Tag Archives: segmentation

The basic energy marketing rules that many fail to apply

CHARGE Energy Branding Conference
The three rules of energy marketing

Before energy suppliers begin the journey of their energy marketing, there are multiple issues that need to be addressed. The most basic issue and the foundation of any energy brand is the general idea of what the brand is about before creating and delivering the marketing message. Branding is the basic strategic philosophy any organisation should build their whole operations around.

Create a unique value proposition

The key to any successful brand is the unique value proposition. Many energy brands are abandoning the lowest price race to the bottom and have started to emphasise on creating an emotional connection to the customer. Customers are attracted to them because of a vision that goes beyond simply providing a commodity. Anyone can become an energy supplier and the secure supply of energy is a given in liberalised markets. The best energy brands have created a unique, compelling reason for customers to become their customer by creating a bond on the emotional level.

Know your customer segments

Multiple branding case studies from the energy industry have shown that effective energy marketing comes from a good brand that is a credible source of information for the customer.  There are multiple methods of branding energy but there is not a secret formula for a successful retail energy strategy but rather a toolkit that any brand should use for success. One of the most important tools for utility marketing to become successful is brand segmentation – know who you will be talking to and know how to talk to different segments.

Be consistent and authentic

Once the segments have been identified – you can know how your energy brand can communicate its value proposition to the different brand segments. From segmentation, effective branding strategies can be developed. There are brand building companies and retail energy consulting firms that help with branding but the brand needs to be authentic in all their communication with the customers. Look at any branding case study from the energy industry and you will see that all effective utility marketing (or energy marketing) programme comes from a credible source – an effective energy brand.

There are multiple technical challenges for the energy sector and there have always been. But the biggest challenge for the sector is knowing how multiple stakeholders perceive utilities and services and products for the sector. To be able to be effective in marketing energy services, utilities need to be able to understand the customer and communicate through a powerful energy brand. This same principle applies to different parts of the electric energy sector – from generation, transmission, distribution and sales of electricity.

 

Know you segments

market_sementation

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.

Stakeholders

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.

Brand building through experience and relationship

At CHARGE 2016, Tomaz Oresic, Chairman of the board at Elektro Maribor, presented on the current outlook of the electricity supply value chain is going through major changes, with new players entering the market, shift of perception of electricity as a basic commodity and how the customer is increasingly being put at the very centre. These disruptive trends are changing the old electric utility business model with the result of an increasing number of utilities starting to pay more attention to branding.

Tomaz points out that utilities have been marketing an almost invisible product to an undefined customer with top-down communication strategies. These engagement strategies have often failed since the electricity suppliers have not walked the talk and due to mismatched communication.

OVO Energy – a big small energy supplier

Stephen Fitzpatrick – CEO of OVO Energy – describes the company as a big small company. As a challenger to the Big Six energy companies in the UK, the company has grown from a simple idea around the kitchen table to servicing over 700.000 customers in the retail energy market and employing around 1.000 people. Even though the company is no longer small, they still act and think like a startup.

Stephen’s presentation was not only on the future of energy but on the future of customer expectations in general and how children growing up to be the consumers of tomorrow are growing up in an on-demand world that gives them different expectations from brands than today’s consumers have. In just three years, on-demand services have revolutionised industry after industry and no one knows how fast the next three years are going to change. But by always thinking like a customer, OVO Energy anticipates being prepared to stay on top of the energy market that might have changed dramatically in an unforeseen way.

OVO Energy was the winner of the first CHARGE Awards and was crowned the World’s Best Energy Brand at the CHARGE Awards ceremony in 2016. The brand did well both in both the score of the global panel of experts but more importantly, the brand is doing an excellent job according to their customers.

Neville Ravji – CEO Volterra Energy

Among CHARGE2017 keynote speakers is Neville Ravji, CEO of Volterra Neville Ravji Discount PowerEnergy in Houston, Texas. Neville has been working in the energy industry since 1997 and co-founded Tara Energy in 2002 when energy deregulation was beginning to take hold in Texas.

Neville has strived to bring energy to consumers through a bottom-up approach that involves understanding customer needs by creating macro and micro segments and then providing products that meet these needs and backing them with a fanatical focus on top-notch customer service. Under his leadership, Volterra Energy is successfully executing a multi-brand strategy aimed at various niches, with a special focus on the South Asian market. The company’s brands include Discount Power, Power Express and Volterra Energy.

The products and services offered by Volterra Energy have made them one of the fastest growing companies in the United States. “By its very nature, the product we sell has no distinguishable physical characteristics – so it is very important to be able to differentiate ourselves by creating intangible attributes that appeal to our customers. At Volterra, we have managed to do this very successfully, mainly because of a very experienced and talented team that understands the customer very well. I am looking forward to speaking to my industry peers at CHARGE and sharing our story.”

Dr. Fridrik Larsen chairman of CHARGE Energy Branding Conference said “Volterra Energy is among the few energy companies in the world that have done an outstanding job in identifying segments that they understand and can relate to. The conference is about how energy companies need to connect to the minds and hearts of consumers to be able to participate in the market today and Volterra and its brands are a great example of this.”