Why Utilities Need a Program Funnel Approach to EE, DR, and DER Enrollment

Utilities invest heavily in energy efficiency (EE), demand response (DR), and distributed energy resource (DER) programs. Yet, despite offering real benefits to customers, participation in these programs remains a persistent challenge.

Many programs struggle to scale because they pre-filter customers too aggressively, limiting their own reach before enrollment efforts even begin. A demand response program designed for electric vehicle owners, for example, may require participants to have a Level 2 charger installed at home. That automatically excludes EV drivers who use standard wall outlets, those who have not yet upgraded their home wiring, and renters who may not have control over charger installation. This approach creates an artificial bottleneck, shrinking the pool of eligible participants and making it harder to achieve meaningful adoption rates.

Instead of designing programs around narrow eligibility requirements, utilities should think in terms of a program funnel; that is, a structured process that brings in a wider audience, nurtures them over time, and converts them into active participants when they are ready. 

Utilities Are Filtering Out Too Many Customers

Most utility programs operate with a rigid structure: either a customer qualifies or they don’t. This binary approach leaves many potential participants on the outside, even if they might become eligible in future.

Returning to the EV demand response example, a program designed for homes with Level 2 chargers excludes a broader pool of EV owners who could be interested but have not yet made the investment. Some may be planning to install a charger in six months. Others may be open to a different approach, such as managed charging through a vehicle telematics platform rather than a dedicated charger. By pre-filtering participants based on current infrastructure alone, the utility is missing the opportunity to engage with a much larger group that could eventually participate.

This pattern plays out across many utility programs. Income-qualified energy efficiency programs often have strict eligibility thresholds that create barriers for customers who are just outside the required criteria. DER incentive programs may require customers to install specific technologies before they can take advantage of any benefits. In each case, the utility ends up targeting only a fraction of the potential audience, limiting both immediate participation and future program growth.

Lessons from Sales: How a Program Funnel Works

The challenges utilities face in enrolling customers in programs are not unique. Businesses across industries deal with similar issues when selling products or services. A salesperson may define an ideal customer profile, but that does not mean every potential customer is ready to buy immediately. Instead, they build a sales funnel, i.e. a structured process that moves people from awareness to engagement to conversion.

Over time, through targeted communication and follow-ups, some will move to the next stage of the funnel, actively considering a purchase. Eventually, a smaller subset will decide and convert.

This structured approach to customer engagement is well understood in sales and marketing, yet utilities rarely apply the same thinking to their programs. Instead, they attempt to enroll customers in a single step, filtering out those who do not immediately qualify. The result is a much smaller pool of participants and a slower path to scale.

A better approach is to apply the funnel model to program design. Rather than starting with a restrictive set of criteria, utilities should begin by engaging a broader audience, nurturing them over time, and progressively guiding them toward deeper participation.

 Building a Utility Program Funnel

The first step in building a program funnel is to expand the top of the funnel by casting a wider net. Instead of limiting outreach to only the most qualified customers, utilities should engage a much larger group that includes future participants. This means identifying and communicating with customers who may not meet all eligibility criteria today but could in the future.

Once the audience is defined, the next step is ongoing engagement. Instead, they should be provided with relevant information, updates, and opportunities to stay connected. For example, customers interested in an EV demand response program could receive insights into their charging habits, personalized cost-saving recommendations, or notifications about upcoming program changes that might affect their eligibility.

The conversion process should be designed with flexibility in mind. Instead of requiring full participation upfront, utilities can offer phased enrollment options. A customer may start by signing up for energy usage insights before progressing to an active demand response program.

Finally, once a customer is enrolled in one program, utilities should have a plan for cross-program engagement. Just as businesses focus on upselling and retention, utilities should look for ways to transition customers from one program to another. A customer who joins a basic time-of-use (TOU) rate plan may later be a strong candidate for a more advanced demand flexibility program. By mapping out logical pathways from one program to the next, utilities can maximize long-term participation. 

The Cost of Customer Acquisition in Utilities

One of the most overlooked aspects of program design is customer acquisition cost. In industries such as telecommunications or banking, companies track customer acquisition costs closely, knowing that each new customer requires a significant investment in marketing and sales efforts. Acquiring a new customer in telecom can cost hundreds of dollars, and businesses invest heavily to ensure that once a customer is acquired, they remain engaged.

