By Hugh Hibbert
When it comes to getting consumers to switch to paperless billing, no Canadian utility does it better than Union Gas: but that doesn’t mean there isn’t room for improvement.
Union Gas, a major Canadian natural gas storage, transmission and distribution company based in Chatham-Kent, Ontario and owned by Enbridge, has been pulling out all the stops for a number of years to convince customers to switch to electronic billing. Using promotions and incentives the utility managed to convince 36% of their customers to move away from paper bills. But after following the same strategy for about 10 years they felt they were starting to lose momentum.
“Once we started to get past the low to mid 30% range it started to get harder to get those sign-ups,” said Karen Sweet, manager, market research and analysis at Union Gas. “We were offering the same promotions, but we were getting fewer people.”
The work Union Gas did to get to this point was remarkable considering paperless billing rates in the industry are more commonly in the 15-20% range. Because the company was already well ahead of the industry benchmark, it knew it was going to have to work even harder to build on those numbers.
Finding customers to target
Up to this point Union Gas had largely relied on mass market advertisements and bill inserts to get its message out. In order to reinvigorate the paperless billing drive the company felt it was time to adopt a more innovative strategy, targeting consumers with specific promotions and messaging. The challenge was how to find those customers. Many of the existing customers who opted into paperless billing were evenly distributed across the company’s service area; without more research there was no obvious way to figure out which areas to target and how to engage them.
In 2017 Union Gas commissioned Environics Research and Environics Analytics to design a new segmentation strategy rooted in psychographics and geo-demographic data. Their goal was to better understand who their clients are and what motivates them to adopt new products and services. Once that work was done they would look to the data again to find the best ways to connect with them. Moreover, by linking primary market research and third-party data, Union Gas also saw an opportunity to validate their work to ensure they were on the right path.
By leveraging PRIZM5, Environics Analytics’ proprietary segmentation system and SocialValues, jointly developed with Environics Research, which is a database that explains how an audience will respond to specific advertising and communications, Union Gas discovered it had seven distinct target groups. The segmentation approach showed that the early paperless adopters were higher in terms of their economic status. While younger populations tend to favour technology more, age wasn’t found to be a factor in who switched from their paper bills. The data showed that customers who lived in neighbourhoods with more access to technology, who were also comfortable using connected devices, were more likely to incorporate digital into other parts of their lives.
Strong and also surprising results
Seven target groups emerged out of this segmentation work, but Union Gas focused on the top five segments that offered the greatest potential. Because PRIZM5 can link to postal codes, Environics Research was able to attach a segment to each customer in the Union Gas database and then execute a focused and targeted survey with only the most relevant customer subgroups. Since the segmentation data from Environics Analytics already contained demographic, wealth and behavioural information, it allowed Environics Research to focus more of the survey on filling in gaps their current understanding of the customers’ bill management processes. The segmented data also enabled it to test potential incentives to encourage customers to try a new process.
“It gave us the capacity to talk with each segment and target them individually,” said Sweet. “We found that each segment liked different incentives.” For instance, one group might be more into the idea of creating a social benefit but that wasn’t as much of a priority for others. The segmentation data also showed which consumers would be more likely to be moved by messages around the ethical and ecological impact of their consumption and who would see paperless billing as a way to alleviate the stress of their financial management responsibilities.
A few surprises came out of this research, too. For instance, these data that showed that doubling the value of the cash prize consumers would be eligible for would likely have little impact on the number of new paperless billing enrollments. “We were pleasantly surprised by this,” said Ali Zulfiqar, advisor, market research at Union Gas. “Since there was no difference in the response between the two prizes, why offer $10,000?”
This was an important finding because the research showed that consumers were more motivated by incentives that included cash prize draws than small credits on their bill for going paperless.
It’s easy to see why Union Gas is eager to recapture some of its momentum around paperless billing. With approximately 1.5 million customers and postage costs increasing every year, it could be looking at significant savings from a 1% to 2% change in paperless adoption, which would more than justify the additional resources needed to target specific customers.
Hugh Hibbert is director, consulting services at Environics Analytics.