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Profitable Product and Service Marketing in the Energy Industry: Insights from Successful Product Managers
E SOURCE, Nov 2003, Pages: 24
Marketing products and services rather than just energy commodities to residential customers is an ongoing challenge for energy service providers (ESPs) seeking steady revenue streams in an increasingly turbulent business environment. We spoke with ESPs throughout the United States and the United Kingdom to determine the critical factors for increasing revenues and profits, improving customer satisfaction, and avoiding costs. Our investigation centered on appliance warranty and repair services, equipment financing, and bill-payment protection insurance offerings for several reasons: These programs are specifically designed to generate revenue, many ESPs offer them, they are closely aligned with utility core competencies, and ESPs can choose from a variety of market-entry models for these offerings. We evaluated the risk-reward spectrum, price points, take-rates, timelines, marketing channels, revenues, costs, and profitability associated with each type of product.
The managers of successful programs emphasized that all offerings must reflect local market conditions and that no product or service will sell in every market at all times. They also affirmed the importance of reasonable expectations, careful analysis, and sound partnerships with any third-party providers. Respectable returns can be achieved over time through persistence, proper staffing, ongoing marketing support, and consistent attention to detail. By providing additional services to customers, ESPs can deepen customer relationships and cultivate 'customer advocates' who are more likely to make repeat purchases and provide word-of-mouth endorsements to other customers.
Marketing products that help customers protect themselves from macroeconomic uncertainty or from equipment failure in their homes or businesses are consistent with utility companies overall commitment to the customers and communities they serve. If an ESP can lower customers anxieties, it will, by definition, improve their quality of life. Therefore, we expect that most profitable products or services will be mutually beneficial for the utility and the customer.
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