Utilities rarely apply the same level of scrutiny to program enrollment. The assumption is often that because customers already purchase electricity, getting them to join a program should be straightforward. But program participation is fundamentally different from standard utility service. Customers still need to be educated, convinced, and supported through the enrollment process. That requires investment.

When a customer drops out of a program, that acquisition cost is effectively wasted. The most efficient strategy is not just to acquire participants, but to retain them and move them into additional programs over time. By thinking about program enrollment as a long-term engagement strategy rather than a one-time transaction, utilities can maximize the return on their investment.

Pipelines Instead of Pools

For utilities looking to scale EE, DR, and DER programs, a shift in approach is needed. Instead of focusing on short-term enrollment, program managers should think about building a pipeline of participants who can be engaged over time. That means designing programs with more inclusive outreach, flexible enrollment pathways, and clear cross-program transitions.

Look at sales professionals. Sales teams do not expect every prospect to convert on the first interaction. They build relationships, nurture leads, and guide them through a structured journey. Utilities should take the same approach. By developing a program funnel, they can expand participation, improve cost efficiency, and drive long-term engagement.

Rather than filtering customers out, the focus should be on bringing more of them in and then guiding them forward, step by step.

Rethinking Program Design: Moving Beyond One-Time Enrollment

One of the biggest shifts utilities need to make is moving away from a one-and-done approach to program enrollment. If they don’t, the utility moves on, often spending additional marketing dollars to try again with new prospects.

This approach overlooks the longer customer journey that should be built into program design. Many customers may be interested in participating but are not yet ready due to financial, technical, or behavioral reasons. Instead of treating program enrollment as a pass/fail moment, utilities should develop multi-stage engagement strategies that allow customers to interact with the program in different ways over time.

For example, a demand response program for EV owners could offer different entry points:

• Customers who don’t yet have a Level 2 charger could start by receiving energy usage insights and charging recommendations.
• Those who are considering an upgrade could be offered rebates, financing options, or educational resources to help them transition.
• Customers with Level 2 chargers but who are hesitant to enroll in an active demand response program could be given the option to join a limited-time trial with an easy opt-out.
• Those who are fully enrolled could then be encouraged to participate in additional DR events, TOU plans, or DER integration opportunities.

Why Participation in One Program Should Lead to Another

Another flaw in how most utility programs are designed is that each program often runs in isolation. Energy efficiency, demand response, and DER initiatives are often run by separate teams, each with their own budgets, goals, and marketing efforts. The result is a fragmented customer experience where participants in one program are not naturally guided into others.

Yet, in most industries, repeat customers are the most valuable customers. Acquiring a new participant for a program requires marketing spend, outreach, education, and administrative costs. Once that investment has been made, the best strategy is to retain the customer and deepen their participation.

For utilities, this means thinking beyond just program-specific goals and designing seamless pathways from one program to the next. A customer who has already engaged with a TOU rate plan should be a prime candidate for a demand response program. Someone who has taken advantage of an energy efficiency rebate for a new appliance should be targeted for a broader home energy management initiative. Customers who have installed rooftop solar should be introduced to battery storage programs or virtual power plant opportunities.

By structuring programs with clear connections to future engagement, utilities can maximize both customer value and program effectiveness.

Overcoming the Challenge of Program Fatigue

Many customers feel bombarded with utility program offers. Whether it’s time-of-use rates, appliance rebates, EV charging incentives, or home energy audits, the sheer volume of options can create decision fatigue. Some customers may tune out entirely, while others may be wary of enrolling after a past negative experience such as a confusing rebate process, long wait times, or unclear benefits.

To combat program fatigue, utilities should focus on reducing friction and simplifying enrollment. Instead of marketing multiple programs separately, bundling offers together, such as an energy efficiency upgrade combined with a time-of-use rate incentive, can streamline choices and make participation more intuitive. The enrollment process itself should also be as frictionless as possible. No one wants to fill out a 10-page form just to participate in a demand response program. Clear instructions, automated sign-ups, and digital onboarding can dramatically improve conversion rates.

Utilities Already Have an Advantage That Salespeople Would Love

In most industries, companies pay heavily for customer data, lead generation, and the ability to communicate directly with potential buyers. Sales teams spend enormous sums on advertising, cold outreach, and data analytics just to get in front of the right audience. Utilities, by contrast, already have direct relationships with their customers. They have access to energy usage patterns, billing data, and built-in communication channels like monthly statements and email notifications. This is an incredible advantage but it is often underutilized. The challenge isn’t access to customers; it’s engagement. A better-designed program funnel can turn this unique position into a strategic asset.

