British Gas case study: Saving energy

As winter blows in, energy costs and efficiency come into focus. One supplier is doing its part to reduce waste.

With the planet hotting up under global warming, it's shocking to hear that the British public wastes around £5bn worth of energy every year, much of it just through not insulating their homes properly. And it's a figure British Gas is tasked to cut down on. Under the Energy Efficiency Commitment (EEC) that utilities must commit to under the Kyoto agreement, all have an obligation to try and get domestic customers to become more energy efficient. And British Gas has a strategy in place to help it do so - promoting and selling home energy efficiency measures such as loft lagging, cavity wall insulation and energy efficient light bulbs.

But as part of the EEC, this is also a non-profit making exercise for British Gas, so it doesn't want to waste more resources by targeting people with irrelevant information. Once a house has had its loft insulated, it's unlikely to need it done again, while some homes don't even have lofts or cavity walls.

British Gas charged media buying and planning agency Carat with helping it find the right targets. Carat has been working with British Gas on its energy efficiency programme since 2003, but this was quite a different remit. Its solution was a targeting model that would tell British Gas exactly who to target with what message, as Luke Murphy, Carat's analyst, explains. "There were two different considerations with this - will people be interested in energy efficiency and is it physically possible for them to adapt their property? These hadn't been included before."

It meant Carat needed quite specific data and lots of it. Luckily British Gas had a wealth of customer data and to build it, Carat used two sources.

The first was internal past sales information for cavity wall and loft insulation, and energy efficient light bulbs. This gave rise to information about the type and size of house, as well as the product bought and the energy savings made.

In addition to this, information from energy efficiency questionnaires was fed into the model to work out propensity to purchase. "We do a home audit where we ask questions such as number of bedrooms and whether the home is insulated, so we can produce a bespoke energy efficiency report and make money-saving recommendations," explains Sacha Brech, British Gas marketing manager. "We offer this through our engineers, online and through our energy efficiency team in Southampton.

It's part of our retention activity."

For this campaign, though, British Gas needed to find out the answers to three key questions: whether customers could, should and would take-up products to improve the energy efficiency of their home, based on both attitude and appropriateness.

"'Could they' is about whether the house is appropriate," says Brett McKibbin, Carat associate director. "No matter how much they want to save money or to be environmentally friendly, could the house take it? 'Should they' is where the sales data comes in - thickness of insulation in loft, whether wall or loft, size of house, and therefore how much money they could save. And 'would they' asks could they be bothered? This is where the questionnaires come in."

Detective work

Taking each product in turn, postcodes were then scored to work out propensity to buy. This was where the modelling came in - the data British Gas had didn't define the type of dwelling, so Carat and British Gas had to do some detective work. "If there was a postal sector we had data for, and another with the same accommodation groups, we could infer that they had similar homes," says Murphy.

"If we saw a postcode where we'd previously made an insulation sale, we knew that postcode could do it," adds McKibbin. "So we didn't have to physically go out and eliminate Victorian and Georgian stock - British Gas had a wealth of sales data it hadn't used before that was ideal for this."

Doing this enabled British Gas to cut out flats, which don't have lofts, from some mailers, and Victorian and Georgian houses, most of which don't have cavity walls, from others. And it also worked out how likely prospects are to want to save energy. Whereas some might to do it for environmental reasons, for others it could be more of a financial consideration, and others aren't interested at all.

And it was important to tackle the attitudinal barriers to purchase.

"There are seven million unfilled cavities in the UK, and 10 million houses without enough loft insulation," says Brech. "So while there is a lot of opportunity, there are also barriers, like price perception, and the model is a way of circumventing these." So while the targeting was crucial, the creative had to attract the recipients' attention and overcome attitudinal barriers.

To appeal to the majority, it centred around the energy efficiency package and the benefits it can bring to a home, particularly in terms of money savings. "If someone had already filled in the energy efficiency questionnaire, it was an indication that they're likely to be mindful about it," says McKibbin. "The communications also talk about the money that could be saved."

The model was rolled out against 1.1 million pieces of direct mail, 4.3 million door drops and 200,000 outbound calls last year. "In terms of integration - sending with bills, direct mail, outbound calls and door drops, we were testing the efficacy of each channel in its own right," says McKibbin. "Outbound proved to be great at generating leads but not quality of leads. With door drop and direct mail - the conversion was good enough to continue."

Direct mail performed best, scoring a 130 per cent increase in response rates against a control group and reducing cost per lead. Overall, using the model reduced cost per lead by 10 per cent over the whole year.

And it's not over yet - with EEC an ongoing commitment, British Gas still has targets to reach and both parties are keen to improve the efficiency of their work. "There's some testing we're going to do from a media point of view - looking at the differences between Royal Mail and News Share for door drops for example," explains McKibbin. "We're proud of the model," he sums up. "It's been very successful and it's clearly the way forward."

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