Segmenting the market and the customer base has in a way followed energy companies since the start. Market segmentation for utilities used to be less complicated – the customer was everyone living in a certain geographic area over a certain age. In short: everyone was the customer and everyone got the same message in a form of a bill or announcement of outages.
Enter the competitive retail energy markets
The competitive energy markets require more detailed segmentation. It is almost no longer possible to deliver the same message and the same service to just about everyone. And everyone is not looking for the same service from an energy retailer. Some people are following the lowest price, others are looking for a pleasant user experience, a group of consumers are after green energy and sustainable energy savings… the list goes on and most consumers are after a mixture of everything mentioned but put different emphasis on different factors.
How to segment energy consumers?
First off, there are, broadly speaking, four different types of segmentation.
Geographic segmentation segments users based on their location. This might seem like an outdated segmentation tool but rural energy customers have different needs than urban users. There are even different needs for users in different cities.
Demographic segmentation is along with geographic segmentation the most easily understood methods of segmentation and most used. Segmenting users by age, gender, income and family size sounds pretty familiar to everyone.
But electricity is not something bought off the shelves in supermarkets located in cities of a specific population density – electricity is not an easy made meal for a woman aged 35-42, married with two-point-two kids aged 7-12.
That is why energy requires more detailed segmentation.
Psychographic segmentation looks at lifestyles, personal characteristics – attitudes and how consumers live their lives. Branding is after all about creating something intangible on top of the core commodity – a certain spirit or experience. Psychographic segmentation looks at how people look at life and that is where it is likely for a brand to succeed.
Geographic and demographic segmentation still play a part and one type of segmentation does not exclude another.
Your brand can speak to different groups. But you should not change the brand for each group your brand is speaking to but your brand can approach each group differently but with a coherent voice.
Moving from the macro-segmentation of the market to the micro-segmentation of your customers.
While speaking to the market at large, the brand also needs to communicate with customers and customers can usually be segmented. This is where behavioural segmentation comes in (remember – one approach does not exclude the next) to offer different types of customers different types of incentives. Big data and data analysis of your customers should be used to analyze their behaviour and see which groups of customers behave in a similar way.
The energy sector is not only commanded by customers but also different stakeholders. For brands operating a regulated monopoly business and large energy companies with a global brand footprint – it is important to realise and map stakeholders in general. Stakeholder mapping helps utilities to visualise different stakeholders such as politicians, regulators, trade unions, environmentalists, large energy consumers and household consumers.
Tailoring the message for different segments
Building an effective energy brand and energy marketing is not only about customer engagement but also knowing who your brand is communicating to and how it should communicate at different points. Different segments are communicated to with a different type of message through different channels. One of the brand’s customer segments is price conscious while another is concerned about the environment. To make energy savings a point of brand value, the brand would approach the groups with a different message, the price savers would respond better to a message regarding how much money they would save from being energy efficient while environmentally concerned customers are more likely to respond to message regarding how they can contribute to saving the environment with energy efficiency.