of older adults have used a prepay option as compared to 69 percent of other generations (18-54) recorded in our last general EcoPinion survey of all Americans on prepay.
  • This a significant finding since we have a noted the following: use of any prepay option (e.g., gift cards) results in high satisfaction, which results in higher interest in other prepay options, including prepay energy. So, if you have not started down the prepay path, it stands to reason that you would have lower interest in a prepay energy options.
  • And indeed, interest in a voluntary prepaid electric service option is relatively low among adults 55 or older—even though approximately one-half have used or purchased a prepaid card or service plan, and most have been relatively satisfied with its use.
  • In fact, interest in prepay energy by older Americans (15 percent) is almost a third of the interest level of other Americans (40 percent).
  • And the older you are, the less likely you are to be interested in a prepay energy option. For example, 19 percent of Americans who are 55-59 indicated an interest in prepay energy vs. 5 percent for those who are 75+.
  • Depending on the relative age of the respondents, there are marked differences in how the respondents want to transact with the utility. For example, there is a 20-point difference between 55-59 year olds and those aged 75+ on the desire for automatic payments. The older you are the more likely you want automatic payments as an option.
  • Email is an important means of notification of older Americans, and half prefer notification by more than one channel. Like the finding above, there are significant differences on channel preferences depending on your age. 55-59 years olds are much more likely to prefer text messaging.
  • Six out of ten adults 55 or older would be somewhat or very concerned about using a prepay plan. Highest concern was among the 60-64 years olds (68 percent).

“EcoPinion No. 22 is probably the clearest set of survey findings yet that point to the differences between generations in regard to prepay energy and other aspects of the utility’s service model,” continued Wimberly. “The differences in preferences and needs between millennials and older Americans are large enough to posit the need for almost two generational service models. Yet, for now, utilities are trying to use the ‘old folks’ model for everyone. There is a need to move to a differentiated, segment service model to support applications such as prepay energy on a going forward basis.”

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