Driving Demand for Energy Upgrades

November 15, 2010
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A new study published by the Lawrence Berkeley National Laboratory makes recommendations for how to motivate homeowners to invest in energy-efficiency improvements. Commissioned by the Department of Energy (DOE), the report was created as a guide for the many government and nonprofit agencies that have received public funding to implement energy-efficiency programs. Yet the report’s findings are also applicable to HVAC contractors seeking to motivate residential customers to upgrade, and especially to contractors seeking to participate in local efficiency programs.

Titled “Driving Demand for Home Energy Improvements,” the 136-page report was released in September. According to the report’s authors, their primary goal was to examine the question: “How can millions of Americans be persuaded to divert valued time and resources into upgrading their homes to eliminate energy waste, avoid high utility bills, and spur the economy?”

Seeking answers to this question, the researchers conducted surveys and interviews, and also reviewed 14 successful case studies of energy efficiency programs. The results of their study emphasize that the quality of the marketing and outreach to homeowners is crucial to motivating their investment in energy upgrades. The report also discusses best practices for working with contractors to create successful programs.

MAKING THE CASE FOR UPGRADES

To make an appealing case to homeowners, the report states that the following key concerns must be addressed:

• Why should the customer be interested in home energy improvements?

• How much time and effort will it take?

• How much will it cost, and is there affordable financing if the customer doesn’t have the cash?

• Is the contractor trustworthy? How will the customer know if the contractor does a good job?

The report states that homeowners are turned off by home energy improvements that appear to be too expensive or too much of a hassle. Instead, the report offers suggestions for effectively engaging homeowners through targeted marketing.

BUSTING MARKETING MYTHS

The report rejects the commonly held assumptions that if people are given information and access to financing, they will choose to make home energy improvements. According to the report, “saving energy and lowering utility bills is something people value, but it is unlikely to be the primary driver that motivates most people to make home energy improvements.”

The report also dispels the myth that homeowners are more likely to upgrade when provided with financing, such as “a loan for an upgrade that will ‘pay for itself’ within the term of the loan.” Instead, the report suggests that complex marketing approaches based on behavioral and social science can be more effective at convincing people.

Rather than merely providing information and a loan, the report recommends program designers study their target population and “sell something people want.” According to the report, “high home energy use is not currently a pressing issue for many people,” but there are other marketing messages that may be more appealing. The report includes the following as examples of these type of motivating messages:

Comfort: “Increase your family’s comfort and well-being.”

Practical investment/security: “Make an investment to protect and maintain your most valuable asset.”

Self-reliance: “Become a self-reliant American - reduce your energy dependence.”

Social norm: “All of your neighbors are making home energy improvements.”

Health: “Protect your family from mold allergies and asthma.”

Community: “Join your neighbors in supporting local prosperity, reducing energy waste, and protecting the environment for future generations.”

Additionally, the report states that a program to motivate homeowners is more likely to be successful when it approaches them multiple times and uses language they can understand. “The majority of people need to be exposed to a product message at least three times before they buy into it,” the report says. “Energy efficiency is an especially tough product - it can be expensive and can’t be readily touched, tasted, or seen - and that calls for a layered marketing and outreach approach that achieves multiple touches on potential participants.”

The report also recommends that programs “avoid meaningless or negatively-associated words like ‘retrofit’ and ‘audit.’” Instead, the report suggests, programs are more successful when they are marketed with terms that the average public understands, such as “upgrade” or “energy assessment.”

INVOLVING CONTRACTORS

The report urges policy makers and program designers to partner closely with contractors to ensure the success of energy efficiency programs. It states that “contractors, more than any other party, are the people sitting across the kitchen table making the final sales pitch to a homeowner.”

Contractors who are interested in becoming involved with local energy programs can read the report’s recommendation to learn what program designers are looking for in a partner. For example, the report suggests that “program designers may want to start by working with a smaller group of innovative contractors” to get their feedback and support for a program. It also notes that “contractors that currently offer a single measure (e.g., insulation or equipment replacement) may not fit well into the comprehensive home improvement framework.”

The report also focuses on the importance of holding contractors accountable for their energy efficiency work. According to the report, “Customers are likely to view private contractors as extensions of the program.” As a result, the report recommends implementing “robust quality assurance procedures that hold contractors accountable for their work.” It notes that when work performed does not pass inspection, homeowners come away with negative perceptions about energy upgrades.

Overall, the report concludes by stating there is no silver bullet driving homeowner demand for residential energy upgrades. However, the report states, “success will require multifaceted approaches that acknowledge a deeper understanding of what motivates homeowners and contractors.”

To download the full report, visit http://drivingdemand.lbl.gov.

Publication date: 11/15/2010

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