This article is republished from the July 2017 issue of Strategies, AESP's magazine for members. To receive Strategies, please consider joining AESP.
SmartTech as MarTech
By Laura Orfanedes
No longer the stuff of far-off visions or science fiction, the Internet of Things (IoT) and smart homes are quickly becoming a present reality for consumers. Utilities are increasingly embracing the increased connectivity, convenience, and savings offered by a new generation of these smart devices. The promise of new "smart" technologies is significant, including energy and cost savings, demand savings, and improved customer engagement with an outlook toward the fully connected smart home.
Beyond energy savings that can be claimed when installing the device, smart thermostats offer utilities a versatile out-of-the box platform for customer engagement. In this article, we position the idea of using smart thermostats as an actual marketing technology, one that marketers can and should be incorporating into marketing campaigns, just as they do for other marketing and media channels.
The MarTech Industry
Over the past 20 years, while digital transformation has been radically re-shaping customer expectations and experience, an industry has quietly emerged known as Marketing Technology, or "MarTech." Ushered in with the Internet in the 1990s – and the explosion of technology and data that accompanied it – MarTech has grown to become a nearly $30 billion industry with 5,000 companies operating in the space.1,2
Simply defined, MarTech "enables the customer experience revolution by changing the way marketers identify, engage and support customers. It is at the heart of successful digital transformation, linking previously siloed disciplines: product, marketing, sales and customer service".3
MarTech cuts across a wide range of marketing function4, including:
- Advertising and Promotion: i.e., mobile marketing, display, search, native content, etc.
- Content and Experience: i.e., mobile apps, content management, marketing automation, etc.
- Social and Relationships: i.e., call analytics, loyalty and rewards, chat, social listening, etc.
- Commerce and Sales: i.e., proximity marketing, sales automation, ecommerce, etc.
- Data: i.e., mobile and web analytics, dashboards, customer intelligence, etc.
- Management: i.e., collaboration, projects and workflow, Agile management, etc.
MarTech solutions, like the examples listed above, may serve different functions, but they all have one thing in common: they have radically and irrevocably transformed the speed, relevance and reach of marketing campaigns.
Smart Thermostats as Marketing Technology
According to chiefmartec.com, there are nearly 6,000 different MarTech tools currently in the market5. Some of these solutions are deployed in a large enterprise setting, while others are smaller, software-as-a-service-based tools. These tools come in a range of different forms, including software, downloads, or as cloud-based subscription services.
While smart thermostats are hardware, they are also software-managed and connected to the Internet. In that regard, they share many of the same characteristics - and offer many of the same benefits – as those tools that might be defined as MarTech.
Also, smart thermostats share a similar dynamic with other disruptive MarTech platforms in that "innovation begets another innovation."6 For example, Instagram and Snapchat needed smartphone cameras in order "to become one of the fastest growing communication channels today — and thus give people — and companies — new mediums for outreach."7
Likewise, utilities sought a technological solution to help them and their customers manage energy usage. In incentivizing this technology, they inadvertently opened a new channel for reaching customers with instantaneous and highly personalized communications.
Pathway to Deeper Customer Engagement
While the annualized energy and peak demand savings associated with a relatively low cost measure like a smart thermostat is very exciting for most utilities, the real magic lies in granular data acquisition, control and optimization algorithms, and the connection to the cloud. In short, marketing technology-like features and functionality.
These components provide utilities with a platform for more accurate virtual home audits, home automation, and more personalized customer engagement. For example, ICF is working with SMECO in using advanced analytics with smart thermostat data to identify homes with large potential for savings and then targeting these customers for participation in other utility offerings (Exhibit 1).
EXHIBIT 1. DATA COLLECTED BY SMART THERMOSTATS IS A GOLD MINE OF INSIGHTS
This is accomplished by combining customers' propensity to participate in energy efficiency programs with the more accurate assessment of their savings potential that can be determined from analyzing thermostat data. These insights can be delivered back to the customers in a number of ways including home energy reports, a utility dashboard or the thermostat itself (Exhibit 2).
EXHIBIT 2. DELIVERED INTERACTIVE CUSTOMER INSIGHTS INCREASE PARTICIPATION
Putting Smart Thermostats into the Marketing Mix
In 2015, Travis Wright, Chief Marketing Technologist at CCP Global, named 13 primary types of marketing technology tools.8
We present these tools (in Table 1 and highlight) and how smart thermostats stack up in comparison in offering utilities similar or proxy MarTech functionality that help them understand, target, reach, engage, and convert utility customers into programs.
TABLE 1. SMART THERMOSTATS COMPARED TO MARKETING TECHNOLOGY TOOLS
Therefore, when placed into the marketing mix, smart thermostats will behave much like a MarTech tool, and offer the same hallmark benefits of digital marketing technologies: speed, relevance, and reach.
Aligning DSM with MarTech
Smart thermostats offer a range of MarTech-like capabilities within a single platform. However, it will be important for utilities to evaluate their marketing strategies and determine how a device traditionally used for non-marketing purposes would support overall DSM program, marketing, and other business objectives.
For utilities to work effectively together in the digital world, marketing managers, DSM program staff, and IT must work in unison. This is often a tall order for many organizations and these multiple departments can often end up in conflict, resulting in delays, missed synergies, and poorer results.
In order to undergo a digital transformation and leverage smart thermostats and other MarTech tools, utilities will have to decide who should be in charge. Should it be DSM program implementation or marketing, or perhaps a different department, or function, altogether?
Some recommended best practices9 include:
- Making sure all team members – including any outside marketing agencies and implementers – are adequately trained on how to best use the technology.
- Ensure organizations have allocated the necessary budget for technology procurement, and any recurring data transfer or API fees.
- Consider assigning a dedicated marketing technology resource to a tool like this to help bridge the gap between these different stakeholders.
By reframing how we, as an industry, see smart thermostats, and applying best practices, who knows...? The result may be that, at the next annual marketing meeting, smart thermostats show up in the marketing plan right alongside Facebook ads, direct mail, search, and email marketing.
Laura Orfanedes is Principal, Energy Marketing at ICF in its Commercial Energy Division, where she delivers energy marketing and strategic communications for utility clients and supports business development. Justin Mackovyak, a residential energy efficiency consultant with ICF, contributed to this article. This article is from the AESP Marketing Topic Committee.