15 Jun Deep Dive on Data: How REPs are Using Data to 4x Their Sales
By Kendall Tucker
Retail energy providers (REPs) are all looking for ways to acquire more customers, while at the same time maintain favorable headroom on their products. Since only about 18 million of the 63 million accounts eligible to switch to a competitive energy supplier have actually done so, there is room for REPs to distinguish themselves by using data and technology to do segment-of-one marketing to capture the unswitched, eligible 45M accounts.
In the last few years REPs have started using census-level data (zip + 5) and media market targeting to decide who to sell to. This is called segment-of-many marketing, because the targeting is granular enough to get customers interested, but not nuanced enough to hold their attention and close the sale. Unfortunately too many REPs using this level data are losing 1 out of every 2 customers that they sign up within 3 months (according to data studies conducted with a small handful of Energy REPs).
To provide context, Segment-of-many marketing looks something like this:
The problem with segment-of-many marketing is that it’s expensive and requires 10+ touchpoints to hold a customer’s attention and drive towards messaging that resonates with them. By the time a customer has been messaged to 6+ times, they feel assaulted and uninterested and have likely heard messages that are so irrelevant to them that they have decided not to consider making a switch, not to mention the immense financial loss and expenditure which hurts cost of acquisition (CAC) considerably.
In order to successfully grow amongst unswitched customers, data-driven REPs such as NRG, Entrust Energy and Inspire Energy, are adopting behavior-based marketing strategies that deliver personalized campaigns to customers based on individual level data. This process requires quality, individualized data and level of technological sophistication so that the REPs can iteratively test a data strategy as they implement segment-of-one marketing and sales.
Segment-of-one marketing is when REPs source advanced psychographic profiles of individualized consumers in order to understand what products, services and sales pitches will appeal to the right people at the right times.
Segment-of-one marketing looks like this:
In segment-of-one marketing, REPs can create hypotheses based on “look-alike” models on previous customer interactions on what will appeal to individualized customers (i.e. customers who care about climate change will respond better to renewables offers than customers who prioritize cost cutting). REPs use CRMs or other tracking tools to establish a baseline of how customers respond to their outreach and modeled data can help them identify patterns and correlations that carry useful information about customers, interactions, products and sales strategies that are and are not working as they expand their customer footprints.
These Signals provide REPs the ability to forecast customer behavior, allowing them to start engaging in highly targeted marketing in current and new targeted territories. Reusable Signals are organized into Targets with relative priority levels, individualized sales scripts and recommended outreach times. This provides a broad range of fresh, retailer-specific Data, eliminating the redundancy of having to extract and process vast amounts of data for each and every Target- allowing REPs to target people at the right time and in the right places when it mattered.
Segment-of-One Marketing Results
Based on use cases in the industry, the Signals in segment-of-one marketing allow REPs to radically increase their customer acquisition rate from 2% to 8% of all interactions (We have tested this numerous times with similar results each time). A crucial part of this success is that REPs with strong data programs are generating new targets at least as often as daily. By feeding fresh, proven Targets directly into their technology and CRMs, sales leaders bypass the time-intensive data manipulation work that was previously required and their sales flourish.
REPs that use segment-of-one marketing also spend up to $1 million dollars less on marketing than they were before because marketing is targeted on an individual level to be as succinct and successful as possible. If the goal is lowering CAC and also simultaneously increasing expected Life-Time Value of new clients, then investing in accurate data + technology resources is a great place to start.
We are excited to continue watching data-driven REPs improve and evolve in this space. If you want to learn more about our data work and technology, feel free to reach out.
Kendall Tucker is CEO of Polis.