Will you lose your commercial customers to a better offer?

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Will you lose your commercial customers to a better offer?

My quick answer is that we’re heading in that direction. And I’m not sure “lose them” is right; it’s more like “lose a significant portion of their business.” Let’s dig into some numbers.

Our most recent B2B Pulse™ study polled business decision-makers across a variety of sectors, sizes (10+ employees) and job titles (facilities managers, CEOs, COOs, CFOs, purchasing managers, etc.). When we asked those folks how they feel about their current utility, we found:

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  • 52 percent of commercial customers say they would buy energy or energy management services from a company other than their current utility if they could.
  • And 67 percent of those would buy electricity from an alternative provider such as Google, Honeywell or Comcast.
  • 50 percent overall would buy directly from a solar energy provider if possible.

When we asked why, the answer was generally, “I’m sure I can get a better deal somewhere else.”

Now, as noted behavioral economist Dan Ariely likes to say, “We’re all wonderful people in the future,” so in reality not this many people will jump ship. But here’s what we’re worried about:

  • Advances in technology are creating new expectations of all the companies we all buy from. Business decision-makers are people, too, and when those people have an everyday experience of tracking Uber drivers and pizza delivery guys on their smartphones in real time, they expect their utility company to offer similar options. When they can’t, they’ll get a wandering eye for a company that makes acquiring and managing energy easier.
  • 86% of the Fortune 500 now publishes an annual sustainability report. When those companies state their goals for how they’re going to operate more sustainably, adding renewable energy and making their plants more energy efficient are at the top of the list. In fact, listen to a webcast I facilitated for GreenBiz.com last September and you’ll hear that Walmart intends to eliminate “brown power” altogether via efficiency and renewables.
  • Given decision-makers’ expectations about technology (and growing belief that utilities can’t give them what they need), plus their pressure to hit publicly stated sustainability goals, the fact that SolarCity landed $1.5 billion in funding to finance rooftop solar deals in the commercial sector should be very concerning to utilities. Add in Elon Musk’s drive to make energy storage attainable, and suddenly solar is a viable option for even small to mid-sized businesses. And that’s who utilities should be most worried about – the commercial customers that aren’t quite big enough to have a key account rep assigned to them, but that consume enough energy that those costs are noticeable every month. Utilities are typically pretty lousy at communicating with/building relationships with this sector. Thus, we expect that’s where you’ll see load attrition first.

We’ve seen this cautionary tale before, of course. AT&T managed to reinvent itself as a digital/cellular company (vs. an old-school, long-distance telephone service provider) … but Blockbuster scoffed at the threat of Netflix and other new players in the online/digital/live-streaming arena and did nothing (they didn’t even buy Netflix when it was offered to them for sale in 2000). And never mind that Kodak invented the digital camera and had advisers telling them that digital was a very real threat to their business … again, nothing. Kodak once owned 90% of the film market and was one of the world’s most valuable brands. I’m sure they thought they were too big, too entrenched to fail. I hear utilities say, “We’ve got too much invested in infrastructure … trying to compete with us would be too hard.” Or worse, “We don’t know how to sell a new business model to the regulators.”

Guys, stop making excuses and get to work. You want to wind up like AT&T, not like Blockbuster and Kodak.

So how? Well, beyond calling Shelton Group for help crafting customer loyalty strategies, the broad answer is:

  • Play more offense than defense.
  • Be easier to do business with via technology.
  • Offer transparent, meaningful, helpful interactions regularly via products and services.
  • Get out of your own way.

There are a few other insights from our data that can give you a starting point:

  • 70 percent of commercial customers are interested in an energy services agreement – so make sure you can work with them in this way.
  • 57 percent say the availability of loans makes them more likely to undertake energy efficiency retrofits.
  • 75 percent of them think their facilities are already energy efficient, so you may need a plan to shake them out of their complacency to get them to buy some products and services from you.
  • Anecdotally, from our work with some of the nation’s largest companies on marketing their sustainability stories, we know those companies want green electrons coming to their facilities. It’s not good enough for you to add more renewables overall to the grid … they want it coming directly to them/on site. Make that happen.

I encourage you all to sit down, put yourself in your customers’ shoes and think through all the things that make your company difficult/irritating to do business with, and all the things you could do to surprise and delight your customers – and build long-term loyalty. Figure out how to build that better customer experience, how to get your regulators to approve it and continue to thrive in the future. The alternative doesn’t look pretty.

Skills

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Posted on

July 9, 2015

About the Author

Suzanne Shelton

Where Suzanne sees opportunity, you can bet results will follow. Drawing on her extensive knowledge of both the advertising world and the energy and environment arena, Suzanne provides unparalleled strategic insights to our clients and to audiences around North America. Suzanne is a guest columnist in multiple publications and websites, such as GreenBiz, and she speaks at around 20 conferences a year, including Sustainable Brands, Fortune Brainstorm E and Green Build.

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