Marketing 101Components of a Complete

Marketing Program

Bryan K. SingletaryPresident

Practical EnergiesTampa, Florida(813) 915-0545

Three Discussion Questions

What did you come here to learn? What do you think that you should

know about marketing? How active do you think your utility

should be in marketing?

What is Utility Marketing?

Definition

Today

Tomorrow

What Marketing Is Not

Is not SELLING. Is not SPONTANEOUS. Is not One-Size-Fits-All. Is not WARM FUZZIES!

Marketing Is

Is MEASURABLE. Is REALISTIC. Is OBTAINABLE. Is GOAL ORIENTED. Is PRE-PLANNED.

Marketing Essentials

PLANNED course of action. TARGETED to SPECIFIC results and

customers. Requires CUSTOMER KNOWLEDGE

and INFORMATION. Requires COMPETITOR KNOWLEDGE

and INFORMATION.

Why Plan?

Planning is an management tool to influence outcomes

Good things can and do happen without planning - But only if you are lucky

Planning mitigates risk and allows managers to make things happen

Types of Planning

Strategic Planning Determining how a utility should

position itself to meet the demands of stakeholders in a new competitive environment

Ops planning Focuses on accomplishing the strategic

results on time, on budget

Strategic Planning

Agree on realities of the future Determine stakeholders Determine your utility’s position and

purpose Review your organizational values Understand your capabilities Set goals Develop contingencies

Ops Planning

Know the budget Determine the tactics Identify the process Assemble the resources Communicate responsibilities and

schedule Track the metrics

Strategic & Ops Planning

Observe social, political and economic environment

Track major trends Keep the customers close and

competitors closer SWOT

Planning Pitfalls

Sometimes viewed as not relevant Difficult to set aside required time Conflicting staff expectations Negative assumptions damper process Lack of involvement from all levels Realistic action plans not established Unclear ownership

Keys to Planning Success

Must become a top priority Must have commitment Must be on-going Must include marketing Must, Must, Must, follow the plan!

CUSTOMER

Marketing Planning Flowchart

Customer focused

Analyze market Assess situation Analyze impact Analyze risk Action plan Reality testing Evaluation

A good marketing plan need be merely four pages long

1. Quantifiable goals and target audience for each one.

2. Specific action steps & who’s responsible for each one

3. The Budget (include revenue projections, sales cost)

4. Calendar

Marketing is a Mechanism to ...

INCREASE customer benefit ECONOMICS QUALITY of LIFE (Services)

Reduce utility COSTS “per unit.” Solve STRATEGIC PROBLEMS.

Know what you want to do!

Don’t engage in XEROX marketing. Simply copying something that you

have seen at other utilities or this meeting!

Move the meter with marketing on issues that will do something for your system.

What are the issues facing your system?

Alternative fuels competition Load shape problems Regulatory changes Customer satisfaction/loyalty Sales of diversified products Economic development

Alternative Fuels Competition

Water heater replacement Energy efficient home Heat pump promotion Commercial and industrial

environmental assistance

Load Shape Problems

Direct load control Water heaters Heating and cooling systems Irrigation systems

Generator sales and service (C&I only) Curtailable and interruptible rates Market pricing and average billing

plan Time of use rates

Regulatory

Grass roots lobbying efforts Renewable/portfolio programs Branding Innovative pricing Key Accounts Energy efficiency services

Customer Loyalty / Satisfaction

Annual meeting Branding Customer service center

modifications Service guarantees Education Employee community involvement Rates & reliability

Product Sales

Direct mail Telemarketing Trade and home shows Local fairs/festivals Walk-ins Cross selling

Economic Development

Individual direct sales Key Accounts Business park development Statewide, Regional and National

associations Chambers

You Must Target the Customers

There never was anything that was “one size fits all.”

Not all customers will want or need your programs.

Not all customers are needed to meet your strategic initiatives.

Targeting SAVES money!

Water Heater Replacement Targeting

Mailed 10,000 700

Respond 14 14

Closed 7 7

Cost / Sale $1,430 $100

Targeting Exercise

What are some tools you could use to target customers for one of your existing/future products services.

You can only use data that is in current customer database.

How long would this take you at home?

Customer Segmentation

Type of customers you have will impact marketing programs you need and how you apply those you have.

You must go beyond traditional RCI classifications.

