Could Energy Retailers be Doing a Better Job Engaging Their Customers?  Probably.  Does it Matter?  Definitely!

By Dan Seaman

Before the National Energy Policy Act, and the energy market deregulation orders that followed, the residential energy industry was fairly well insulated from (1) the pressures of market competition, (2) the commoditized dynamic of their core product, (3) consumer expectations regarding customer service and customer care, and (4) the need to keep up with the changing landscape of what’s now called “customer engagement”.

In 2018, many energy marketers now find themselves not only playing competitive catchup, but also chasing the social and technological trends, expectations, and capabilities driving modern customer engagement.  To be sure, deregulation opened the door to free market competition, but it also highlighted the large gaps in the energy industry’s consumer marketing and engagement strategies. 

In the last 10+ years with the advancement of digital connectivity, smart phones, mobile apps, social media, and so many other shifts in the way consumer information is received and transferred, we’re now confronted with a smarter, and more informed consumer…a consumer that now demands and expects a unique, tailored, and personalized experience from their energy supplier. 

So, how can energy companies stand out to their current and prospective customers?  In a commoditized industry like energy, product differentiation is near impossible, and price competition is extremely limited.  One way to stand out is through customer engagement, defined by unique content, sales strategies, niches, benefits, hooks, and value-adds that seek to build relationship, goodwill, and positive experiences with each customer.  80% of consumers say they’re more likely to do business with a company that engages with them on a personal level, and consumers that feel engaged are 10x more likely to be brand loyal. 

Some energy retailers engage customers with strategies like “go green” initiatives, special contract terms, bundled services, proactive customer service, SMS messaging, and legacy customer discounts.  Others have looked to customer loyalty and reward programs.

As customer engagement tools, rewards are unique in that they are a single solution that delivers a low-cost, high-impact, personalized, content-driven, value-additive way to not only measurably boost acquisition, retention, and renewal performance, but also simultaneously build goodwill, improve customer satisfaction, and provide a differentiated customer experience.  Many energy companies have found these dual benefits of (1) improved bottom line performance and (2) improved customer outcomes to be a winning strategy.

Here are a few things to keep in mind when considering rewards to improve customer engagement:

  • Rewards Offer Increased Customer Touchpoints – Branded loyalty reward solutions open the door for a more interactive customer experience that reinforces brand affinity and goodwill, adds something of value, and motivates the customer to action.
  • Rewards are Measurably ROI Justified – Rewards are data-driven, measurable, and compliant solutions that cost 90%-95% less than traditional promotional incentives like gift cards.  Typical reward ROI is over 1000%.
  • Rewards Increase Engagement and Retention Rates – In the retail energy arena, rewards typically yield a boost of 50%-150% in customer engagement, a 5%-15% increase in customer persistency, a 5%-10% lift in customer save rate, and an 8%-18% boost in renewal rates.
  • Rewards Are Complementary to Other Offerings – Rewards are an excellent complement to other customer engagement strategies already underway.

It costs 5X more to acquire a new customer than to retain an existing one.  In the highly competitive energy market, that differential puts customer loyalty at a premium.  Rewards are a cost-effective and proven ways to retain customers through engagement. 


Dan Seaman is President and Founder of Optimus Rewards.