The core function of any retail business is identifying how to reach consumers and get them buy a particular product or service. Energy providers serving residential customers are no different. Their ability to economically acquire and retain customers is critical to their success. Without a steady flow of new enrollments, energy providers will slowly see their customer base erode. This challenge results in energy companies utilizing multiple customer acquisition channels to maintain and grow their market share.
Energy providers face significant competition whether they are selling electricity, natural gas, solar panels, or home energy services. Competitive pressures often lead to creative and novel marketing approaches. For example, marketing incentives such as rebates and free smart thermostats are common. Beyond incentives, many energy providers utilize a combination of advertising and sponsorships to create brand awareness. Advertising media include the Internet, radio, television, billboards, and direct mail. Customer enrollments also occur through telemarketing and field marketing (i.e., door-to-door sales).
Energy Marketing Challenges
This is where energy providers have had trouble with quality control. With telemarketing, conversations can be actively monitored to guard against misrepresentation. In addition, there are federal guidelines on telemarketing including “do not call” lists and specific hours limiting when phone solicitations can occur. If consumers feel unduly pressured or confused, they can simply hang up and terminate the call. Field marketing is very different.
First, door-to-door selling is a difficult profession. Fewer consumers are willing to open their doors to strangers. There are issues with weather, loose pets, and local ordinances that may prohibit this approach to selling. Coupling these challenges with consumer reluctance to make major decisions on their doorstep, results in a very hard way to earn a living. People that excel at door-to-door sales must have an engaging personality and a thick skin. Too often, even the best sellers have trouble making quota selling electricity and natural gas plans. This leads to a temptation to deviate from the approved script.
State utility commissions have punished energy providers who fail to control the actions and behaviors of door-to-door sales agents. In their defense, field sales agents are not employees of the energy provider. They are independent contractors compensated primarily by sales commissions. Energy providers provide the contractors with training and scripts. They also use third-party verification (TPV) calls to make sure the consumer is making a voluntary and properly informed decision to enroll. However, these measures have been far from perfect in preventing misrepresentation and high-pressure sales tactics.
Attempts to clean up the field-marketing channel have been extensive. Some states require marketers to pass criminal background checks and to wear pins stating that they are not employed by the utility. Other measures include having the marketer move a minimum distance away from the consumer while the TPV service verifies that the marketer made proper representations. Some energy providers have even proposed video recording of the sales interaction to verify the representations made by the marketer.
In the end, there is an ongoing and growing concern that electricity and natural gas might not be well suited for door-to-door sales. Energy suppliers are only interested in this channel if it proves to be an economical means of acquiring customers. Training, technology, and active monitoring are the best means of securing high quality enrollments. Utility commission penalties and bad press are never the goal of any marketing program.
Consumers should not make a commitment to enroll based on anything that is not in writing and clearly understood. If the consumer is confused, uncertain, or feels pressured, they should terminate the conversation. Door-to-door energy marketing will evolve as technology provides enhanced opportunities for quality control. Whether or not this channel remains financially viable depends on whether the costs for this level of quality control can be managed effectively.