Solving for Sustainability: Aligning Incentives for a Brighter Energy Future

“The cleanest energy is the energy that we don’t use.”

It’s the motto that we use around the office when we talk about product innovation and smart energy. The point being that it takes energy to produce energy, and costs nothing to use zero. If we can get people to use less energy, we’re that much closer to our mission of reducing their carbon footprint for a brighter energy future. Simple enough plan, right? Kind of. After years of energy companies conditioning customers to use more energy so they can make more money, it’s a challenge many believe is easier said than done. But we figure if we can realign customer incentives in a smart way, we can actually make it happen. Thus the birth of Reduce & Redeem.

It’s our team’s idea of solving for sustainability by creating a loyalty rewards program designed to pay members when they use less energy.

We’re in the age of consumer rewards. People are familiar with them and most have come to expect them — making it an obvious way to create the change we want to see. The numbers show that the average American household belongs to more than 20 different rewards programs. A quick look at the greatest hits (and their cult followings) — from Starbucks to Starwoods, Amex to Skymiles and more — showed us that these programs actually work in getting people to change their behavior. We’ve all been there, deciding which coffee shop to go to, or if that 6am flight is worth it, and the final factor that tips the scale is the rewards. It makes sense, because who doesn’t like free? It’s such a powerful draw that gets you across the finish-line. While most rewards programs want you to drink more coffee to get more coffee; or spend more money to get a deeper discount, we put our own unique spin on the concept.

Reduce & Redeem revolves around using less and getting more. Its foundation is modeled on best in class programs such as Toms, Patagonia, and Amazon Prime — programs that are mission aligned, respect the customer relationship, and deliver consistent value.

Putting it all together, it works like this. Members can beat their energy forecast and earn cash that is automatically credited towards their energy bill. Their reward is approximately ⅓ of their subscription price. So if they pay a flat rate of $89.99 every month, their cash reward is $30. This means all members actually get a reward that’s valuable to them. What’s an energy forecast? Well, it’s what we expect a member’s usage to be throughout the course of the year and adjusted based on how much energy they’ve historically used.

The really cool part is that by comparing Members against their own forecasted usage, it’s a personal journey in the same way training for a marathon is. It’s a challenge where you’re able to focus on doing your personal best. Think of this as a personal Nike Run Club challenge for energy where we’re getting people to participate one-by-one in a competitive connected movement. Instead of logging miles to unlock new levels, members are accumulating negawatts to receive cash.

This wasn’t the typical product design challenge for a startup. From a Labs standpoint, it started with understanding what our customers actually want. We had our theory that “rewards” could be a behavior change “silver bullet”, but we still had to test it out. After testing multiple concepts, we found our members prefer cash rewards but it had to be easy to redeem and more than just a drop in the bucket. They don’t think about energy often (understable), but if it meant saving real dollars it could be their new best friend.

We’re now slowly rolling out the program to energy subscription members in Pennsylvania, and we’re excited to see it take shape — it’s ready for the moment. The goal isn’t just a one-off dip in energy usage, rather repeatable energy savings by our members; so we’ll monitor the trends and adjust as needed.

It’s been fascinating solving this equation. Figuring out the design of a rewards program that breaks so far from conventional industry wisdom meant imagining the world as it should be, not as it currently is. But it’s this optimism that has us believing that as more and more people sign-up, we’ll continue to change our overall relationship between energy and how we all use it.

In other words, get more people using the cleanest energy of all — the energy they don’t use.

Interested in learning more about smart energy? Check us out.