May 15, 2017

The completeness of 100: how an intuitive scoring of every product in terms of its efficiency can lead to systematic preferences for more efficient products.

By allocating a granular and dynamic scoring output to every consumer product in a category, consumers instinctively select more efficient products, seemingly regardless of their decision-making style.

Written by
Guy Champniss

As a consumer, buying energy efficient products should be the most obvious thing to do. Saving energy means saving money, so even if you’re not environmentally inclined, surely we are all financially inclined to save where it’s easy?

Plus, we’re constantly met with survey after survey that reports rising consumer concern and commitment to buy energy efficient for environmental and social reasons.

So why does this apparent growing intent, together with clear information regarding energy consumption, fail to deliver the swathes of energy efficient purchases that represent the increasingly obvious choice?

One could argue that consumers are just not aware of the opportunity to either save money or buy efficient, in which case cut-through awareness raising and education campaigns should be the answer.

But those have been tried (over and again) with no material impact. So it’s not a question of knowledge or awareness, but likely something more nuanced within the actual decision making process when we buy.

Dissecting that process reveals a range of influences on our decision making that may explain why energy efficiency fails to make the cut: temporal discounting, status quo bias, lack of feedback, and ‘satisficing’ (where a ‘good-enough’ decision is the right decision), to name but a few. In short, there are a host of reasons drawn from behavioral science as to why consumers may tend to be inattentive toward the analysis and benefits of energy efficiency — the problem of ‘rational inattention’.

We are not claiming for a moment to be the first to speculate on these various causes of inattention that leads to such a poor return on energy efficiency programs. But we are in a position with Enervee’s Marketplace platform to be able to test hypotheses regarding consumer propensity to buy energy efficient products and to potentially tease out specific barriers, influences and opportunities that could lead to more of us making the obviously better choice. In short, we are in a position to hopefully make energy efficiency more…efficient.

Enervee’s Marketplace presents two key pieces of information to encourage more energy efficient buying behaviors. First, it allows visitors to see a quantification of energy efficiency, in the form of projected financial savings over the lifetime of the product in question (‘Energy Savings’). Visitors can also personalize this information through confirming their tariff and specifying just how much (or little) they’ll likely use the appliance, compared the typical amount. When the visitor enters their details, the energy savings figure updates in real time, providing concrete and personalized feedback for the user. Second, every product that appears on Marketplace has an Enervee Score.

The Enervee Score: a simple-to-read score between 0 and 100 that points the way toward the highest levels of energy efficiency
The Enervee Score: a simple-to-read score between 0 and 100 that points the way toward the highest levels of energy efficiency

As a 0–100 number, the Enervee Score instantly tells the user how that product compares on energy efficiency to others products in its category; the higher the score, the more energy efficient that choice. The motivation behind the Enervee Score has always been to make it as simple and as intuitive as possible to make not just an energy efficient choice, but the most energy efficient choice; just aim for as close to 100 as you can.

Considering these two features of Marketplace, we set out to test whether they could disable two of the potential culprits identified from behavioral science research that are likely causing consumers to fail in making energy efficient choices: energy savings quantified to act as a feedback mechanism, and the Enervee Score as a decision tool that would recognize the lighter-touch, ’satisficing’ approach to decision making.

To test these features and their effects, we created a test version of Marketplace for a single category (washing machines). Respondents, who were active US consumers, were then invited to take part in what they believed was a trial for a potential new shopping site (but which was in fact, Marketplace). We chose to construct the trials this way in order to control for a range of other factors, which would prove tricky to pin down were we investigating these effects within a more naturalistic setting of a real Marketplace. We allocated respondents (at random) to one of four conditions, varying whether they saw the Enervee Score, the Energy Savings, both, or neither. As an outcome, we asked respondents to select their three preferred washing machines for purchase from the category search results. We also measured their views of the ‘new shopping site’ in terms of how green or environmentally leaning they thought it was, and whether respondents held pro-environmental attitudes or beliefs.

Our predictions going into these controlled trials were that both Marketplace features (Energy Savings and Enervee Score) would lead to more efficient purchase preferences, and that the two features combined would create the strongest effect.

