Questionable practices to acquire electricity customers tarnishes the industry

Last week a Chicago Tribune  article reported on the onslaught of marketing activity by retail energy providers to acquire individual customers before municipal aggregration is awarded. These bulk contracts with power companies are currently in various phases of the bidding process in approximately 250 municipalities throughout Illinois. 

Trying to sign up individual home owners before aggregation contracts go into effect is a sound strategy. But not if it ruins your brand in the process.  Turns out, many suppliers are enlisting the help of door-to-door companies to switch residents and these contracted sales representatives are employing  questionable practices.  In fact, many are going so far as to imply that they are associated with the municipality. 

The article went on to report that the response from independent energy providers to complaints from prospective customers was that while they don’t approve of misleading tatics, they need to compete during this short window of opportunity and hard sell tactics are a necessity. 

At the root of this problem is that many of these energy providers are being characterized as fly-by-night, unknown companies.  And while most had the opportunity to enter the Illinois market last year, few took the time to build their brand, gain awareness and earn consumer trust before launching aggressive switch campaigns.  It’s a classic marketing mistake.  Companies increasingly view marketing as a silver bullet they hope will immediatley solve all their sales problems instead of understanding that recognition, relevancy and differentiation must be established in the minds of the consumer in advance of a sale.   

Our hope is that post-aggregation, building a brand becomes the new normal for energy providers.  However,  for many, repairing their brands’ reputation and regaining  respectability will have to come first.

Tags: building a brand, Chicago Tribune, Energy, municipal electricity aggregation, retail energy providers

Municipal Electricity Aggregation – A Customer Acquisition Silver Bullet?

This has been an exciting year for electricity providers in Illinois. Competition to acquire new customers has been fierce. In fact, many providers, having just introduced themselves to consumers, are claiming success. Early on, these wins came through marketing campaigns that drove brand awareness and enticed residential customers to switch via money-saving offers. As we wrap up the year, a new phase has emerged.

Providers are now heavily courting municipalities. Municipal aggregation efforts have significantly gained in importance. An enormous amount of outreach by providers and broker organizations have helped educate communities on how residents would benefit and how village boards might realize a boost to their bottom line along the way.

And while it may have started with a handful of communities, voters in several Northern Illinois municipalities have passed referenda approving the process for aggregation and many more are poised to follow. The deadline to pass a board ordinance to place  a referendum on the March 20, 2012 ballot is December 31st, and over 100 townships and districts in Northern Illinois alone are on the membership list of the top-ranking broker organizations specializing in aggregation.

The energy providers competing in this space embrace aggregation opportunities enthusiastically. They view it as a cost-effective avenue to acquire customers and as a way around having to spend money to build a brand and consumer trust. But there are significant perils to that approach. First, it’s a winner take all scenario, and to date, only a small number of providers are winning these bids. That means many energy providers competing for aggregation are coming up empty. Secondly, these efforts put the providers who do not win the bid in a situation where marketing becomes even more critical. That’s because they are faced with the challenge of convincing residents in aggregated communities that they can still switch. But those marketing efforts will require more education, surgical and targeted application, and offers that extend value far beyond price. Differentiation through value proposition development is something the entire industry has yet to focus on, and prefers to ignore. It’s the hard work that has to be addressed and thanks to aggregation the time to tackle it is now.

Tags: aggregated communities, customer acquisition, electricity providers, Energy, energy marketing, energy providers, municipal electricity aggregation, Northern Illinois electricity