Last week DNV KEMA released their forecast for the retail energy market and leveraging a phrase from 1980’s movie critics Siskel and Ebert, they gave it “2 Thumbs Up!”, stating that “competitive power markets will continue to expand aggressively in the next two years for homeowners and small businesses.” As marketers, this vertical should be a blockbuster!
Not every industry has surges of expansion like we are witnessing in the competitive energy space, and as the competition gets fiercer, those who leverage data as smarter marketers will rule the day. As noted in the forecast, “It means that effective marketing strategies could lead to increased market share and long term customer relationships if done properly.” The key word here is “properly.” Like in the motion picture industry, over 600 films are released yearly and only a select few receive top honors and awards like the Oscars. The motion pictures that are successful understand their target audience, what motivates customers to invest in their movie, and in some cases, their brand –Avengers anyone?
DNV KEMA states: “A substantial increase in competitive retail suppliers entering restructured markets signals that residential and small markets are going to heat up.” No matter what markets you are servicing and looking to enter as marketers, you need to understand who you want to target and what motivates them to take action. This is an essential part of the equation when developing a marketing strategy, because the reality is that potential customers in these markets are going to receive a lot of solicitations from several different channels, online, door-to-door, telesales and direct mail. With all of this competition, you need to make the most of every interaction so you can stand out from the competition and grab the consumer’s attention.
When building your market-by-market strategies, you need to gain an understanding of who your customers are and what differentiates them from the population at large. This can be accomplished by building a model based on prospects that have converted and become customers. The model will be used to score the potential universe and identify those most likely to respond and become customers. The more effective the targeting, the lower cost per acquisition! This methodology is nothing new in direct marketing, but as we see competition increasing and the fight for customers become more heated then ever, you need to be smart, or as we say in Boston “Wicked Smahht”.
In addition to building a model based on your customers and understanding what motivates them, you also need to implement a test-and-learn approach to your campaigns. One approach that works very well in rapidly growing industries is Multivariate Testing. In this approach, you test several campaign elements at once to gain the most learning fastest. The ultimate goal is to understand what motivates customers to take action. The reality is, within one market, there will be multiple elements, or a combination of elements, by customer group. To win the Oscar in the acquisition game, this approach is a must!
As a marketer and consumer, it is fascinating to see the Retail Energy industry surge-- just read my post on the Man Crush I have with it. I liken it to watching the rise of a new movie franchise. So sit back, grab some popcorn and enjoy the show. And should you need some help, we are always happy to jump in the directors char with you to ensure your program is a blockbuster.