As with most randomized controlled trials (RCTs) we only needed a small sample — 50 respondents per condition — and the whole experiment took only 2hrs once it was live within Enervee’s test environment (this makes such trials fantastically efficient and cost-effective).

The results were both encouraging and surprising.

Firstly, when consumers see the Enervee Score for products, they consistently choose more efficient products — both as their first purchase choice, and on average across their top three preferences.

In other words, the presence of a simple-to-read Enervee Score leads to significantly more efficient purchase preferences, regardless of consumer profile. It would seem — from these experiments at least — that the many of barriers to energy efficient choices can be disabled through providing a simple — but granular — signal in this form.

Second, presenting the energy savings in dollars had no significant effect on delivering more efficient purchase choices. While at first glance, this seems disappointing, it’s worth pointing out that because we used a test version of Marketplace for the experiments, we were not able to offer the full personalization features of the genuine Marketplace (no option to enter tariffs or usage rates). So it is highly possible that we failed to see an effect here specifically because the degree of feedback (through personalization) was severely limited. There’s also a second reason why this may not have had the desired effect which we’ll return to; what’s known as a ‘rebound effect’.

Third, both features combined did not deliver a larger effect still. The Enervee Score remained the key mechanism to drive a more efficient purchase.

Finally, with respect to the other measures we picked up (in terms of perceptions of the Marketplace and pro-environmental attitudes) these results were also revealing.

First, there was no significant difference in terms of how consumers perceived the Marketplace across the four conditions. That’s to say, including the Enervee Score and Energy Savings does not make the platform more ‘pro-energy saving’ or pro-environmental from the consumer’s perspective.

This is crucial, since it lends support to the argument that these measures could be introduced — and could influence consumer choice — without it becoming an obvious energy efficiency play for the provider, and with all the potential negative reactions that could trigger from mainstream audiences. Energy efficiency hiding in plain sight.

Second, we did not see any significant differences in levels of pro-environmental consumer attitudes across any of the conditions. Again, this is important, in that it supports the argument that we saw the effects in terms of better choices, not because we happened to have a bunch of environmentally aware consumers in one of our groups, but from the inclusion of the Enervee Score itself.

So what do we take from this trial? Well, overall, there are three important insights from these manipulations within a controlled, trial Marketplace.

Most obvious, we’ve a clear reason to get excited that a simple Enervee Score (which is far from simple to generate, by the way) can prompt consumers — any consumers — to make more efficient purchases. That in itself is worth further reflection, in that is represents a literal signpost toward the mobilization of all of us toward making better choices.

Second, while we have not seen in this instance an effect of providing energy savings for a product in dollar terms, the fact that we disabled the full personalization feedback capabilities of this function lends support to the argument that we hampered a feedback effect, and points toward further experiments where this functionality is fully enabled. We should also consider the existence of a rebound effect here, in that the reality of energy and financial savings from more efficient purchases may be smaller in reality than the initial perceptions of consumers. This requires further investigation, and is on our to-do list. One way to potentially counter this (if it is indeed the issue) is to help consumers compare by energy efficiency not only products in the market today, but products available today with what they currently have in their homes. In this instance, the savings — financial and energy-wise — are both more accurate (in that consumers would be replacing what they have at home with a new appliance), and larger.

Further experiments should also look to extend these results across different product categories, and indeed across different buying conditions (e.g. distressed purchases, versus planned purchases). We’re confident we’d see the Enervee Score proving itself influential across these different conditions, albeit maybe for different reasons (see Enervee’s upcoming white paper ‘Energy Efficiency and the ZMOT’).

Which leads to the last important insight from these experiments: that Enervee is able to design, run and report on randomized controlled trails efficiently and with no disruption to customer experience. Enervee can do this to help clients in their EE programs, their customer engagement plans and to explore opportunities for new business lines, as well as to inform policy discussion and development.

To return to our opening ambition, there is plenty to explore and test in the name of making energy efficiency efficient, and we’re confident Enervee’s Marketplace presents a valuable environment in which to capture this knowledge. The results reported here, revealing the potential effectiveness of the Enervee Score to disable or sidestep the stubborn attitudinal and cognitive barriers to energy efficiency, is the first step in Enervee’s research journey.

For the moment, we’re excited to recognize that when it comes to driving energy efficient preferences, it seems it’s top marks for the Enervee Score.

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