Multiple segmentation Usage, connect date, annual meeting

attendance, responding characteristics, age, income, etc......

New Market SegmentationCustomer Segmentation Approaches:

Traditional Vs. Market-Based

Customers Traditional Approach Market-Based Approaches

Residential

Commercial,Agricultural,&Industrial

• Type of dwelling• Age & income level• Rate class• Consumption level

• SI C code• Business size• Building type• Mix of end-use

equipment

• Needs & expectations• Preferences & buying patterns• Other

• Business strategies• Business operations• Energy operations• Other

Commercial Segmentation

Office Retail Grocery Restaurant

Hotel/Motel Institutional

Schools and Universities

Medical

Data and Information ...What do you need?

Data must be able to answer fundamental market questions about: Your utility, Your customers, Your competitors and their customers, Your existing programs and services.

Your Utility

Customers by segment. End uses saturations and load data. System load analysis. What portion of the market do you

own?

Equipment Saturations

The types and numbers of appliances and electric equipment your customers possess are drivers for definition of market needs and potentials.

You need to know how many of your customers have specific end uses and how many they have.

End Use Data

Residential Space conditioning Water heating Lighting Refrigeration Other

Commercial and Industrial Lighting Space conditioning Motor Water heating Cooking Other

Appliance saturations Potential new end-

uses How and when are

they used Large energy

consuming end uses will drive kWh sales and marketing programs

Load Curves

How customers use electric appliances and equipment determines your power requirements.

Each appliance has an electrical signature called a “load curve.”

Load Curves shows how the device uses electricity over a specific period of time.

Load Curves

Data represents an average usage of the end use by an average customer.

When added together will produce a system load curve.

Load Curves

Equipment that has a high peak demand and low usage will produce a load curve with sharp peaks.

Equipment that runs all the time will produce a flatter load curve.

Flatter load curves tend to produce lower per unit power costs.

What Portion of the market do you already have?

Market share is a measure of how well you are doing.

Four Different types of market share Customers Electricity Energy Revenue

What do your customers want?

From you as an energy supplier? Low cost energy? Efficiency/conservation assistance?

From your utility as a member of the community?

In general?

Know your customers needs and wants!

What do they want and why? How and when do they want it? How much are they willing to pay or

not pay to satisfy their needs and wants?

Is your utility prepared to look at the customer in a new way?

Customer Needs and Wants

Each customer group will have different needs and wants.

Customers within each group will have specific and unique needs and wants.

Determine those you can serve and provide direction to the others.

Your Customers

What drives your customers’ energy decisions? Attitudes about your company. Opinions about energy issues and your

company. Purchasing drivers.

Knowledge of customer needs and wants.

Customer Attitudes

What does the customer think of your utility? Are you easy to do business with? Do they know what a public power system

is? Do they view the utility as a professional

organization? How do you rate when compared to other

suppliers?

Customer Issues

What keeps the customer up at night? Environmental issues. Job security. Economic issues. Energy conservation. Community projects. Energy issues and prices.

What drives customers in selection of energy supplier?

Price Service Reliability Quality

Access to decision makers

Locally owned and/or operated

Being a public power system

Your Competitors

Benchmarks Costs Market shares Programs

Actions and offerings Current Future

Competitor Benchmarks

Rates and prices. Cost of service. Integrated resource plan data. Average sales. Customer size. Revenues per employee. Personnel data.

Competitor Actions

Current marketing programs: Names Target customers Success rate Staffing History

Future marketing activities Research Strategic initiatives

Competitive Actions and Response

Your competition can and will drive your marketing efforts. They: Claim being more high tech than public

power. Use rate advantage. Often provide more resources.

Don’t get in the program matching business: Marketing is not the fashion industry. Market to meet your customers’ needs.

Competitive Actions and Response

Virtually anything you do can and will be matched by someone. Craft Beer - five years ago there were

almost none, today every supplier has at least one line.

If you don’t match/exceed competitors products / services your customers want / need, you will lose market share: possibly the system!

Competitive Actions and Response

As a first step in the marketing process, look at what your competitors are supplying and ask your customers and theirs if this is a service they want.

Make sure the offering is strategically beneficial to your system.

When you can beat the competition to the punch or uncover their plans - role your program out first!

Your Current Actions

What marketing and conservation programs do you currently have?

