With our Customer Panel research moving into the next stages it is time for another edition in our series of blogs looking at some of the key insights coming from this ongoing research.
Our first exercise conducted earlier this year showed that there continues to be a mismatch between customers who buy microgen and those who want to buy it. The biggest factor that plays into this is the fact that many customers who want to install often cannot afford the upfront investment. However, we find that they are more than open to using alternative funding options that would solve the upfront cost barrier.
In this blog we look more closely at what the typical profile is for people that should be targeted with innovative financing / new business models, and quantify what the size of the opportunity from reaching these customers could be.
Two key customer groups to reach with innovative financing
The graphic below shows the results from our customer profiling exercise and we have highlighted the specific profiles of people that are the most interested in installing microgen if more financing options and new business models are available.
The first profile is a younger customer (aged 16-34) in the C1 or C2 socio-economic group, living in a property with electrical heating. This shows that younger generations are becoming increasingly more concerned about saving money on their energy bills but are limited by the high upfront investment of low-carbon heating.
Additionally, these customers show high level of interest in installing smart heating controls, which is not surprising as this is the generation that is more familiar and engaged with ‘smart’ technologies. This also shows clear opportunity for offering a product bundle with microgen + smart heating control to this type of customer.
Secondly we have identified that, while higher income customers aged 35-65 with mid-age boiler systems are cautious about investing upfront in microgen, ~40% of these homeowners would seriously reconsider installing if more financing options would be available. Here again lies a sizable opportunity to be captured if industry can come up with compelling ways of allowing customers to spread the cost of upgrading their ageing gas boilers.
Almost 2.5 million potential customers to be reached with innovative business models
Our estimates taken from our 1,000 panelist sample indicate that the number of potential homeowners in the UK matching the criteria of first identified customer profile (young, ‘smart’ with electrical heating) is ~500,000 and the number of homeowners matching the criteria of second customer profile (older ABs with mid-age boiler) is ~1,900,000.
With an installed base of only 1.1 million microgen systems in the UK at the moment, reaching out to our identified 2.5 million customers could unlock the next phase of growth in low-carbon sales - which have been growing slower than expected over the last few years.
What’s next from the Delta-ee Heat Insight Service?
So what are the new business models to look out for and what do UK customers really think about various business model propositions? What will make or break their attractiveness in the eyes of a customer? These are the key questions currently being addressed in the in-depth phone interviews we are conducting right now and this will also be the key topic that our subsequent online customer survey will focus on.
The key business models our in-depth interviews cover are – buying a system with monthly installments, renting the heating system with a monthly fee and contracted purchasing of the heat from heating system.
Look out for our next blog as well as our upcoming public webinar where we will share some of the findings coming from our first customer panel survey and tele-depth research with UK homeowners, including their views on the previously mentioned business models.
Find out more about our Heat Insight Service here or contact email@example.com for further information.