Marketing Opportunity
A recent real-life experiment demonstrates the potential social value of harnessing reference group power. For years the Sacramento, California, Municipal Utility District tried various tactics to goad people into using less energy, such as awarding rebates to residents who buy energy-saving appliances. These efforts weren't working too well, so the district tried something new: It told people how their energy consumption compared to their neighbors’ energy consumption. Thirty-five thousand randomly selected customers received statements that rated their energy use compared to 100 of their neighbors who lived in homes of a similar size. The relatively energy-efficient customers earned two smiley faces on their statements, and those whose usage was . higher than average opened their envelopes to see frowns (they had to delete the frown part after customers got too upset with this criticism). After six months, the utility found that customers who had gotten the “frown” report cards reduced energy use by 2 percent compared to the rest of the district.