Keep EE Programs Fresh with Rewards and Shelve the Stale Rebates.

Rebates have a shelf life and present lots of challenges for utilities who depend on them for their Energy Efficiency (EE) programs. At their very best, rebates fulfilled at point of sale (POS) on an energy marketplace translate to sales of EE devices, but also train customers to buy those products only when substantial rebates are available. Sales dry up with lower rebate levels, and almost evaporate on the utility marketplace without a subsidy. However well they perform in the best times, POS rebates come with enormous administrative costs on top of the rebate funding, for products that are well known and understood by customers after nearly 15 years of availability.

Without a POS implementation, rebate value slips quickly in direct proportion to the difficulty of completing the rebate process and the time it takes for customers to receive the rebate credit. Customer skepticism can get pretty severe if that process is hard to do or takes too long from their perspective, giving traditional rebates a lot of mixed results.

We think it’s time to consider a reward system for Energy Efficiency that improves performance not only in EE program adoption, but with the added bonus of increasing customer engagement, satisfaction, and the critical data insights required to make meaningful changes to customer behavior in the long run. Here’s a top 10 list of reasons that energy utilities should consider customer reward programs over traditional rebates.

1. Higher Adoption Rates: Reward systems often have a psychological edge, offering immediate gratification which can result in higher adoption rates compared to traditional rebate systems. Utilities will increase program enrollments with the opportunity to adjust reward tiers and lower overall costs in order to increase EE adoption across the broader customer base.

2. Ongoing Engagement: Reward systems can create a continuous relationship with the customer, whereas rebates are typically one-time transactions. Customers participate more actively in reward programs, download apps and track their achievements, which means utilities can promote other programs, new educational content, and generally enrich their digital CX channels.

3. Branding and Loyalty: Rewards can be branded and customized, promoting the utility company's image and fostering customer loyalty. They can also be paired with educational content to promote energy-saving habits, EE newsletters, and social campaigns to amp up the reach of your customer education. Branded rewards ensure that customers associate any reward with the utility program in these applications.

4. Flexibility: Rewards can be tailored, adjusted, and scaled based on customer feedback, market trends, or technological advancements. Best of all, customers pick their own rewards, shifting control to the customer and demonstrating the utility’s customer centricity.

5. Cost Efficiency: While both systems entail costs, reward systems, especially digital ones, can be more cost-effective in terms of administration and processing compared to handling rebates which often involve paperwork and manual checks. Lowering the administrative costs, and even testing rewards with lower price points than traditional rebates, makes your program more effective across the entire customer base and looks great to regulators.

6. Cross-Promotion Opportunities: Using a reward platform, utilities can cross-promote other services or products, increasing their overall reach and effectiveness. Reward programs let you more easily “stack” or bundle offers like a reward with the purchase of an EV Charger, plus an additional reward when its enrolled with a Time of Use rate plan, for broader program adoption across the customer lifecycle.

7. Data Collection and Insights: Reward systems, particularly digital platforms, can provide real-time data on user behavior, allowing for better targeting, segmentation, and optimization of energy-saving campaigns in the future that translates into faster achievement of success metrics.

8. Trends in Other Industries: Many industries, from retail to banking to airlines, have shifted from direct discounts or rebates to loyalty and reward programs. These industries have found that rewards foster long-term customer engagement, increase participation, and drive consistent customer outcomes over time.

9. Ecosystem Integration: Reward systems can integrate with other platforms, apps, or ecosystems, creating a seamless user experience and further promoting the adoption of energy-efficient behaviors and devices. Plug it into your existing marketplace or legacy rebate program to amp-up performance. Add reward programs to EE content and education programs to accelerate that success, as well.

10. Behavioral Economics Principle: The allure of earning rewards can be a more potent motivator than the promise of a future rebate. This plays into the psychological principle that people tend to value immediate rewards more than future ones, even if the future ones are more substantial (a phenomenon known as temporal discounting). Real science with loads of performance data and customer use cases demonstrate the direct benefits of rewards, so utilities can lean into their EE goals with more confidence.

Most importantly, customers love reward systems. Just take a look at the best admired companies in virtually any commerce category and you’ll find a high quality customer reward program to promote far more than just customer retention. We think this data and performance shows significant benefits to customer engagement, satisfaction, and program participation. Best of all, shifting to rewards means that utilities can personalize their EE programs by letting customers pick their own rewards that best fit their household budgets. While customers may not notice a bill credit immediately, they certainly will enjoy picking a reward card for a clothing store to help get their kids back to school, or a grocery reward card to put food on the table, or a gas reward card to make getting to work more budget friendly. Utilities with reward programs demonstrate a greater understanding of the needs of their customers than could ever be delivered though traditional rebate programs. We hope you consider a reward program at your utility, and stay tuned to ModernUtilityCX for more information about the science behind reward programs.