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Feb 14, 2013

4 Things Utilities Can Learn From Hallmark

 

Today is Valentine’s Day. It’s often called a Hallmark Holiday, a holiday that’s been overly commercialized (or even fabricated) for the profit of companies such as greeting card behemoth Hallmark. Poor Hallmark; Valentine’s Day long predates the company and its greeting cards. (It dates to at least the Middle Ages.)

What we can credit Hallmark with is capitalizing on consumer demand for desired products and services. And utilities could borrow a few tactics from Hallmark’s century of business refinements.

1. Make product choice readily apparent

Prior to the 1930s, shops kept greeting cards in drawers, away from the eyes of consumers. One’s options were relatively inaccessible. Then along came Hallmark founder J.C. Hall’s “Eye-Vision” display, an early forerunner to today’s greeting cards displays. His concept was simple: take the cards out of their drawers and put them all on display for consumers to easily browse. He pulled back the greeting card veil.

Transparent price response programs employed by some utilities similarly pull back the veil. Rather than charge customers a flat electricity rate, regardless of the actual cost of producing that electricity at the time of consumption, price response allows consumers to make more informed energy consumption choices, influenced in part by minute-by-minute pricing information. This approach also respects the diversity of a utility’s customer base and their varying needs; utilities can match services—including transparent, responsive pricing—to customers rather than taking a one-size-fits-all approach.

2. Tap into the value of diversified products and services

Starting with a licensing program with Disney that began in 1932, Hallmark has deliberately and regularly diversified its products and services over the decades. Hallmark Hall of Fame television productions launched in 1951. Hallmark International was born in 1966. The 1970s saw the launch of Hallmark Keepsake Ornaments. And the diversification has continued, all with an eye toward a suite of products centered on the brand’s core values and messaging.

Utilities are faced with a similar opportunity, one in which they can expand beyond the straightforward delivery of electricity via the grid. The role of utilities is shifting, and as it does, many opportunities exist to capitalize on an expanding role for electricity generation and distribution. Energy efficiency programs, enhanced grid reliability and resilience, facilitating the integration of distributed resources and renewables into the grid, and home energy management programs all offer opportunities to diversify the ways in which utilities interface with and deliver value to customers.

3. Change with the technological times

As the Internet became highly prevalent and influential through the 1980s and especially into the 1990s, Hallmark moved in kind, launching Hallmark.com. The company was changing with the technological times. While Hallmark didn’t abandon its core greeting card business (far from it), it moved into e-cards and e-commerce.

Utilities are increasingly going a similar route. Wifi-connected thermostats, smart phone energy monitoring apps, smart meters, and other electronic platforms are helping consumers better manage their energy consumption in interactive, digital ways. That trend isn’t going away anytime soon, and the utilities that engage their customers sooner on these platforms are the ones that will likely reap the most gains.

4. Reduce barriers to customer engagement

In more recent years, Hallmark rolled out its Hallmark Warm Wishes greeting card line. With hundreds of cards—available for 99 cents each at retail outlets—it was Hallmark’s largest-ever product introduction. One of its net effects was to reduce the barriers that may have prevented some consumers from more fully embracing the company and its offerings.

Utility customers face similar barriers—many of them financial—when it comes to greater adoption of energy efficiency measures and distributed, renewable generation and storage, such as rooftop solar PV. Utilities can help lower those barriers, for example through on-bill financing that helps to lower the upfront cost of energy efficiency upgrades, or by working with service providers to streamline and drive down installation costs.

Granted, greater consumer adoption of some of these products—notably efficiency and distributed renewables—may serve to decrease, rather than increase, utilities’ revenues. Utilities may need to embrace alternative business models and revenue streams, and likewise may need to work with their regulators to ensure that they have an opportunity to change how they are rewarded, rather that solely through the number of kWh they sell.

While lovebirds everywhere may be celebrating with romantic, candlelit dinners tonight, lessons like these gleaned from Hallmark may help more of us fall just a little more in love with our utilities.

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