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A New Way to Engage Small Business Customers in Energy Efficiency

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By Danielle Marquis

Small businesses occupy 4.6 million buildings across the United States and consume 44 percent of the overall energy in buildings, according to the U.S. Department of Energy. Described as hard to reach and fraught with various barriers to widespread energy efficiency solutions—including size, time and money constraints; lack of awareness; split incentives; small dollar savings and perceived disruption—this sector requires a creative approach to program design and marketing to achieve results.

If you think about it from the customer’s perspective, many of our existing program designs for this sector range from inconvenient to downright painful. Owners and other decision-makers are busy trying to keep their business running, usually getting their hands dirty right alongside their employees. And as energy efficiency program implementers, here we come, knocking on their doors out of the blue, wanting an hour of their precious time to conduct an energy audit.

“I’ll show you how to save energy and recoup your costs in a year,” we say. “And, oh, by the way, I’ll need you to shut down operations for a couple of days to complete the upgrades,” we add with a smile—and a request to sign on the dotted line.

Is it any wonder these programs often struggle?

What about the customers who live too far out in the rural areas of your territory to make it cost-effective to send an outreach and installation crew? And what about those who will never participate in an assessment or direct-install program because they simply don’t have the time?

About a year ago, AM Conservation Group (AMCG) sought to find innovative ways to breach these barriers when we piloted a Small Business Marketplace with Michigan-based utility Consumers Energy. Consumers Energy had a full suite of existing, long-running small business programs—assessment, direct install, business energy reports and a business energy portal—more than I’d ever seen. Yet the utility was struggling, like most of us, to get small businesses to participate. Consumers Energy had compelling offers and implementers working hard, yet gaps remained.

To fill those gaps, AMCG designed the Small Business Marketplace, an e-commerce website featuring instant rebates and free shipping, and Consumers Energy committed to incubating the idea and helping it grow into something that would help them better serve this market, especially their smallest small business customers and those in rural areas.

Best Practices in Marketplace Design and Marketing

E-commerce marketing is different from traditional utility-program marketing. It requires a unique skill set and approach to achieve success when we’re up against large e-commerce competitors such as Amazon and Walmart. AMCG’s goal was to develop a marketing strategy for the Marketplace that would help generate predictable traffic and conversion rates so the program team could throttle participation as needed to meet Consumers Energy’s commercial-portfolio-savings goals. The following is an outline of what worked and what might help improve your small business program.

Advanced Market Segmentation .

AMCG recommended advanced market segmentation to prioritize outreach and increase the pilot’s chance of success, staying in line with best practices. In conjunction with Illume Advising, we developed propensity scores and categories for each business based on past participant data from Consumers’ SBDI program, firmographic data and program theory. Five target groups, which comprise 103,882 customers, were recommended for targeting.

The segmentation model has proven to be accurate and has helped the team better target digital advertising and direct mail. For example, a field test of the model, conducted on all orders through March 2018, demonstrated it was 73 percent accurate at identifying customers who would place orders in the Marketplace. Those customers identified by the model also had order values between 9 and 17 percent higher than the average order value, suggesting it was not just effective at predicting participation, it also predicted deeper-than-average participation.

Inbound Marketing

We developed an inbound marketing strategy to help attract customers to the Marketplace rather than relying solely on traditional advertising to generate awareness and Marketplace visits. According to HubSpot, the company that developed inbound marketing methodology, “inbound marketing is focused on attracting customers through relevant and helpful content and adding value at every stage in your customer’s buying journey.”

A variety of relevant content pieces (e.g. blog posts, infographics, guides) was developed to position Consumers Energy as a teammate to small business customers, able to help them become more energy efficient and reduce costs, all while positioning the Marketplace as a helpful resource. The positioning is in line with Consumers Energy’s brand standards, the intent of the pilot programs, and best practices for reaching the small business segment. The content was added to the Marketplace’s Resource Center for organic search engine optimization and is incorporated into email campaigns.

Inbound marketing has proven to be an effective strategy for reaching this segment. For example, traffic originating from search, which is driven by the search-engine-optimized Marketplace content, has driven an average order conversion rate of 5.84 percent, making it the Marketplace’s most cost-effective source of orders. In addition, the average order-conversion rate for micro-targeted social media ads is as high as 13 percent, when optimized, targeted to high-propensity groups and combined with email campaigns.

Growth-Driven Design

Seamless, easy transactions are the way to win today’s demanding customers, according to e-commerce best practices. The Marketplace was designed to be easy to use in order to increase organic search traffic, reduce abandoned shopping carts and increase sales. The Marketplace’s home page, for example, was designed to be clean—without unnecessary images or calls to action—and easy to navigate. Likewise, the Marketplace’s interior category and product pages were designed to function as gateways for conversion. The Marketplace also features a custom segmentation and validation method based on address.

A growth-driven design (GDD) process was followed when designing the Marketplace that leverages tracking software, user-behavior insights and quarterly “test-and-learn sprints” to make data-driven decisions and improve the Marketplace over time. GDD, originally developed by HubSpot, is built on top of the SCRUM agile process and weaves together various concepts into a comprehensive and highly effective web-design methodology. GDD websites have been proven to drive more business impact than websites built using traditional web-design processes. Some agencies that use this method report 16.9 percent more leads after six months and 11.2 percent more revenue with clients. The AMCG team regularly reviews heat maps, recorded user actions and behaviors on the Marketplace to determine areas of improvement for quarterly GDD improvement sprints.

To date, the GDD improvements to Marketplace have been successful. For example, the validation tool on the Marketplace was streamlined during a quarterly GDD 

sprint to improve user experience on mobile devices. Within the first two days of the updates going live, shopping increased 21 percent over the prior week, with 19.54 percent of customers looking at specific products, and add-to-cart conversions increasing 100 percent over the prior week. During this time, no new marketing went live; the validation updates were the only changes to the Marketplace design.

Results

Launched in late August 2017, the Marketplace is in its infancy, and Consumers Energy is still evaluating the long-term potential for this pilot to convert to a full-scale program. The data-driven approach taken when designing and marketing the Marketplace, however, has shown success in this short period of time. The Marketplace is currently on track to exceed all order, kWh and Mcf goals for 2018, and the current 30-day Net Promoter Score is already world-class. Customer comments have praised the ease of use of the Marketplace and repeatedly thanked Consumers Energy for offering this program. The small business market is still a tremendous challenge to reach, but this gap-filling program design and data-driven marketing approach have given us more leverage to crack the code.

Danielle Marquis is the Director of Marketing Strategy for AM Conservation, where she leads corporate and program marketing.

This article was contributed by the AESP Marketing Topic Committee.

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