What marketing/community activities are you engaged in?

How do you measure the effectiveness of your efforts?

Current Marketing Programs

What are your existing/planned programs?

Who is your target audience, and why? What type of market research did you

do to decide you current course of action?

How long have you been operating your current programs?

Current Community/Marketing Activities

EXERCISE List your current community activities. List the benefits to your customers. List the costs to your customers.

Can another company provide the same activity/service?

Why are you involved in these activities?

Current Measurement Tools

What tools are you using to measure the success of your programs and activities?

Are current programs/activities consistent with strategic goals and objectives of the utility?

Can your measurement tool tell you if you have made poor, fair, good, great or “totally awesome” progress towards goals?

What Can Be Measured - Demand Reductions

Demand reductions must reflect actual demand adjusted for weather and growth

Demand can be measured from billing and or metering records

Beware of demand payback, especially with DLC

What Can Be Measured - Expense Reductions

Provided utility has consistent expense baseline, expense reductions measured immediately.

Look at associated program expenses to insure true savings Ex. - Not replacing an employee may have

reduced total labor costs, but tasks may now be performed via outside services under a different account at a higher rate.

What Can Be Measured - Consumption Changes

Energy consumption can be monitored at Customer level End use level Distribution system level Power Supplier level

Normalize consumption for weather and other customer changes

What Can Be Measured - Revenue Changes

Revenues from customer energy and demand consumption or associated services is a fundamental measurement tool likely one of the only tools for most

business’ Adjust increased revenues for

rate/price changes

What Can Be Measured - Program Participation

Counting how many customers take advantage of program/product or service will provide a snapshot of acceptance and market share

Understand that accumulating a lot of bad things will result in a net bad thing “we’re only losing a dollar on each sale

- but we’ll make it up in volume”

What Can Be Measured - Attitudes/Satisfaction

Customer satisfaction and attitude will be meaningless without a baseline If 95% of your customers love you after the

implementation of your marketing program it may mean the other 5% stopped.

But it can be measured and tracked with follow-up polls.

Poll for specific results not general info. - polling is a science!

A Checklist for Marketing, Customer Services & Communications Troublemakers

Who will your customers be five years from now?

Older? Younger? More commercial? More residential? More surburban? More resort / recreation? More agribiz? Generating their own power?

Your mileage may vary

The only certainty is that it will be different than it is now.

The issue is how to prepare for an uncertain, changing customer market.

The “usual suspects” on this topic list

Communicating your mission while forging ahead with change

Explaining new products and services to your customers

Public power principles vis a vis diversification of products and services

The REAL issues:

How do I make the most of what I've got?

How do I get my hands on the stuff I need but don't have?

How do I get the time, money, and "buy-in" to do what has to be done?

ALL-PURPOSE HANDY-DANDYMARKETING, CUSTOMER SERVICES & COMMUNICATIONS SELF-RATING CHECKLIST

a.k.a. the handout

1. Do you have an understanding of your new roles & responsibilities?

The good old days…

Newsletters High bill complaints Power use advisor / energy auditor School safety programs PSAs during a storm Schmooze State Sen. Fatbottom

Now there’s a whole new jargon

Sales force Key accounts Restructuring New economy Diversified services Customer aggregation Distributed generation BPL Renewable energy

And there’s a bunch of new stuff decorating your job description

Webmaster Market Research Analyst Customer Database Guru Product Manager Brand Manager Key Accounts Executive Sales Manager

So what you need to do is…

Get a clear definition of what you’re supposed to do.

Understand how will you know that you have succeeded

Make sure your resources and authority match those new expectations?

1. Do you have an understanding of your new roles & responsibilities?

Rate yourself on a scale of 1 – 10

2. Have you done a competitive analysis?

Competitive analysis basics

Keep a clipping file Shop the competition Buy shares / read annual reports Internet sites Bridge to their employees Call on their key accounts Poll their customers

2. Have you done a competitive analysis?

Rate your utility on a scale of 1 – 10

3. Are you systematically measuring customer expectations?

Do you poll every 18 months or so? Do you call on key accounts at least

once per year, and do performance / value evaluations for each account?

Do you systematically track and evaluate all customer contact?

Have you done ANY snooping on the other side of the fence?

