From the moment a household is connected to the electricity grid consumption data [in the form of energy use] is continuously being produced. For decades energy providers like E.ON had no means of capturing this data on an individual level, let alone in real-time. Frankly, E.ON could not offer its customers an optimal service without deeper insights into their consumption behavior. E.ON first needed a mechanism that would allow for a better understanding of their customer, alongside a value-proposition that would incentivize their customers to participate. The co-creation solution: Smart-Meters. These meters are technology that allow for the collection of energy use in real-time. Let us examine the building blocks of how this value is co-created.
E.ON provides the customer with the resources to create value; energy. Value-creation is governed through E.ON customer’s consumption of energy (Saarijärvi et al. 2013). Inviting E.ON into this process by allowing them to install a Smart-Meter makes consumers a co-creator of value. Making this a ‘Value-in-Use’ co-creation type (Grönross and Voima, 2013). In this B2C relationship, the consumer expects something in return for their contribution i.e. more value from E.ON than before they installed the Smart Meter.
Value for the Customer
- With this new data E.ON receives from their customers they are able to bill them more accurately and transparently.
- The Smart-Meter allows E.ON to give energy efficiency tips to a household, reducing unnecessary consumption.
- Based on consumption behavior the company could even recommend rates best fitting the needs of individual customers. Ultimately, this is a form of personalization, tailored to individual preferences that are based on historical data (Li & Karahanna)
- Knowing when electricity prices fluctuate allows customers to shift their demand towards non-peak times, reducing their bill.
- Through remote monitoring, less repairs and maintenance are necessary, alleviating the consumer from the hassle of a technician visit.
Consumers are thereby participating both passively and actively in this business model. Simply through their consumption of energy the customers are passively creating valuable data. However, when they act on the energy saving advice or accept a recommendation then their participation becomes active in the ongoing relationship.
Value for E.ON
- The greatest benefit for E.ON is the ability to better match demand with supply, reducing costs and uncertainty.
- Costly technician visits and maintenance is reduced.
- Faster reaction time when problems occur.
- By involving the customer in the service production process, the greater the perceived value and satisfaction (Cova and Dali, 2009)
Ultimately, this new paradigm is a continuous process of co-creation where the consumer provides value in the form of data to E.ON and in return receives greater value in the form of an improved service. The Smart-Meter acts as the mechanism for co-creation where the resulting value is greater than the sum of the individual parts.
Cova, B., Dalli D., 2009, ‘Working consumers: the next step in marketing theory?’ Marketing Theory, vol. 9, no.3, pp. 315-339.
Doris, E, and K Peterson. “Government Program Briefing: Smart Metering”. National Renewable Energy Laboratory. N.p., 2011. Viewed. 10 Febuary 2016, <http://www.nrel.gov/docs/fy11osti/52788.pdf>
Grönroos, C., Voima, P., 2013. ‘Critical service logic: making sense of value creation and co-creation’ Journal of the Academic Marketing Science, vol. 41 no 1. Pp. 133-150.
Hannu Saarijärvi P.K. Kannan Hannu Kuusela, (2013),”Value co-creation: theoretical approaches and practical implications”, European Business Review, Vol. 25 Iss 1 pp. 6 – 19