The Elephant in the Room

Even with direct access to customers, trust remains a major barrier. Many customers are skeptical of their utility’s intentions, assuming that EE and DR programs are designed primarily to benefit the grid rather than them. Some worry that participating in a demand response program will result in discomfort or inconvenience, while others may feel burned by previous experiences with unclear incentives or confusing rebate processes. Building trust is just as important as marketing.

One way to address this is through transparency and clear communication. Customers need to see exactly how a program will benefit them, whether through cost savings, increased comfort, or environmental impact. Third-party validation can also help. Partnerships with local contractors, community groups, or municipal governments lend credibility to a program and help alleviate skepticism. Utilities that proactively demonstrate customer benefits and then follow through on delivering them will see stronger engagement and retention.

Metrics: How to Measure Program Funnel Success

Many utilities measure program success based solely on participation rates. While this is an important metric, it does not tell the full story of how well the funnel is working. A more complete set of metrics should track engagement throughout the entire journey, from initial awareness to long-term participation.

Key metrics to track include:

• Engagement rates:  Open rates on emails, click-through rates on program pages, and time spent reading materials all indicate interest.
• Lead nurturing success: The percentage of customers who move from initial awareness (e.g., visiting a program webpage) to an intermediate action (e.g., requesting more information or starting an application).
• Drop-off rates: At what stage do potential participants disengage? Are they opening emails but not clicking through? Starting an application but not completing it? Identifying these points helps utilities optimize their funnel.
• Cross-program participation: How many customers who participate in one program later join another? Tracking the flow from EE → DR → DER provides insight into long-term engagement.

Measuring these intermediate steps helps utilities refine their approach and maximize long-term success.

The Business Case for a Program Funnel Approach

For many utilities, the challenge of increasing program participation is framed as a marketing problem. The assumption is that if only more customers knew about the program, they would sign up. This leads to a focus on increasing awareness through bill inserts, email campaigns, or social media outreach.

But awareness is only the first step. The real challenge is program design and creating initiatives that allow for flexible engagement, progressive enrollment, and seamless transitions between programs.

A program funnel approach does not just increase participation rates - it improves cost efficiency. Instead of spending marketing dollars repeatedly trying to attract new customers, utilities can focus on deepening engagement with customers they already have. This mirrors the strategy used in industries like telecom, where companies spend heavily to acquire customers but work even harder to keep them engaged through upsells, add-ons, and bundled services.

Consider the cost implications:

• If it costs $200 to acquire a customer for a demand response program and that customer drops out after one year, the utility must spend another $200 to replace them.
• If that same customer is instead transitioned into a follow-up program, such as an EV TOU rate or a DER integration initiative, the utility maximizes the return on its initial acquisition investment without having to start from scratch.

By shifting focus from one-time enrollment to long-term engagement, utilities can build more sustainable, cost-effective programs that grow over time.

A Smarter Path Forward

Utilities have access to customer data, direct communication channels, and an existing customer base. These are advantages that most sales teams would kill for. Yet, in many cases, utility program design does not take full advantage of these strengths.

A more effective approach is to think like a sales leader and develop a structured program funnel that:

• Expands the top of the funnel by engaging a larger potential audience, not just immediate qualifiers.
• Keeps customers engaged through ongoing education, incentives, and personalized communication.
• Reduces friction in enrollment with flexible sign-up options and phased participation models.
• Encourages cross-program participation by designing clear pathways from one initiative to the next.
• Optimizes customer retention by focusing on long-term engagement rather than single sign-ups.

By applying these principles, utilities can create programs that are more inclusive, more cost-effective, and ultimately more successful. 

Don't Just Sell the Program. Build the Relationship

Participation in utility programs is not just about meeting enrollment targets. It’s about building lasting customer relationships that drive long-term engagement. Treating program enrollment as a single transaction is short-sighted. Instead, utilities should view it as a structured funnel, designed to guide customers through different stages of participation over time.

This is not just a theory. Industries with strong customer engagement models, from telecom to financial services, have been using these principles for years. Utilities can apply the same approach, designing programs that don’t just seek immediate sign-ups, but actively cultivate future participation.

Instead of filtering out potential customers before they are ready, utilities should focus on bringing them in, keeping them engaged, and leading them forward step by step. That is how successful programs grow, and how utilities can create real, lasting value for both customers and the grid.