3. Are you systematically measuring customer expectations?

Rate your utility on a scale of 1 – 10

4. If you could teach your customers only one sentence in the next 12 months, do you know what that sentence should be?

If you’ve got such a sentence, write it down now.

Is it research driven?

4. If you could teach your customers only one sentence in the next 12 months, do you know what that sentence should be?

You don’t have money to do more. Is your sentence specific, significant,

and compelling – or just adjectives? Is it a USP – unique selling

proposition – that makes an “only” claim?

If everyone believed it, would it make any difference?

4. If you could teach your customers only one sentence in the next 12 months, do you know what that sentence should be?

Rate your utility on a scale of 1 – 10

5. Is your marketing program connected to your communications program – and vice versa?

Do marketing and communications have a written plan to leverage each other’s resources?

Do you time stuff to match messages so you can break through the clutter?

Do you share market research, database, and targeting functions?

5. Is your marketing program connected to your communications program – and vice versa?

Rate your utility on a scale of 1 – 10

6. Do you have message discipline?

The challenge is NOT thinking up 24 new things to say

If it does not support the central message, kill it.

6. Do you have message discipline?

Rate your utility on a scale of 1 – 10

7. Do you have goals that contain numbers?

Are they written down? Are they do-able? Are specific resources assigned? Would achieving them make a

difference?

7. Do you have goals that contain numbers?

Rate your utility on a scale of 1 – 10

8. Are you mining your database?

Do you know what data is on your customer file?

Do you have ready access to the data?

Can you target your most likely “players,” least likely, mid-likely?

Have you ever done a targeted mailing to a subset of residential customers?

8. Are you mining your database?

Rate your utility on a scale of 1 – 10

9. Do you have an offense?

Diversified services Key accounts offense National accounts Sales territory agreements? Residential aggregations? Selling your services outside your

service territory?

9. Do you have an offense?

Rate your utility on a scale of 1 – 10

10. Do you have a plan to get buy-in?

From your manager From your fellow employees Have you listed the objections you

expect to encounter and brainstormed a solution to each?

10. Do you have a plan to get buy-in – from managers?

Do test projects Let the GM try the product Show the money Examples from other public power

systems Get him/her to think it was HIS/HER

idea

10. Do you have a planto get buy-in – from employees?

Share authorship Recognition / appreciation Group bonus / incentives Information about competition Added value

10. Do you have a plan to get buy-in?

Rate your utility on a scale of 1 – 10

11. Have you created strategic alliances?

National image / national accounts

Regional organizations, joint action agencies

Local departments and services

11. Have you created strategic alliances?

Rate your utility on a scale of 1 – 10

12. Do you have a plan to liberate money?

Prune from the bottom Kill sacred cows Keep charity & advertising in

separate budgets Do bursts instead of level buys Timing is everything

13. Do you have a plan to liberate more time?

Prune from the bottom Kill sacred cows Timing is everything Buy large trash bags

13. Do you have a plan to liberate more time?

Ask for help Delegate Budget your time Learn to say no nicely

13. Do you have a plan to liberate time?

Rate your utility on a scale of 1 – 10

14. Do your customers understand the advantages of belonging to a public power system?

The public power advantages:

1. Locally owned and operated Money & jobs stay here

2. Public power put consumers first3. Public power systems are

responsive to local needs.4. Economic participation5. Customers have a voice

14. Do your customers understand the advantages of belonging to a public power system?

How well do they understand it? How many of them understand it? Is there a “fault line” between who

understands and who does not?

14. Do your customers understand the advantages of belonging to a public power system?

Rate your utility on a scale of 1 – 10

15. Are you systematically converting

customers into owners?

If your system is typical, only 1/3 see themselves as owners.

Are you making it impossible for new customers to miss the point?

Have you targeted existing customers who are less likely to think of themselves as owners?

Is your plan pro-active?

15. Are you systematically converting customers into owners?

Rate your owners on a scale of 1 – 10

Add it up.

What are your top two strengths? What are the top two or three areas

you need to work on?

A Rational Process

Must know where you are in the marketplace.

Must know where you are going. Are there strategic issues to

address? Do you have a need to market? You do not market for marketing

sake!

Summary and Review

Marketing is a Science! Marketing should be used as a

measurable tool. Just as with a transformer or capacitor

bank. Evaluate and modify what you do! Set goals that meet your system’s

needs!