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The Reward That Moves Utility Customers

Residential utility customers, like other types of consumers, are motivated by incentives. And incentives play a large role in persuading customers to take part in residential energy efficiency and demand response programs. This leads to a question: Which type of rebate or reward will inspire the most customers to participate in a utility-sponsored program?

We have a suggestion: prepaid cards.

Some utilities are already using prepaid cards as rebate rewards, or to encourage reduction in energy use, and it’s easy to see the appeal on the supplier side. From an administrative point of view, prepaid cards are easier to issue than checks. From a legal point of view, handing off escheatment — the process of tracking down and accounting for uncashed checks — to your prepaid card provider can be a very happy escape from a tiresome burden.

However, the appeal may be even greater on the customer side. Simply put, people prefer prepaid cards. Industry research consistently shows that when given a choice, consumers prefer prepaid cards as rewards, often by substantial margins. And this makes all the difference when it comes to utility rebates.

Here’s how. Just as prepaid cards are easier to issue than checks, they’re also easier for your utility customers to use. Instead of a trip to the bank, your customers can head to the nearest store. But more importantly, prepaid cards can be experienced as rewards, which is the whole point. A bill credit or check frequently disappears into the family checking account, only to end up being used on light bulbs and dog food. By contrast, a prepaid card can be experienced as a guilt-free indulgence: Your recipient uses it for something they definitely want, and might not be able to otherwise justify buying. In other words, it’s “special.”

Our own research bears out consumers’ strong preference for prepaid cards over other rewards. Offered several options for a post-purchase incentive, 67% of survey respondents chose a $25 prepaid card. A $25 Amazon gift card was a distant second at 26%, while the other options failed to total 10% between them. Additionally, the same percentage would select the $25 prepaid card over a $30 gift card from the store where the purchase was made.

That’s some serious appeal for prepaid cards, and the appeal extends back to you, the utility. You can co-brand the cards with your logo, so each time it comes out of the wallet, your recipients will remember where they got it. You can also direct spending on the card to a particular merchant, or group of merchants — for example, a retailer known for its recycling efforts, or ones encouraging environmental awareness and energy efficiency, or simply a selection of merchants with widespread appeal to ensure a great reward experience.

Prepaid cards as utility rebates or energy efficiency incentives work for you, and work even better for your customers.



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