Low-income customers are notoriously challenging to reach for energy utilities. This group of customers — defined by the Pew Research Center as making less than $48,500 for a three-person household — are driven by saving money and they may qualify for needed payment assistance programs. However, they also share many of the same interests, wants and needs as utilities’ general customer base, from an interest in smart home technology to being environmentally conscious.
To connect with low-income customers, your energy utility needs to take a closer look at this unique audience and what barriers exist to reaching them.
Easing the energy burden
Low-income customers come from every walk of life, from rural communities to major metropolitan areas. They represent all ages and are made up of households with and without children. As a result of the coronavirus pandemic, many of these customers are facing financial troubles for the first time. It’s important to understand that income is the major characteristic that differentiates this group from higher-income customers — not other demographics or traits.
According to the Smart Energy Consumer Collaborative’s (SECC) report “Understanding Lower-Income Consumers and the Smart Energy Future,” two-thirds of low-income customers spend more than 6% of their income on their energy bills. In contrast, the average U.S. consumer spends just 3%. These customers look to their energy utility for support and understanding, as well as programs or services to help ease their energy burden.
Breaking barriers to reach low-income customers
The reality is that barriers exist for low-income customers to take advantage of payment assistance programs. One of the biggest hurdles is basic awareness of these programs. In fact, only 46% of low-income customers are familiar with programs available to help with their monthly electric bill, according to SECC’s research. Awareness was even lower for energy efficiency programs. Only 33% knew about energy efficiency upgrades offered by their energy utility.
For energy utilities, building awareness is key to driving interest and participation in financial assistance programs among this audience. Consider utilizing segmentation to reach low-income customers with relevant, personalized information on programs like payment assistance or budget billing. Once familiar with these programs, more than 90% of customers will take advantage of the assistance.
In addition to offering payment options to make it easier to pay their monthly bill, low-income customers benefit from energy efficiency tips and advice. By improving energy efficiency, they can better manage energy use in their homes, which has a profound impact on their monthly bills. For example, consider reaching out to homeowners or renters with energy efficiency products, programs or helpful information relevant to their living situation.
A focus on the environment
Just like higher-income customers, there is a subgroup of low-income customers who are dedicated to an eco-friendly lifestyle. SECC research found that 44% of environmentally driven customers say a concern for future generations drives their interest in energy efficiency. These customers are concerned about air quality, carbon dioxide emissions and would like the government to invest in more renewable energy. Since this group has a higher income compared to other low-income customers, they are able to invest in more energy-efficient technologies than others in the segment.
To reach these customers, it behooves energy utilities to create marketing communications with an environmental focus. For example, when promoting energy efficiency products in your energy marketplace, consider using messaging that highlights the environmental benefits. You can also reach out to low-income customers with segmented email newsletters focused on energy efficiency, renewable energy and other eco-friendly options.
Adoption of smart energy technologies
Smart energy technologies, ENERGY STAR® appliances and rooftop solar panels can seem like luxuries to even the typical energy consumer. However, it’s not only higher-income customers who have an interest in them.
When making purchasing decisions, a variety of drivers spark an interest in smart energy technologies for low-income customers. For example, the primary driver to purchase smart thermostats is saving money and making their home more comfortable. When purchasing smart appliances or smart lighting, low-income customers are driven by the ease of use. For rooftop solar panels and community solar, a passion for helping the environment is a significant motivator.
Despite these drivers, smart energy adoption remains a challenge. According to SECC research, 28% of low-income customers believe that these smart energy technologies are not worth the effort. To encourage adoption, reinforce the fact that these technologies are beneficial for both saving money and maintaining the comfort in their homes. It’s also important to provide insights on the positive impact to the energy grid and local community.
Reach low-income customers with a relevant message
As this research demonstrates, low-income customers have many of the same values and motivations as higher-income customers. To better connect with this audience, it’s vital to increase awareness about financial assistance programs, energy efficiency programs and smart energy technologies.
With the right messaging — from a focus on saving money to improving the environment — your energy utility can effectively reach low-income customers, connect them with relevant programs and help them achieve their energy goals.