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We interviewed one of the world's leading experts on consumer behavior. This is his advice for utilities in 2015.

The holy grail for today's utility is meaningful customer engagement. Energy providers that can maintain clear, two-way conversations with the communities they serve are better positioned to achieve all kinds of important business outcomes, from cost-effective demand-side management to better customer care.

But everyone from the C-suite down knows that robust customer engagement is tough work. Whether you're trying to motivate people to save energy or visit a web portal, success depends on getting the right message to the right customers at exactly the right time. Dr. Robert Cialdini is one of the world's leading experts in doing exactly that. He's the man behind Influence, a classic text from psychology and business that famously laid out six behavioral science principles behind successful marketing and outreach campaigns. 

Those of us at Opower know him best for an experiment he ran that established the science behind behavioral energy efficiency.

We're thrilled to have Dr. Cialdini back at PowerUp, our annual utility innovation conference, where he'll share new insights from the leading edge of behavioral science. We caught up with him this week to get a quick preview.

Opower: Our first solution for utilities, behavioral energy efficiency, came out of the famous door hanger study that you ran with Wesley Schultz. Can you talk a little bit about the deeper principles behind that experiment? Why is normative comparison so powerful?

Dr. Robert Cialdini: Well, I think one reason it's so powerful has to do with a question that I am frequently asked when I present those findings. If you recall, the normative comparison — “here’s what your neighbors are doing” — was much more productive in getting people to conserve energy than simply telling them, for example, how much money they could save if they conserved energy.  It’s often the case, especially in groups that include economists, someone will ask, “how could this be? We know from centuries of evidence that people respond to economic incentives. How could it be that simply telling them that their neighbors are conserving energy could be superior to telling them how much money they could save?”

her_neighborComparison_generic
A sample Home Energy Report, which uses normative comparison to motivate behavior change.

My response is telling them how much money they could save doesn’t tell them that they can save that money. But telling them that their neighbors are doing it is social proof that, yes, they can do it. And it’s that difference — the idea that this is actually something that is practicable, that is feasible — that makes all the difference.

O: What’s your all-time favorite application of normative comparison?

RC: I think my favorite comes from Beijing, which shows you the cross-cultural reach of this particular principle of influence. It comes from restaurants in Beijing and a small tactic that restaurant owners were able to employ to increase the amount that particular dishes on the menu were selected by their customers. It was simplicity itself. They simply put asterisks next to those dishes that were the most popular on the menu. And each one immediately became 13 to 20 percent more popular.

"All we need to do is inform people of what their peers are doing or choosing, and that's often enough to get them to do something. And yet we almost never see it."

What’s most interesting to me is that the strategy — like its application to home energy reporting — is entirely ethical and entirely costless. You're simply informing customers of something that is true. All we need to do is inform people of what their peers are doing or choosing, and that’s often enough to get them to do something. And yet we almost never see it.

O: A couple years back, researchers at Accenture found that people spend just nine minutes a year interacting with their utilities. What should utilities make of that fact? What does behavioral science have to say about communicating successfully under tight time constraints?

RC: Behavioral science tells us that when people feel constrained by time or the amount of activity that they have on their agenda, they tend to fall back on their underlying habits and human tendencies. What this means is that the six universal principles of influence that we have uncovered in behavioral science are very likely going to shape people’s actions — energy consumers included.

"When people feel constrained by time or the amount of activity that they have on their agenda, they tend to fall back on their underlying habits and human tendencies."

Normative comparison is one of those principles. But there are others. What are the experts saying in the matter? What have I done in the past on this topic? What is a scarce or rare opportunity for me to act that, if I don’t act, I will lose? These kinds of things that traditionally have motivated people to act will be especially powerful under conditions of time constraint.  Opower and its utility partners have developed a keen understanding about how these tendencies relate to the utility customer experience, and that’s what has enabled them to advise and communicate effectively with energy consumers all over the world.

O: One story you shared last year that really resonated with the PowerUp audience was the $5 versus $50 experiment. The key finding was that people are more likely to complete a task when you give them $5 up front than when they’re promised $50 afterward. It’s a fascinating example of the power of reciprocity. Are there businesses or industries that are putting this finding to use in interesting ways?

RC: Yes. One industry that is using reciprocity especially well is opinion and marketing research, which needs people to fill out surveys or respond to interview questionnaires about their preferences or opinions on some topic. Very often, people decline to participate in questionnaires. So researchers wind up providing an incentive. What they’ve learned is that providing the incentive up front — in the invitation letter to participate in the survey — convinces significantly more people to participate than if they provide the payment upon completion of the survey. And a smaller, upfront payment doesn’t just produce more agreement; it also reduces risk. People feel obligated to give back to others who have first given to them. That's reciprocity.

Here’s another fascinating finding: the people who don’t fill out the survey usually don’t cash the check. So sending the money as a check is almost costless. Nobody will take the money for something they didn’t do. They don’t feel entitled to it. So you only increase your success by going first.

O: What do you think was the most important behavioral science experiment or finding of 2014? What new research caught your attention?

RC: I’m going to be biased here, because I want to tell you about a study we did in my lab that hasn’t been published yet. And it has to do with a question that I think we’re all concerned about when we use these principles of influence — and that's ethics. That is, just because we can influence people powerfully, it doesn’t mean that we should use these principles in deceptive ways. In practice, what would stop an organization from using behavioral science unethically? A lot, it turns out. In our study, we found that if individuals inside a team see their leaders doing something that is deceptive in order to win business — let’s say a dishonest marketing campaign, or sales strategy, or promotional effort — three things happen.

"The organization that uses dishonesty in their marketing practices has pulled the viper under their coat. People who lie for you will lie to you."

First of all, people who witness an unethical use of the principles of behavioral science become stressed by it. They perform less well on business tasks that they are asked to perform immediately afterward. We saw a 25 percent drop in their performance efficiency after they’ve seen an unethical use of these strategies. Secondly, because they’re stressed, people are more likely to leave the organization. So you’ll have turnover costs. Finally, there are some people who decide that they don’t want to leave an unethical organization — they’re comfortable with the dishonesty. But here’s the irony: those people who are comfortable with cheating now cheat the organization 50 percent more than anybody else! The organization that uses dishonesty in their marketing practices has pulled the viper under their coat. People who lie for you will lie to you. People who cheat for you will cheat from you. That’s the latest set of findings. It really hammers home why these principles have to be used in an ethical way.

O: Absolutely. To close things out: you were a huge hit at PowerUp last year, and we’re really glad to have you on board again for PowerUp 2015. What are you most looking forward to this February?

RC: I’m most looking forward to the conversations I’ll have. PowerUp is a huge learning opportunity for me — a chance to better understand the challenges utility leaders are facing, and then keep honing the programs Opower employs to help them overcome those challenges.

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