22 Jun 2010
How are developments arouund the Internet changing the relationships between individuls and business enterprises? The OII workshop ‘Service Provision in the Digital Age: The Use and Impact of the Internet of People and Things in Supporting Business and Consumer Relationships‘ (12 May 2010) was organized as a means to draw insights for business and industry from OII research on the role of the Internet in everyday life and work.
A secondary purpose was to inform the design of the next OII Oxford Internet Survey (OxIS) of Internet use in the UK. The survey will go into the field in early 2011 with new questions shaped by the workshop discussions.
The Changing Relationships Between Individuals and Business
The main theme of the workshop was the way in which a variety of developments around the Internet, from smart metering to social networking, are changing the relationships between individuals and business enterprises, such as their utility company. Key developments include: information search, which is increasingly focused on the Internet; transactional services, such as bill paying; social network sites, which are beginning to rival search engines in driving individuals to information sources and service providers; and smart metering, which creates a continuing link between households and their utility provider, creating new information for both the consumer and the company that could enable better decisions at each level.
The differential use and impact of these developments, such as social networking, is likely to increasingly be reflected in the segmentation of customers, not only by standard social and economic demographics, but by their patterns of relationship with the company. There will be no standard utility customer, but an increasingly variegated array of connections based on how they get information, pay their bills, etc. Likewise, the motivations behind consumer decision making will be increasingly diverse (environmental, energy savings, cost, innovation), but also more capable of being captured by enhanced approaches for mining data on customer profiles and interactions with the company.
New technologies also raise new issues over the privacy and security of personal information and transactional data about customers. This information can support improved services and cost efficiencies that benefit customers; but weak approaches to handling personal information can erode consumer trust in their providers. Finally, all of these relationships are likely to be sensitive to shifts in policy and regulation, ranging from data retention to energy policy.
In such ways, the workshop focused attention on how the Oxford Internet Surveys (OxIS) might better track the diffusion, use and design issues surrounding the full range of developments (from smart metering, search, and transactions, to social networking) relating to service delivery. Over-time information on these issues should be of value in the strategic decisions of companies seeking to retain and attract customers through smart use of new technologies as well as through intelligent energy consumption.
Key Issues in Service Provision in the Digital Age
- Early days and rapidly developing as a technology. The US brought in early smart meters that are now out of date. The spec for Smart meters has been simplified drastically over time.
- On the supply side, more functions will be reliant on electricity in future and yet supply is likely to rely on (for example) intermittent wind power.
- They enable anytime tariffs and carbon trading. They provide monitoring and exception reporting to customers.
Commercial aims in introducing smart metering and online services are:
- To reduce energy use, through greater efficiency and control, but to enable a company to attract more customers through the value accorded cost and energy savings by users.
- To reduce costs by replacing telephone call centres with online engagement where users can get answers to many of their questions immediately and without the need for human intervention, enabling customer service representatives to focus on the most critical issues.
- To improve service quality through automated customer transactions (though legacy systems mean that automation lags behind where it might be).
- To reduce expensive customer churn generated by price comparison websites (satisfied online customers are more likely to be loyal and less susceptible to churn).
Price comparison websites
- Any move to make tariffs more transparent is vitiated by the need to constantly adjust them to achieve top ranking on price comparison websites. This problem will be exacerbated by the more complex time tariffs enabled by smart meters.
- How customers compare prices online depends on a portable data standard. One would need a year’s worth of complex time use data to feed into a comparison website. Research is being done on real time pricing in the US.
Customer motivations to use smart metering:
- Customers respond to increased information provided by smart meters in several different ways: some reduce use due to guilt over excessive energy consumption. But in some trials low users increased consumption, although it is not clear why: is there a slacking off if users perceive themselves as doing well compared with others? Or are they responding to approval signals?
- Money saving? Money saving motives will not affect customer behaviour unless the price of electricity goes up significantly – which it will. Energy Demand Research Project (EDRP) trials where home energy display units are provided show that the novelty wears off in 3:1 cases (representing customer frustration at hitting a barrier after initial savings in energy use).
- Entertainment? Eg resource reduction games have shown some promise. They need to be either highly entertaining or essential. What makes gaming addictive?
- Content? Provide news about energy saving in an energy saving portal, or a widget for tickertape with news of people who have won energy grants. Internet users look for content not individual sites.
- Competition with peers or neighbours to reduce energy consumption? At the community level, smart meters could provide benchmarking with neighbours cooperating to reduce usage. Helen Margetts’ experimental work (OXLab: Oxford eXperimental Laboratory) suggests that it is group size that matters (influenced by how neighbours voted or if in a group of up to 500, but not if in group of a million or more). Robert Metcalf’s work on the role of information in consumption: trying to get blocks of council flats to compete with each other but get free riders.
- Incentives offered: Since a utility company can be a broadband provider, it could consider offering free broadband as a reward for loyalty (thus promoting online engagement). Likewise, if smart meters highlight an expensive fridge: offer a free fridge.
Lessons from online banking
- Customer as decision maker: Will move the relationship to one similar to online banks’ relationship managers. Early online banking lost money but allowed innovative banks to retain or attract high-end users. What was the tipping point for adoption of online banking and when was it reached?
- Conversely, people in debt avoid looking at their online bank accounts and a company could have problems engaging with customers who are in debt. The Financial Services Authority (FSA) have a similar problem in engaging with those in debt in order to educate them.
- Online banking, including ATM use, has been so successful that some banks have had difficulty attracting customers back into the bank, where new services can be presented. Some US banks are becoming more like a neighbourhood centre in order to bring in customers.
Involving consumers as producers
- Web 2.0 sites work because they are interactive. They are viable because users themselves generate a large supply of new content that keeps people coming back to the site. The key then is new user-generated content. Provide facilitation for community forums (open to anyone, not all in-house).
- Could harvest information from customers’ opinions (like the WeGov project at University of Southampton or IBM’s report on ‘Switching perspectives‘).
- The British Airways killer app was the ability to choose your seat online, which forced customers to get online or not have a preferred seat.
- Could invite customers to participate in pricing through an auction? Could create a set of tools to create an open data API and allow crowd sourced engagement. Could offer prize to graphic designer to re-design the company bill and get the public to vote on it. Could offer a discount for those who agree that their (aggregated) data can be made public and set up a different sub-brand like Foursquare.
- Don’t tell, ask!
Data protection issues
- Home automation will provide profiles of usage. Who owns the data: the customer or the energy supplier?
- Distinguish between privacy and confidentiality: banks hold personal financial data but they are trusted (though not by all) to maintain confidentiality. Mandatory smart metering in the Netherlands was held up for 12 months over confidentiality issues.
- There is no law (yet) about privacy in smart metering. Explore what data cannot be revealed in aggregate, without presenting individual level data. Data standards.
- The Energy Demand Research Project (EDRP) is government led and not yet concluded. British Gas have recently gone it alone to set the standard.
- Broadcasters agreed data standards without much difficulty and they are already in use. Their problem is that they are monitoring usage through multiple outlets using diary methods, when the audience doesn’t know or care about the difference between live and on demand.
Opportunities for Further Research
- Work on consumer search in relation to comparison websites.
- Work on appetite to share personal data by age group (to examine anecdotal evidence that 14-20 year olds are less willing to share such data).
- Tracking over time the diffusion, use and impact of smart metering, search, transactions, and social networking of relevance to service provision.